[leroy_masochist]

I work as a consultant to PE companies as a source of cash income while doing other entrepreneurial stuff. Much of this work involves pre-deal commercial diligence and/or post-deal portfolio company strategy review. In the context of this type of work, which often involves formal customer / partner interviews, I think NPS is actually a very useful metric.

For sure, NPS has its limitations. Broadly speaking, I think it's a bad metric for something like asking random strangers how much they like their iPhone. But if you're trying to figure out the strength of, for example, an ERP software company's customer franchise, NPS is really useful, for two reasons:

1. When you're talking to people who know a product well, and you're talking to them in a professional context (e.g., a scheduled 15-minute interview that is part of their work day), they tend to be thoughtful about the 0-10 rating.

2. The follow-up question traditionally used in NPS surveys, "What could [company] do to make that score a 10 instead of [number]?" almost never fails to provide valuable feedback. I believe this is because of the way the question is set up: first the respondent is asked to provide a broad indicator of their customer satisfaction, and then, with that number identified, they're asked for details as to why they chose that number. I have no background in psychology but I think it's pretty intuitive that this question-flow focuses the mind and prompts people to provide insightful constructive recommendations.

[bunderbunder]

To your 2nd point, there is some danger there with big ticket products like ERP software.

Asking "What can we do to make that score a 10" of existing customers is fine as long as you've got it balanced with some other work to help you gauge the thinking of the portions of the market that aren't already sending you a 6 figure annual check. But I bet many companies are lulled into a false sense of security by numerous answers to that sort of question that just request minor improvements to existing functionality. Probably frequently given by people who answered 9 to "would you recommend?" and then migrated to some hip new cloud offering a year later.

[leroy_masochist]

In terms of gaining/maintaining a holistic understanding of a given market and the competitive opportunities within it, I fully agree with your point that understanding the needs of one's existing customers is necessary, but not remotely sufficient.

That broader context is outside the scope of the work I usually do, though -- I'm usually focusing much more specifically on understanding the strength of existing customer franchises.

Certainly, two customers who give 9-out-of-10 scores might have very different levels of satisfaction. Sometimes it's a 9 because "I love the product and the customer service is great but on principle perfection is impossible and I don't give 10s" and sometimes it's a 9 because "the product is pretty good and does everything we need, but our main sales rep is really hard to get ahold of". This is why, in practice, I find that more insight comes out of the "why not 10" questions than the pure NPS number.