Would you consider coming back to The Marketing Gateway?
Think a high NPS equals success? Think again!
In this episode, we discuss the pitfalls of relying on NPS as a measure of customer loyalty.
Key Insight: Context matters! Customers have different reasons for their recommendations.
SOURCES:
The One Number You Need to Grow: https://nashc.net/wp-content/uploads/2014/10/the-one-number-you-need-to-know.pdf
Decomposing Brand Loyalty: An Examination of Loyalty Subcomponents, Product Price Range, Consumer Personality, and Willingness to Pay: https://www.mdpi.com/2076-328X/15/2/189
The Marketing Gateway is a weekly podcast hosted by Sean in St. Louis (Sean J. Jordan, President of https://www.researchplan.com/) and featuring guests from the St. Louis area and beyond.
Every week, Sean shares insights about the world of marketing and speaks to people who are working in various marketing roles – creative agencies, brand managers, MarCom professionals, PR pros, business owners, academics, entrepreneurs, researchers and more!
The goal of The Marketing Gateway is simple – we want to build a connection between all of our marketing mentors in the Midwest and learn from one another! And the best way to learn is to listen.
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Copyright 2025, The Research & Planning Group, Inc.
TRANSCRIPT:
Sean Jordan (00:00)
I don’t eat out at restaurants very often at this stage in my life. For one thing, it’s very expensive, and even if I’m not including my family of five in my dinner plans, I just don’t enjoy the experience very much. I don’t like having to order food I’m going to wait for and then spend my time wondering if it’s going to come out the way I wanted it or if I’m going to have to wait even longer for someone to fix it. I don’t like having to wait for refills on my beverage when I want to take a sip of something, and I really…
really hate waiting for the check and then have to wait again for the server to get around to charging my credit card. To me, the entire restaurant experience is about anxiety, and I’m honestly much happier to just order a pizza and eat it at home. Pretty much the only time I enjoy going to a restaurant is if I’m meeting someone for conversation or if I’m celebrating something, and in both cases, I prefer a place that offers prepaid counter service and fountain beverages on demand to anywhere where I’m at the whim of waiting.
to be weighted on. Now, some of you, I’m sure, are appalled at my lack of culture and refinement. And it’d probably help if I share one additional detail, because there was a time where I did enjoy going to restaurants. But about a decade and a half ago, I had three major changes in my life happen around the same time. My wife and I had our first child. I became more concerned about my overall health. And I decided to embark on a vegetarian lifestyle.
And let me tell you, it’s pretty hard to find a restaurant that has that magical combination of a menu that’s health conscious and that offers a delicious meatless dish, especially here in the Midwest where nearly everything is fried or cooked or garnished with some sort of meat. And then it also has to have items on the menu that actually appeal to my children. At most restaurants, I have maybe two or three choices tops and
Some of the most popular restaurants don’t even bother offering more than a terrible salad wrap or a bland pasta or an assortment of overpriced side dishes for those who don’t want to join in a carnivorous carbo load. And even if a restaurant does offer a meatless option, one can only eat so many impossible burgers, and quite honestly, I can make those at home whenever I want for less than half the price that I pay at a restaurant. Every single restaurant seems to be interested in whether I’m likely to recommend them to others,
And on the surface, it’s a reasonable question. One of the most common topics that working adults bring up with each other is what restaurants they enjoy. It’s always nice to hear about a place you’ve never tried or realized you may have misjudged, particularly when you’re receiving a passionate recommendation from someone who really, truly loves it. But to me, making restaurant recommendations is something I don’t do easily, particularly if I sense the person I’m talking to isn’t interested in the sort of food I like.
My likelihood to recommend a place and my likelihood to patronize it are two entirely different things. And all of this leads me to wonder, why in the world do we get so fixated on the likelihood to recommend something when we’re measuring a customer’s experience with a service or product? And why don’t we ever wonder why they would make that recommendation? So if you’re an insights professional like me, you probably know where this is heading.
That’s right, we’re going to talk about the very flawed metric that is the net promoter score. But I’m not going to waste our time trying to debunk it, because so many other people have already done that better than I ever could. What we’re going to do instead is ask, does the question of whether or not someone would ever recommend a product or service even make any sense to begin with? I’m Sean in St. Louis, and this is the Marketing Gateway.
In 2003, a loyalty researcher and consultant from Bain & Company named Fred Reicheld published a paper in the Harvard Business Review called, The One Number You Need to Grow. In this paper, Reicheld told a story about how Enterprise Rent-a-Car had determined that it could drive growth among its customers by sending out a short survey with just two questions. One about the quality of their rental experience and another about how likely they would be to rent from the company again.
What was particularly interesting was that Enterprise’s focus was on the customers who awarded them the highest possible rating for the experience, because they found that those customers who were the most likely to come back were also the ones most likely to recommend them to their friends. The simplicity of the survey and its data allowed Enterprise to compare results among all of its branches and see who really had the most enthusiastic customers and to push the underperforming branches to work harder to develop some.
Rykel went on to explain that he was so inspired by this insight that he committed himself to finding something that could be useful to any industry, a single question that would yield a single number that could be used to gauge customer loyalty. The paper explained that loyalty and satisfaction were not the same thing, and that attempts to measure satisfaction were often gamed by the people who benefited most from seeing these scores reach the highest levels, like salespeople who wanted to protect their bonuses by asking their customers to give them high ratings on satisfaction scorecards.
And Rykel believed loyalty mattered more than satisfaction anyhow, because a loyal customer could have an unsatisfactory experience and still come back. But a disloyal customer could receive the very best experience and still choose to go somewhere else. Now if you read the paper, it details how Rykel and his research team arrived at the now famous question of, how likely is it that you would recommend the company to a friend or colleague, which is assessed on a balanced scale of 0 to 10.
but he didn’t stop there. He concluded that anyone who gives a 9 or a 10 on the scale is a promoter, someone who’s likely to be an enthusiastic supporter of the product or brand. Anyone who gives a 7 or 8 is a passive, which means that they are generally positive, but not enough to recommend the brand without some reservation. And anyone who gives a score of 6 or below is a detractor, which means they are not enthusiastic about the brand and are likely to be disloyal and defect to a competitor when given the chance. Rykel’s cherry on top.
was to then ignore the passive, subtract the percentage of detractors from the percentage of promoters, and then multiply the result by 100 to get a number that he called a net promoter score. And if your organization uses this metric today, it’s because the idea was quickly adopted into business schools and promoted as a new breakthrough in measuring customer sentiment. Ryke Held has written books about it. Bain and Company has pushed it as part of their consulting service. Most major surveys platforms have adopted it and offer benchmarks for it.
It’s everywhere and widely used by organizations around the world. Like I said, I’m not going to go through the pluses and minuses of the Net Promoter Score because that’s well-trod territory at this point. NPS is a contentious metric that most insights professionals dislike, and I often liken it to a funhouse mirror that distorts reality as you look at it from different perspectives. To talk about why it isn’t valid or a reliable metric is a really, really tedious discussion that can involve a lot of math.
I’m not going to bore you with that. What I do want to question, however, is the premise. Because anyone who fields Net Promoter Score surveys has almost certainly seen feedback from survey respondents who say something along the lines of, why are you asking me if I’d recommend this product or service? I never talk to people about this topic. And there’s another group, too, who will often say, why would I recommend this to my friends? I know it’s not something that they’d be interested in. In other words,
to a not insignificant portion of the people completing the survey, the very question that Net Promoter Score is based upon doesn’t make any sense. That’s something we ought to take seriously because a metric is only useful if it’s producing information that’s honest. And if we’re asking people to assign a number to a question that they don’t really care about or understand, and then we use that number to summarize their feelings, we’re not really listening to what they have to say. We’re just forcing them to pick a point.
above one of three funnels under which they’re going to choose to be filtered, whether they would choose that funnel itself or not. So let’s go back to my restaurant example for just a moment. My reluctance to recommend restaurants to other people is mostly affected by three issues. Number one, I think restaurants are way too expensive. Number two, I get anxious about the dining experience. And number three, I’m a health conscious vegetarian and I know that my preferences are very different from most other people’s.
None of those issues have anything to do with how personally loyal I am to a restaurant or how likely I am to dine with them again. In fact, those three issues are all what we call qualifiers. They’re situations where my normal behavior might be changed by the context of a situation. And there are other qualifiers besides those that might also impact my recommendations. I am not, for example, going to recommend a multi-course meal prepared by a famous chef to a couple who has to bring their four-year-old along.
I’m not going to recommend a place that’s good for a romantic dinner to someone seeking a business lunch. I am not going to recommend just any barbecue joint to a person whose diet prohibits eating pork. And I’m not going to recommend a salad buffet to someone who says they’ll only eat green things that are candy coated.
Let’s think about my three primary qualifiers for a moment. First of all, I say I have a hangup about how much restaurants cost, but you know, if it’s my anniversary or my wife’s birthday or if we have company visiting from out of town or we’re on vacation ourselves, that qualifier might change a little bit. Likewise, I may consider that context when I’m making a recommendation to someone else. You know, if you’re looking for something really special, you might want to go here, I’ll say.
my likelihood to recommend increases not because of my loyalty, but because that seems like the right choice for a recommendation in this particular circumstance. My second qualifier is about my anxiety at waiting on servers to understand my timetable. And this one’s a big deal to me because some of the worst experiences I’ve had at restaurants have either been being rushed by servers eager to turn over tables or…
sitting at my table for what seems like forever waiting for the server to complete the next step of their service. The problem is that I don’t have any control over the quality of the service I’ll receive at a restaurant. I have to instead rely on that restaurant’s standards. These may be well managed, but they’re more often left up to the sole discretion of my server. So I’m going to be very averse to recommending restaurants in whom I have little faith in the consistency of their service.
particularly if I’m hoping the person receiving my recommendation will come back to me with a glowing review to show appreciation for my advice. And if I recommend a restaurant with high standards, I’m probably going to also be conscious about the appropriateness of that setting for the person I’m recommending it to. And then finally, there’s my own diet and preferences. This plays a huge role in what I’m recommending to others because it limits my own experience. I take it as a given that few people want vegetarian cuisine, but
One other food I simply don’t care for is eggs, and so I’m rarely going to recommend a place that specializes in omelets or frittatas, despite the fact that it might be the absolutely perfect choice for that other person. The one thing I do love is spicy food, and I’m often excited to go to restaurants featuring adventurous cuisine if I know something is spicy and vegetarian can be found on the menu. Many people, however, have a low tolerance for the level of heat that I insist upon in my dishes and
I’m going to consider that when I recommend anything for fear that I might turn them off to my restaurant recommendations altogether. So let’s put this all together. Here in St. Louis, one of my favorite restaurants is the Southwest Diner. They serve New Mexican food, which is nice and spicy, and they also have vegetarian options that are reasonably priced. What’s more, my entire family loves to eat there. It all falls in my sweet spot for a restaurant. Give me a Net Promoter Score Questionnaire and the Southwest Diner gets a 10.
And no, they didn’t pay me to say that. I really do love to eat there. But guess why I still might not recommend them? Well, they get really crowded when they’re open, and they’re only open for breakfast and lunch. Those two things mean that they’re not a good fit for everyone. So my Net Promoter Score means nothing if someone else’s qualifiers are going to impact my recommendation. Even worse, you know what I would recommend to someone looking for breakfast food for dinner?
something less exciting like Denny’s or Cracker Barrel, both places that I would give a seven or eight on my own personal Net Promoter score, which I know are broadly acceptable to most people. Maybe if I knew a little bit more about the person, I’d recommend the Courtesy Diner or Uncle Bill’s Pancake House, but I probably wouldn’t recommend those places unless I knew those recommendations would be up their alley. And that is a big problem. But there’s one more.
Research has shown that many of the brands people habitually use aren’t necessarily their favorites. But they’re the ones that they already deem good enough because they know them and they’ve used them. These repeat customers may not express much vocal enthusiasm, but they’re definitely loyal. In many situations, customer loyalty is often less about sentiment than it is about habit. But there’s a catch. Repeat customers tend to be focused on low-priced, routine purchases where they don’t have to think very much.
These are known as low involvement decisions. In these situations, repeat customers will overpay a little bit for a preferred good or service, but not a lot.
Where loyalty impacts what people are willing to spend is in situations where people are spending larger amounts of money or where their purchases are more discretionary, like a treat or a big ticket item or a luxury purchase. These are known as high involvement situations and brand loyalty here can be worth tens or hundreds or even thousands of dollars per customer, depending on the product category. But these are things that aren’t routine.
and that aren’t boring everyday transactions. They tend to be things like travel or car rentals or luxury goods or leisure time activities where people tend to seek advice from others because of all of the unknowns. There are situations where any information is valuable, and that’s just not most purchase decisions. So my recommendation is that we start looking at NPS as the terrible metric it is, and we instead ask two questions after someone has a service encounter. The first is,
Based on your experience today, would you consider coming back with a very simple yes, no, or maybe as choices? And the second is, what can we do better next time? An open-ended question designed to catch anything that person wants to share. And that’s it. That’s the information you really need to know to be successful. Well, I’m Sean in St. Louis, and this has been the Marketing Gateway. See you next time.
Today’s plug is over-tipping for breakfast. One of my many jobs was working at a diner as a server, and I was shocked when I first started to learn that I would only receive a small paycheck because most of my wage was expected to come from tips.
So here’s the thing, tipping is generally done on a percentage scale. Most people tip 10 to 20 % of the total cost of their meal. So for every $10 spent, a server can expect to bring home a buck or two before taxes. But guess what meals tend to be the lowest in price? Breakfast. It’s often at least $5 to $10 cheaper per person for a breakfast meal at a sit down restaurant versus lunch or dinner. And that’s of course not including additional costs for those later meals like alcohol or dessert.
So when a friend of mine many years ago told me he makes a habit of over tipping at breakfast, I decided to adopt that idea as well. I generally do 25 to 30%, which might seem a bit high, but it helps to offset the money those folks are missing out on. And it’s not a lot of extra money. A 30 % tip on a $50 ticket is just $5 more than the conventional 20%. But I rarely have a breakfast server who isn’t working hard enough to deserve it. So next time you’re having breakfast, dining out, think about bumping that tip up a little bit.
It’s a great habit to live by.
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