#9 Net Promoter Score as a way to measure intangible benefits

PMI defines two categories of benefits that may be realized by an IT Project: tangible and intangible.

Tangible benefits can be measured directly: cost reduction, increased cash flow, time savings, etc. Such benefits are highly valued by project managers as it is easier to justify the spent costs and calculate the project value. Intangible benefits, on the other hand, are hard to measure and they may be not as vivid after the project completion. However, in the long-term, they may be more important for the company’s success.

Customer loyalty is an example of such intangible benefit, and it is especially important in the modern world, where people choose restaurants by the number of 5-star reviews, rate every taxi ride, and are more keen on downloading an app if one of their friends recommended it. Fred Reichheld, the inventor of the Net Promoter Score (NPS) metric, found that “companies that focus on earning the loyalty of customers are taking over the world.” Such companies make higher profits, are able to pay higher salaries, keep employees longer, and invest in the projects which focus on loyalty and treating people right.

According to Wikipedia, NPS is calculated based on the responses to a single question:

How likely is it that you would recommend our company/product/service to a friend or colleague?

The scoring for this answer is most often based on a 0 to 10 scale. Those who rated as 9 or 10 are called “promoters”, those who rated as 6 or lower are “detractors”. Responses of 7 and 8 are labeled as “passives”.

After recording the customer answers, the final result is calculated as the percentage of “promoters” minus the percentage of “detractors”. The end result is a single number on a scale from -100 to +100. According to this article, a score above zero is generally considered good, above 50 is excellent and above 70 is exceptional.

An article in the fortune magazine states that this simple metric is being used by two-thirds of the Fortune 1000 companies. Many of the managers have this number on their dashboards and some check it as the first thing in the morning.

I believe IT projects should also measure loyalty where possible. A new modern IT system may be built according to the specification and may deliver tangible benefits and positive value. However, if it is not user-friendly and has bad user support, it may have a negative impact on employer or customer loyalty, which is far more important in the long run.