Net Promoter Score : Past, Present and … Africa!
It’s been fifteen years since my team at Satmetrix co-created the Net Promoter Score (NPS) with Fred Reichheld; fifteen years over which it has become the de facto standard approach to measuring and managing customer experience. Hundreds of thousands of businesses, big and small, reaching across all the continents and over every business sector have made NPS a business revolution and have validated its underlying strength.
But as with many ideas that become “conventional wisdom” sometimes we lose track of where its real value comes from. For that reason alone, it’s worth reflecting on its history, to better understand what makes NPS work.
The search for a relevant measure of customer experience and loyalty started in the late 1990’s, inspired by a conundrum. For most business leaders, the idea that delighting customers is good business is instinctive and obvious. At the same time, traditional ways of thinking about measuring that delight through customer satisfaction scores, didn’t seem to support that case. Satisfied customers didn’t seem to reward their vendors with either superior growth or better profits. In fact, they had a habit of switching vendors whenever offered a better price. Perhaps customers were just price-driven mercenaries, always shopping for cheaper in a race to the bottom?
Dr Laura Brooks at Satmetrix led a data driven research initiative that cracked the code. Customers would reward business for outstanding experiences, but satisfaction was too low a bar to identify what “outstanding” met. NPS was born out of data science; the statistical relationship between customers likelihood to recommend a product or service, and the growth of the enterprise. The lights went on: the connection became real.
Harvard Business Review published a seminal article, written by Fred Reichheld, in December 2003. It caught fire. Large, respected businesses like General Electric went on the record, talking about the power of both the idea and impact on their business. We started a conference series and CEOs of great companies like Zappos and Virgin Media showed up to share their beliefs and successes. 20 conferences later, over 500 companies had sent their leadership to our events to learn, share and enthuse. A site we launched to track industry activity quickly found over 20,000 business subscribers and built a community of deeply committed professionals who brought NPS to their businesses and shared best practices and inspiration. This was big.
The case studies of radical transformation started appearing. My personal favorite of the time was Virgin Media, a newly formed consumer telco in the UK; consolidating multiple companies that all had very poor NPS into a single entity whose performance, perhaps not surprisingly, didn’t improve with integration. A new, resolute management team made NPS a centerpiece of their business strategy. Performance improvement was remarkable: over a 5 year period NPS improved 28 points, customer engagement 19 points and the stock price went from the equivalent of $5 to $50.
A big idea for sure, but not enough, yet. If NPS was a powerful concept, it wasn’t a how-to guide. For business to fully realize the value of the approach, it became clear we needed to help people develop best practices, put in place processes, understand the state of the art. We needed a LOT more. We needed to go back to our role as thought leaders and write the next chapter.