We’ve all run across a customer service agent who implores us to “score them a 9 or 10”. Inevitably these poor souls are being measured against a Net Promoter Score (NPS) scale. Jared Spool has a great, if slightly lengthy article about the significant problems with using NPS as a KPI and the distortions that result:
[T]he NPS calculation makes little sense. There is no business or mathematical reason for these awkward, abrupt changes in the score.
Small incremental improvements should result in small incremental score increases. Only large improvements should result in large score changes. Yet, for reasons nobody can explain, NPS doesn’t work that way.
This is what Kate Rutter calls Analytics Theatre. Creating dramatic swings in numbers for the sake of drama, but not because they help us make our products or services better …
In the original HBR article, the author claimed it correlated strongly with repeat purchases and referrals.
Later studies show it doesn’t. Here’s why not:
The best research questions are about past behavior, not future behavior. (emphasis added) Asking a study participant Will you try to live a healthy lifestyle? or Are you going to give up sugar? or Will you purchase this product? requires they predict their future behavior. We are more interested in what they’ve done than what they’ll do. We’re interested in actual behavior, not a prediction of behavior …
Asking someone about what they’ll do in the future isn’t about loyalty. It’s about optimism.
The full article is well worth a read, and provides interesting insights into how to think about all KPIs.