A Critique of the Net Promoter Metric
Keiningham, Cooil, Andreassen and Aksoy (see the article "A Longitudinal Examination of Net Promoter and Firm Revenue Growth" in the July 2007 JM issue) provide an insightful critique of the Net Promoter metric that has witnessed a meteoric rise in adoption and popularity by leading companies within a very short time.
The Net Promoter concept, originally advanced by Frederick Reichheld in a Harvard Business Review article, involves a "recommend likelihood" survey item about a given firm. It is measured as the difference in proportions of responses considered "promoters" (i.e., those with ratings of 9 – 10) and those labeled "detractors" (i.e., with ratings below 6) of that firm.
Keiningham et al. find evidence that contradicts two Reichheld assertions: (a) Net Promoter is a superior metric for assessing growth (relative to other metrics) and (b) ACSI and growth are unrelated. These authors must be applauded for their extraordinary efforts to objectively compare their analyses with Reichheld's analyses under circumstances where the data from the latter were not accessible.
I wholeheartedly agree with the authors' assertion that new metrics that claim to predict business outcomes must be rigorously tested before they are widely adopted by business firms. To some extent, their study showcases the chasm that sometimes exists between marketing academics, who emphasize sound theory, analytical rigor, and a scientific approach, and marketing consultants/practitioners, who often place greater importance on awareness and management of input-output relationships of interest to businesses than on understanding the "black box" behind those relationships (i.e., the theoretically complex reasons why those inter-relationships exist).
On balance, it is beneficial to hear both sides of any story. I suspect JM readers may want to hear Reichheld's response to this article. JM readers may also weigh in on the many other important issues discussed in this article. I welcome their participation in this blog thread.
Siva K. Balasubramanian
Journal of Marketing Website Editor
