Today, the Net Promoter Score (NPS) is a relevant metric for many companies. Here, we take a closer look at the origins of this metric, which date back to the 2000s.
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The history of the Net Promoter Score
In 2003, Fred Reichheld, a partner at Bain & Company, developed a new method for measuring how well a company treats the people whose lives it affects. He called this metric the Net Promoter Score (NPS). It was introduced in his Harvard Business Review article "One Number You Need to Grow", published that year.
Thousands of innovative companies have since adopted this approach. Over time, it has been developed and expanded by all of them.
The principle behind this tool has remained the same ever since. It consists of a single question: On a scale of 1 to 10, how likely are you to [objective]?
This asks how likely someone is to recommend a product, a company or a particular brand. It can also ask how likely they are to shop at a business again, or simply how satisfied they were with their purchase, customer support or a particular service.
The answers ultimately produce a single score that provides a clear indication of whether improvements are needed. Since 2003, the popularity of this one figure has grown exponentially. Dedicated apps have been developed to track scores, while researchers have been prompted to study both the results and the methodology itself in detail.
Calculating loyalty used to be very difficult
Business leaders have always understood the power of loyalty. Even before 2003, their companies had transformed themselves into industry leaders simply by building strong and loyal relationships with customers and employees alike.
Reichheld’s account of the origins of NPS begins in a boardroom with executives from brands such as Chick-fil-A and Vanguard. They had gathered to discuss what they could do to increase customer loyalty. When the CEO of Rent-a-Car took the floor, everyone listened. He had found a way to quantify loyalty without using conventional, complex and flawed customer surveys.
His solution was a survey with just two questions:
- How would you rate the quality of your rental experience?
- How likely are you to rent from us again?
The simplicity of this approach produced faster results, almost in real time. These were then passed on to the company’s widely dispersed branches.
But the company did something else as well: it counted only those customers who had given their experience the highest possible rating.
NPS customer satisfaction survey
Why were less satisfied customers ignored?
Because focusing on the most satisfied customers allows the company to concentrate on a key driver of growth: the customers who returned and recommended the company to their friends.
Today’s NPS has not moved far from this system and still consists of two parts:
- On a scale of 0 to 10, how likely are you to recommend [product / brand / company / service]?
- Why did you give us this score?
