Assessing the Nomological Validity of the Net Promoter Index Question (NPI)

Abstract

In his landmark HBR article “The One Number you Need to Grow” and bestselling book “The Ultimate Question”, Reichheld (2003, 2006) proclaims that the Net Promoter Index (NPI) is better than traditional marketing metrics in predicting the performance and growth of a firm. In essence, the NPI measures a customer’s willingness to recommend a firm. Arriving at the NPI involves asking customers about their likelihoods to recommend company x to a friend or colleague. The answers are recorded on a single-item scale from 1 = not at all likely to 10 = extremely likely. Then, the percentage of detractors (respondents giving a score from 0 to 6), are subtracted from the percentage of promoters (respondents giving a score of 9 or 10). The result is the NPI. A number of studies, in part through replication, have challenged the relationship between NPI and growth and its superiority in predicting it (Keiningham, Cooil, Andreaseen, and Aksoy 2007, Keiningham, Aksoy, Cooil, Andreassen, and Williams 2008, Sharp 2008). The present study seeks to further investigate the NPI by beginning to evaluate its performance in a well established nomological network of loyalty related constructs. As such the purpose of this study is to assess the nomological/predictive validity of the NPI question.