Kmart and the limits of the NPS
It was just a matter of time. Checking out at Kmart, the screen asks whether I would recommend Kmart to friends. Gee, I hadn’t really thought about that – should I recommend Kmart to my mother? Or can I just get on with unloading my shopping cart filled with toilet paper and shampoo?
The original idea of the Net Promoter Score or “NPS” from Fred Reichhheld in 2006 was to validate a measure of customer satisfaction that correlates to profit. With Reichheld and Bain “proving” that one question “would you recommend this to friends and family?” delivers more money, companies around the world scrambled to follow the latest “must-do” : become a Net Promoter Company. Back then, a “recommendation” carried weight.
But since then, we have seen an explosion of customer surveys that ask us if we’d recommend everything from the plumber to the kitchen sink to our friends and family. We daily “recommend” things to “friends” via a simple “Like” button. In other words, is the value of “recommendation” in 2012 what it was in 2006? Does it still predict profit? Would the original Bain “proof” work today, in a world where recommendations are a dime a dozen?
The way the NPS is over used today suggests that the time has come for a weightier measure of a company’s relationship with its customers : one that involves trust. (Interestingly, a trust question was also an important question in Reichheld’s original work, but lost out to the simplicity of the NPS). Here comes the Trust Equity.