1. NET PROMOTER SCORE (NPS)
Benefits & Drawbacks
28.04.2008
Michael Waltinger & Jörg Milde

2. NET PROMOTER SCORE (NPS)
Stuttgart Media University | Summer Term 2008

3. BACKGROUND
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SOURCE: REICHHELD, FRED (2003-12): HARVARD BUSINESS REVIEW

4. THE ULTIMATE QUESTION
“HOW LIKELY IS IT THAT YOU WOULD
RECOMMEND OUR COMPANY TO
FRIENDS OR COLLEAGUES?”
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SOURCE: REICHHELD, FRED (2006): THE ULTIMATE QUESTION

5. THE ULTIMATE QUESTION
“HOW LIKELY IS IT THAT YOU WOULD
RECOMMEND OUR COMPANY TO
FRIENDS OR COLLEAGUES?”
EXTREMELY NOT LIKELY
LIKELY AT ALL
10 9 8 7 6 5 4 3 2 1 0
PROMOTER PASSIVE DETRACTOR
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SOURCE: REICHHELD, FRED (2006): THE ULTIMATE QUESTION

6. NET PROMOTER SCORE (NPS)
EXTREMELY NOT LIKELY
LIKELY AT ALL
10 9 8 7 6 5 4 3 2 1 0
PROMOTER PASSIVE DETRACTOR
E.G. 70 % E.G. 10 % E.G. 20 %
PROMOTERS (70 %) – DETRACTORS (20 %) = NPS (50)
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SOURCE: REICHHELD, FRED (2006): THE ULTIMATE QUESTION

7. NET PROMOTER SCORE (NPS)
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SOURCE: NET PROMOTER INDUSTRY REPORT FINANCIAL SERVICES (2007) - BASED ON BAIN OR SATAMETRIX
SURVEYS

8. NET PROMOTER SCORE (NPS)
¢ Loyalty/Growth-Indicator
¢ Word of Mouth-Index
¢ Proven empirical relevance of recommendations
¢ Simple to survey and assess (no „Black Box-Index )
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SOURCE: VOCATUS (2007): DER NPS AUS SICHT DER MARKTFORSCHUNG; GOLDMAN (2008): MEASURE THE LOVE

9. CRITICISM ON THE NPS
Stuttgart Media University | Summer Term 2008

10. Net Promotor Score Basics
¢ NPS
developed by Fred Reichheld and
Consulting Agency Bain & Company
¢ Main Criticism by Market Research Institutes
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11. NPS DRAWBACKS I
¢ Just an Index, not a dedicated forecasting model
¢ Not content relevant
¢ MissingDimensions
- Involvement
- Attractivity of alternatives
¢ Only
Promotors and Detractors relevant
- 20% in upper scale segment missing (passives?)
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¢ Difference between ‚intention‘ and ‚action‘

12. NPS DRAWBACKS II
¢ No international, intercultural comparability
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à Cultures tend to vote on scales differently

13. NPS DRAWBACKS III
¢ Notapplicable on all branches
à different importance of mouth to mouth
propaganda in various branches
- low involvement: toilet brushes
- high involvement: tourism industry
¢ Ashby s law
“The larger the variety of actions available to a control
system, the larger the variety of perturbations it is able to
compensate.”
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14. CONCLUSION
¢ NPSrepresents only a tiny piece of empirical
research.
¢ NPSas a stand alone method to determine
customer loyalty it not valid
NPS as a first indicator which needs to be
¢ à
extended through further market research
methods in order to create reliable results
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15. Thanks a lot & take care!
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