Why NPS Fails to Measure Real Loyalty
Net Promoter Score (NPS) was once celebrated as the universal metric for customer loyalty. One simple question—How likely are you to recommend us to a friend?—promised to predict growth, retention, and long-term business success.
But in reality, customers make recommendations for complex reasons that a single number can’t capture. A business can score high on NPS and still fail to grow, or score average and expand rapidly. This article explores why NPS falls short, why companies continue to rely on it, and how the newer “Earned Growth Rate” metric addresses those shortcomings.
When a Simple Gym Survey Becomes a Chore
NPS is built on a deceptively simple idea: ask one question, get one number, measure loyalty.
But in practice, businesses often complicate the process.
Imagine visiting a new, premium gym—great staff, spotless environment, stunning pool. At the end of the visit, a feedback email arrives:
“Based on your experience, how likely are you to recommend us to a friend?”
A reasonable question. But after choosing a 9, the survey doesn’t end. Instead, it unfolds into a long series of rating screens, pages of sub-questions, and detailed prompts about staff responsiveness, cleanliness, and atmosphere.
By the end, it feels less like offering feedback and more like unpaid labor.
This raises the first fundamental issue with NPS:
The simplicity that made it appealing is often lost in execution.
The Real Problem—NPS Doesn’t Predict Growth
Using the gym example:
The facility is outstanding. The staff is friendly. The pool is excellent. The NPS score is high.
However… the location is 35 minutes away by car.
No matter how “recommendable” the gym is, customers may choose a closer option—even if it’s less impressive. The issue has nothing to do with satisfaction and everything to do with convenience.
This illustrates a key flaw:
NPS measures perceived willingness to recommend, not actual customer behavior.
That’s why:
Some high-NPS companies don’t grow.
Some average-NPS companies grow aggressively.
Even Fred Reichheld, the creator of NPS, has acknowledged these limitations. Over time, he moved toward a more reliable metric because NPS was too easy to misinterpret—and too easy to misuse.
Earned Growth Rate — The Metric That Actually Matters
To fix the gaps in NPS, Reichheld introduced Earned Growth Rate (EGR).
Unlike NPS, EGR is tied directly to revenue and customer behavior.
It measures loyalty through actions, not feelings.
Earned Growth is made of two components:
1. Net Revenue Retention (NRR)
This measures how much existing customers spent this year compared to last year.
Example:
Last year: $100M revenue
This year: $120M from the same customers
NRR = 120%
A number above 100% means customers are not only staying—they’re spending more.
2. Earned New Customers (ENC)
These are new customers acquired through:
referrals
word of mouth
organic reputation
It is usually tracked through questions like:
“How did you hear about us?”
Why Earned Growth Works Better
Directly tied to financial performance
Shows which growth is sustainable
Harder to manipulate
Gives clear insight into what drives revenue
Boardroom-friendly: CFOs love it because it’s measurable and credible
In contrast, NPS is easy to “game.”
Internal teams often push for higher scores—even if those scores don’t reflect true business health.
What Companies Need to Rethink About Customer Feedback
NPS is not useless—but it’s incomplete. Companies rely on it because:
It feels simple
It produces a clean number
It’s easy to compare
It looks good on executive dashboards
But without Earned Growth, NPS becomes a vanity metric—one that may paint a flattering picture while hiding underlying problems.
Organizations serious about growth should:
Pair NPS with real behavioral metrics
Analyze customer retention more carefully
Track referrals as a revenue source
Reduce survey friction (stop making customers fill out 20 screens)
The goal of customer experience isn’t just scoring high—it’s understanding what actually drives loyalty.
Conclusion
NPS was a pioneering tool, but business environments have evolved far beyond a single question. Companies now need metrics that reflect real behavior, not theoretical intentions. Earned Growth Rate offers a clearer, more accountable approach that ties customer experience directly to revenue.
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