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HUNDRED F O R T U N E J U N E /J U LY 2 0 2 0 1 1 2
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JUNE/JULY 2020
FORTUNE FIVE HUNDRED F O R T U N E J U N E /J U LY 2 0 2 0 1 1 2 makes it such a
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FINAL
Skeptics and enemies have largely
NPS.W.07.20.XMIT.indd 112
is it that you would recommend
measure of customer sentiment? It
5/8/2020 7:03:29 PM
them is not. Talk to experienced users
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may seem bizarre, but the phenom- friend or col- in a wide range of industries, and one
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enon Youand
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NPS.W.07.20.XMIT.indd 112 5/8/2020 7:03:29 PM
emerging ones. It’s pored over in second question
two-thirds of thealso:
Fortune “Why did use
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all types of organizations, not just give the answer you gave?”
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steadily, languageanyone
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have nonetheless been touched by
it—guaranteed. That’s because you
OLAS ORTEGA
have received an email or a phone
call asking the one simple question
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expressed as emoticons—from green results a company gets from NPS de-
smiley faces to red angry faces. pend on how well it’s used. And the
Asking customers for a quick piece wisdom on how to use it best is not
of feedback is just the beginning, of always what one might expect.

FINAL 5/8/2020 7:03:29 PM

 F O R T U N E J U N E /J U LY 2 0 2 0 1 1 5

NET PROMOTER ALL-STARS won’t recommend them, they want to

To calculate their Net Promoter Scores, companies subtract the percentage of fix that.”
customers who rank them between 0 and 6 on a 10-point scale (detractors) At least as important as the ques-
from the percentage who give them a 9 or 10 (promoters). Here are the tion is Reichheld’s way of stating the
leaders in 10 industries. NPS true believer USAA tops two categories. answer. A respondent who gives a 9
or 10 on the scale is a promoter; a
I N D U ST RY LOW E ST AV E R AG E H I G H E ST
7 or 8 is a passive; a 6 or lower is a
detractor. Subtract the percentage
RETAIL BANKING 16 34 78 USAA who are detractors from the percent-
age who are promoters, and that’s the
CREDIT CARDS 11 38 57 DISCOVER
Net Promoter Score, which can range
PROPERTY & CASUALTY from 100 to –100.
INSURANCE -18 30 70 USAA
Crucially, it’s one number. You
WEALTH MANAGEMENT 18 34 53 VANGUARD needn’t know how many people
WIRED NETWORK
chose each number on the scale, or
OPERATIONS -31 -7 23 VERIZON FIOS the weighted average; there are no
WIRELESS SERVICE charts or graphs. It’s one question
(POSTPAID) 3 33 58 CONSUMER CELLULAR with one answer. “You don’t have to
DEPARTMENT STORES 29 36 42 NORDSTROM explain in detail what the number
means,” says Maurice FitzGerald,
GROCERY STORES -1 29 69 H-E-B
who used NPS when he ran the
DRUGSTORES -20 -12 -4 WALGREENS customer experience function at
QUICK SERVICE & Hewlett Packard Enterprise’s soft-
FAST-CASUAL RESTAURANTS 2 21 60 CHICK-FIL-A ware division and who has written a
book on how to apply NPS. “It speaks
to people so well. The simplicity of
S O U R C E S : B A I N , D Y N ATA , R O I R O C K E T
communication is absolutely why
NPS is the standard.”
Having developed the world’s
shortest customer survey, Reichheld

T
their customers to be more loyal. “I
realized it was a leadership thing and
then realized that these things take a
long time to play out,” he recalls. “So
TO UNDERSTAND what makes NPS so leaders needed a simple metric to find
compelling, it’s necessary to know out, ‘Are we winning or losing with
where it came from. The metric was our customers?’ ”
introduced to the world in a 2003 ar- A simple metric was unorthodox
ticle in the Harvard Business Review at the time, even blasphemous. The
by Fred Reichheld, a Bain consultant. customer surveys of the day were
Its roots are deep. For years Reich- massive, sometimes 100 ques-
held had been “focused on loyalty and tions long. Customers hated them,
treating people right,” he says. He and managers needed an 80-slide
found that “companies that focus on deck to explain them to colleagues.
earning the loyalty of customers are Reichheld spent two years testing
taking over the world.” They make questions for his simple metric. “We
higher profits, pay employees more, picked likelihood to recommend be-
keep employees longer, reward inves- cause it best predicted future behav-
tors better—a virtuous circle. In 1996 ior of customers,” he says. “We picked
he wrote The Loyalty Effect, a busi- it on a technical basis. Fortunately,
ness bestseller that’s still in print, and it also makes people want to take ac-
kept working with clients who wanted tion. If someone hears that someone
then got even more radical. He told
the world what it was. “We made it
open-source, which was a revolution-
ary move,” he says. Consulting firms
don’t give away their secrets. Gallup,
J.D. Power, and others had built suc-
cessful customer research practices
based on proprietary methodologies.
Not that Bain was averse to making
money. But Rob Markey, who worked
with Reichheld and now heads the
firm’s NPS practice, recalls, “I tried to
tell my partners that we should use
NPS as widely as possible to learn
faster. We wanted more companies to
use it and share their results. Those
that were really serious would benefit
from our consolidating the experi-
ence of all these companies.” Besides,
how could anybody keep the world’s
shortest customer survey a secret?
That’s another reason NPS is ev-

NPS.W.07.20.XMIT.indd 115 FINAL 5/8/2020 7:03:32 PM NPS

 FORTUNE FIVE HUNDRED
erywhere. It’s not just simple, it’s also
free. As a result, no one knows exactly
how many companies use it; any
organization can send out the survey
entirely on its own. Which raises an
obvious question: Is NPS a business
or just a pro bono project at Bain?
Turns out NPS is a large and
thriving industry. Any organization
wanting to use NPS immediately faces
a raft of questions: To whom do we
send it? When? How many customers
will respond, and how many consti-
tute a valid sample? How often should
they be polled? And the biggest ques-
tion of all: Once we’ve learned our
NPS, what should we do?
Several firms will be happy to help.
Bain won’t disclose the dollar volume
of its NPS practice but says the firm
has handled nearly 750 NPS imple-
mentation projects over the past de-
cade and has used NPS in thousands
of other client projects. Last year
SAP paid $8 billion for Qualtrics, a
customer research and consulting
firm, most of whose clients use NPS.
A direct competitor is Medallia,
which went public last year; it was
worth $4.5 billion before the corona-
virus clobbered the stock. Reichheld
was a director of a smaller customer
experience software firm, Satmetrix,
which was bought by NICE Systems
in 2017 for an undisclosed sum;
Reichheld is no longer involved with
it. Beneath these major players are
dozens of smaller firms that advise
on the use of NPS, plus dozens more
that just handle the surveying.
The NPS industry even includes
companies that once were bitter
enemies of the metric. Gallup, seeing
a direct threat to its consulting busi-
ness, in 2006 called NPS “a popular
idea that’s dead wrong.” That view has
evolved. “We have to hand it to them,”
says Gallup executive Jim Asplund.
“People have been using it and find-
ing value in it, so there must be some-
thing there.” Gallup even incorporates
NPS into its work. Asplund says, “We
3:32 PM NPS.W.07.20.XMIT.indd 116
look at our clients’ NPS data all the
time and make use of it.”
At J.D. Power, “when NPS ap-
peared, reaction was kind of mixed—
it could be a competitor,” recalls Jay
Meyers, the firm’s research chief. But
five years ago Bain engaged Power
to conduct NPS surveys, and even
though that deal has expired, Power
continues to measure NPS for clients.
“Lots of them use it,” says Meyers.
“We advise them on how to use it. We
look at Net Promoter definitely as
complementary now.”
As for the best way to use it, ask
executives at major companies that
use NPS and you’ll get a surprise.
For all the work that went into devis-
ing this one simple metric, they say
unanimously that the value doesn’t
come from the number. Even at
USAA, the financial services firm
that continually posts some of the
highest Net Promoter Scores in
America, the score isn’t what counts.
“The most important thing we’ve
It’s not about
chasing the
number. It’s about
understanding
what our
customers want
and need from us.”
DEBORAH CAMPBELL, vice
president of consumer and
marketing insights at Verizon
FINAL
learned above all is what customers
tell us, not the number,” says Julio
Estevez-Breton, who oversees the
research. Verizon, which gets some
of the best scores in a low-ranking
industry, has found the same. “It’s
not about chasing the number,” says
Deborah Campbell, who oversees
Verizon’s use of NPS. “It’s about
understanding what our customers
want and need from us.”
That is, even though the score
gets all the attention, it’s the second
question—“Why did you give the
score that you gave?”—that delivers
the value. Even Bain agrees. “Anyone
can hire a research firm and measure
their score,” says Markey. “What’s
more powerful, and required to get
the real impact, is to make use of feed-
back from individual customers.” The
score grabs everyone’s interest and
is useful as a trend indicator, but the
real importance of the first question is
that it sets up the second question.
Parsing the answers to that second
question is not easy for companies
with thousands or millions of cus-
tomers. But now technology can read
responses and analyze them. “The
real gem and actionable insights
come from the verbatim transcripts,”
says Marc Stein of Dell Technologies,
“and we’ve learned the importance of
bringing data science and machine
learning to NPS.”
Sometimes what companies dis-
cover is undramatic but important. It
could be a broad issue, for example,
“clients who think in general that
some of our tech documentation has
to be overhauled and improved,” says
IBM’s Peluso, who implemented NPS
in previous jobs at Citigroup and
Travelocity. Or it could be a narrow
issue, such as “an account team that
didn’t realize a client was having
trouble onboarding their offering.”
Constantly addressing those road-
blocks, which the company might
never have known about otherwise,
builds a cumulative effect. “I’ve been
5/8/2020 7:03:32 PM
 F O R T U N E J U N E /J U LY 2 0 2 0 1 1 7

HOW TO the measure, says this is
“the rule rather than the
CHEAT AT exception” in U.S. auto
NPS—AND retailing. Savvy custom-
WHY YOU ers sometimes beat the
REALLY salesman to the punch
SHOULDN’T by saying, near the end
“Any metric can of the negotiation, “Take
be gamed,” says off another $500, and I’ll
give you a 10.”
Vanguard’s Amy
Cribbs. For that
reason in part, she NUDGING
says, “we do not bake Responses can be
NPS into individual influenced in many
subtle ways. Managers
reward systems.” But
some companies whose bonuses are tied
do, incentivizing to Net Promoter Scores
workers to scam their may send a survey in
employers in ways which 9 and 10 are
that can lead to costly green, 7 and 8 are yellow,
and everything else is
mistakes in the quest
to earn customer red. Or they may send
loyalty. Among the a separate email saying
techniques: only 9 and 10 count. Or,
before the Net Promoter
question, they may ask
a question designed
BEGGING to get a favorable
Seemingly everyone response; respondents
in the field of customer want to be consistent
experience has heard and are thus more likely
about car salesmen who, to answer the NPS ques-
at the end of the sale, tion with a high number.
tell customers, “You’re FitzGerald reports a
going to receive a survey, related stratagem: Offer
and if you don’t give me an incentive like entry
in a prize drawing to
a 10, I won’t be able to
feed my kids.” Maurice everyone who responds;
FitzGerald, who used people won’t believe
NPS at HP Enterprise and they can win if they give
has written a book on a low score.
blown away by how this data can and see the verbatims coming in. It’s
be used for continuous improve- very grounding and humbling.” That’s
SKEWING
THE SAMPLE
Make sure the surveys
go only to people who
are happy or are friends.
This is “easiest where
a transaction is taking
place by phone, and
the script requires
the employee to ask
whether the customer is
willing to take a survey,”
says FitzGerald. “Simply
omit to ask the unhappy
ones.” Send online sur-
veys to customers who
have just ordered a new
product, not to those
whom you’re hounding
to pay a late bill.
BALLOT STUFFING
“A telecom provider
had retail stores where
they were getting
feedback via SMS,”
says Bain’s Rob Markey.
“The customer’s phone
number was captured
by the point-of-sale
system, and the text
message was sent at
the end of the customer
visit. Some employees
figured out they could
temporarily change the
customer’s number to
their own number, give
themselves a 10, then
change the number
back.”
with an airline,” says Peluso. “When
I got an NPS survey, I wrote back
about my experience, but then I
thought, ‘Why am I writing this?
I know you won’t respond.’ They
didn’t, and I’m a really high-level
flier.” Her view: “Don’t ask the ques-
tion if you’re not going to do some-
thing about it. It’s like the airline—
they’re making me angrier.”
Even in a big retail business where
closing the loop seems daunting, it
isn’t impossible. “From frontline em-
ployees to our executives, we call cus-
tomers back,” says Carolyn Saunders,
who oversees customer experience
at Scotiabank, a Canadian bank that
has expanded aggressively through
Latin America using NPS. “We’ve
conducted over a million callbacks
since November 2016.”
Because NPS is so simple, many
companies are applying it beyond its
original use, often by measuring the
NPS of competitors. It isn’t necessary
to get the other guys’ customer lists;
companies hire survey firms to call
or email people at random, asking
which companies in a given industry
they do business with. In fact, many
companies use third-party firms to
learn their own score because the
result is more objective. “The biggest
bias is to send a survey request under
your own name,” says Reichheld.
“You can kick up your score 30 to 40
points by saying, ‘I’m with such-and-
such company, and what did you
think of us?’ ”

ment of customer experience,” says
Boris Groysberg, a Harvard Business
School professor who has studied
NPS. “The ROI over five years is so
much higher than you can get in
three to six months.”
At other times the value of the
“verbatims” is their power to center
a manager’s thinking. At Intuit, chief
product and design officer Diego Ro-
driguez says, “I can log in at any point
why California Closets CEO Barton
starts his day reading the previous
day’s verbatims: “I want the first voice
in my ear every day to be the custom-
er’s voice. It just grounds me.”
The customer isn’t always happy,
and while listening is nice, it doesn’t
help. Only action does. Responding
to non-promoters is called “closing
the loop” in the NPS world, and it’s
vital. “I just had a bad experience
C
COMPANIES ARE even finding they can
learn a lot by surveying people who
aren’t customers at all. Asking the
NPS questions of prospects who
didn’t buy is highly revealing. Sur-
veying the company’s own employees
is also a strong trend; finding out if

NPS.W.07.20.XMIT.indd 117 FINAL 5/8/2020 7:03:32 PM

 FORTUNE FIVE HUNDRED

they would recommend their work-
place to a friend or colleague, and
why, can be eye-opening.
Like all simple tools, NPS can be
used destructively. Longtime users
agree on the No. 1 thing not to do:
“If you want a bad NPS implemen-
tation, start by incentivizing the
scores,” says Nacho Deschamps, a
top executive at Scotiabank. When
pay is at stake, employees can be
marvelously creative. The result-
ing data will be worse than useless
because managers won’t realize it’s
fake. Many companies nonetheless
link compensation for some employ-
ees to Net Promoter Scores.
Other damaging errors “can be
This is a long-
term metric. You
can drive yourself
crazy if you get
hung up on the
day-to-day or
month-to-month.
But if you use it for
improving long-
term, people will
never go back.”
DIEGO RODRIGUEZ , chief
product and design officer
at Intuit, which has used NPS
since it was invented
done with the best of intentions
and produce terrible results,” says
Markey. For example, at an auto in-
surance company that was collecting
feedback on its claims process, “some
genius decided to ask only those
customers whose claims had been
paid, because it meant the process
was over.” Of course it also meant the
company didn’t hear the opinions
of customers whose claims had not
been paid. A common blunder occurs
when a score is attributed only to the
customer’s last point of contact. For
example, a customer starts a transac-
tion online, fails, contacts the call
center, gets put on hold, struggles to
describe the problem, eventually gets
it fixed—and then receives an NPS
survey about the phone rep. The web
team, the source of the customer’s
problem, hears nothing.
The chief remaining critic of NPS
as a metric is Timothy Keiningham,
a professor of marketing at St. John’s
University in New York City. He
argues that his statistical analyses
show NPS is not “the single most
reliable indicator of a company’s
ability to grow” and is no better than
several other measures of customer
sentiment at predicting profitability.
But to NPS believers, he’s focused
on the wrong issue, since they all
agree that the number alone isn’t
what gives them value. (Professor
Keiningham did not respond to
interview requests.)
As NPS becomes ubiquitous,
many companies, especially those
below an industry’s top tier, have
taken to ignoring the first law of
NPS—it isn’t about the number—
and issuing press releases bragging
that they’ve achieved the highest
NPS in their industry. Be skepti-
cal of such claims. The numbers
are rarely comparable because of
differences in how, when, and from
whom the results were obtained.
They may delude the company’s own
managers, “but worse,” says Markey,
“is convincing investors that your
deluded score is meaningful.”
Not even NPS’s most ardent fans
think it’s the only customer experi-
ence tool they need. They all use many
others as well. “It’s not the only way
you get insights on what your custom-
ers need and believe to be true,” says
Amy Cribbs, a customer experience
executive at Vanguard, which has
used NPS since it was created. For ex-
ample, “it doesn’t always give you the
insight on where that passion for your
brand comes from. We are big believ-
ers in it, but there are other things you
have to do.”
In addition, technology could
someday make NPS obsolete. “You
could envision a world where a rep
is talking to a customer live on the
phone, with the conversation being
transcribed in real time and scored for
customer sentiment and bucketed for
issues,” says Stein of Dell Technolo-
gies, another charter member of the
NPS users’ club. “Today the accuracy
just isn’t there. But it will be.” Only
a little further into the future, all
customer experience data could be
biometric and continuous, detected
from a customer’s pulse, voice, and
breathing. It’s plausible. And who
would need NPS?
Until then, it’s hard to see the
metric waning. Someone would have
to invent a tool with a higher ratio
of value to simplicity. In 17 years, no
one has done it. Most important—fit-
tingly for a system that originated as
a way of studying loyalty—its users
are extraordinarily steadfast. “This
is a long-term metric. You can drive
yourself crazy if you get hung up on
the day-to-day or month-to-month,”
says Rodriguez of Intuit, which has
used NPS since it was invented. “But
if you use it for improving long-term,
people will never go back. We’re going
to ask the same questions in the same
way from now until the cows come
home.” For now, the cows are nowhere
to be seen.

(#S085889) Reprinted with permission from the June/July 2020 issue of FORTUNE.
© 2020 Fortune Media IP Limited. FORTUNE and Fortune Media IP Limited are not affiliated with, and do not endorse products or services of,
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32 PM NPS.W.07.20.XMIT.indd 118 FINAL 5/8/2020 7:03:33 PM