In May 2019, The Wall Street Journal published a comprehensive article on the use – and misuse –of customer satisfaction programs that heavily rely on a single measure known as the “Net Promoter Score” or NPS*. Titled “The Dubious Management Fad Sweeping Corporate America”, the authors shared a review of 40,000 earnings call transcripts for 688 companies that are or were in the S&P 500 from 2003-2018. Last year (2018) the words “net promoter” or “NPS” were cited more than 150 times in conference calls by 50 S&P 500 companies. That’s four times as many mentions, and three times as many companies, from five years earlier. Last year, “net promoter score” was mentioned in 56 proxy filings. Some companies, including American Express, Best Buy, and Citigroup list NPS as a compensation metric, alongside share price and EPS. So what is really going on here?
Misuse of NPS