Is a Net Promoter Score a valid predictor of customer loyalty?

In your business travels you may have heard of the acronym NPS. It stands for Net Promoter Score.

Developed by Fred Reichheld of Bain & Company and Satmetrix in 2003, NPS is a management tool designed to gauge the loyalty of a firm’s customer relationships. It serves as an alternative to traditional customer satisfaction research and claims to be correlated with revenue growth. In short, it is a single question measure that asks customers to rate their intention of referring a business on to others. The rating scale is 0-10.

Clients who give scores of 9/10 or 10/10 are regarded as being ‘Promoters’.

Clients who give scores between 0-6 are regarded as being ‘Detractors’.

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