The Problem with the Net Promoter Score


TMCNet

October 23, 2013 | by Paula Bernier

TMCNet The Problem with Net Promoter Score

Larry Freed, CEO of ForeSee and author of the new book “Innovating Analytics,” recently told TMCnet that while big data presents a great opportunity for companies to better understand their customers, there’s also a need to rethink existing models for categorizing customers.

The Net Promoter Score has risen to prominence in recent years as a way for organizations to easily classify their customers as detractors, passives or promoters. But Freed said NPS has hit its peak and is on the way down because it’s not a very predictive metric. As noted in his book, NPS has a high margin of error, is overly simple, and doesn’t take into consideration that customers may at some times fit into more than one of these categories.

A better method for understanding customers, according to Freed, is what he calls the Word of Mouth Index . . .  Read the full article »

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