The finance industry’s dirty little secret: what the Net Promoter Score isn’t telling you
Corporate marketers and insights professionals in the financial services sector are moving rapidly away from opinion surveys to behavioural data in their drive to better understand customers and prospects, and to predict future behaviour. This trend is based on the increasing availability of “big data”, particularly digital behaviour data, as well as the recognition that opinion surveys can be unreliable in predicting future behaviour. Think 2016 presidential election.
Yet there’s one big exception to this trend: the popular Net Promoter Score (NPS) which is used to measure customers’ intention to recommend a brand in the future. It’s a bit like asking people to predict their voting intentions, except for the fact that there is no firm, predictable Election Day when they will be asked for that recommendation, nor any sense of civic duty to motivate them to express their opinion.
The NPS is based on a simple question that asks customers how likely they would be to recommend a given brand in the future, on a scale from zero to ten. The people who answer with a nine or a ten are labelled as “promoters”. The score is based on subtracting the percent who answered zero to six, or the “detractors”, from the percent who are promoters.
Read the full Banking Technology article, here.
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