Questions about the Ultimate Question: Conceptual Considerations in Evaluating Reichheld's Net Promoter Score (NPS)

Abstract

Approximately four years ago in a Harvard Business Review article, Frederick Reichheld (2003) - noted Harvard Business School Press author, speaker, loyalty expert, and Director Emeritus of Bain & Company Consulting - introduced a concept called the Net Promoter Score (NPS). Reichheld's claim was straightforward: of all the customer survey metrics an organization can track, one stands out above all others in terms of its relationship with company financial performance - an aggregate-level measure derived from scores on a "likely to recommend" survey item. In his article, Reichheld presented the case for his premise. While most scholars would agree that positive word of mouth is highly beneficial and that negative word of mouth is detrimental, less tenable is Reichheld's claim that a single word of mouth metric is the 'one thing' a company needs to track and manage. A recently published Journal of Marketing paper challenges the validity of Reichheld's claims on empirical grounds (Keiningham, Cooil, Andreassen, and Aksoy 2007). However, in addition to empirical scrutiny, evaluation of Reichheld's NPS should include detailed conceptual scrutiny. If there are threats to validity in the conceptual elements, these must be factored into evaluations of any empirically-based claims. This paper adds to the assessment of NPS by going back to Reichheld's original work and suggests that rethinking on conceptual grounds will reveal potential threats present in various elements of the NPS formulation.