CEOs’ favorite metric could be described as a ‘religion’
We write a lot about ‘big data’ at Fortune these days. But in the C-suite, there is a small piece of data that reigns supreme. It’s called Net Promoter Score—NPS—and at Fortune 500 companies, it is all the rage. “One could use the word ‘religion,’” IBM’s Michelle Peluso told Fortune’s Geoffrey Colvin.
I experienced the religious fervor myself about a year ago, when I was moderating a conversation on how to build a “data-driven, consumer-centric” company among a group of very successful Fortune 500 CEOs. We went around the room, asking each what data they paid most attention to. And one after another—CEOs from tech, airlines, retail, diversified manufacturing, you name it—repeated like a mantra: “NPS.”
The measure, invented 17 years ago by a Bain consultant, is deceptively simple. It is based on a single survey question.
1. On a scale of zero to 10, how likely is it that you would recommend XX to a friend or colleague.
The score is calculated by taking the percentage of people who answered 9 or 10 and subtracting the percentage who answered 6 or lower. The “score” can range from -100 to 100.
The beauty of NPS is its simplicity. The problem comes in its ability to be manipulated, abused and misinterpreted. Colvin catalogues the downsides with dexterity in his story, which appears in the June issue of our magazine but is available this morning here. It is a must read. (Warning, you need to be a subscriber to access it. Maybe today is the day to sign up!)
By the way, I’m happy to report that CEO Daily has one of the highest NPS scores of any Fortune product. (And please continue to give me high ratings, so I can feed my family.)
More news below.
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This edition of CEO Daily was edited by Katherine Dunn.