Purpose: Although the Net Promoter Score (NPS) index is simple, NPS has weaknesses that make NPS's interpretation misleading. The main criticism is that identical index values can correspond to different levels of customer loyalty. This makes difficult to determine whether the company is improving/deteriorating in two different years. The authors describe the application of statistical tools to establish whether identical values may/may not be considered similar under statistical hypotheses. Design/methodology/approach: Equal NPSs with a “similar” component composition should have a two-way table satisfying marginal homogeneity hypothesis. The authors compare the marginals using a cumulative marginal logit model that assumes a proportional odds structure: the model has the same effect for each logit. Marginal homogeneity corresponds to null effect. If the marginal homogeneity hypothesis is rejected, the cumulative odds ratio becomes a tool for measuring the proportionality between the odds. Findings: The authors propose an algorithm that helps managers in their decision-making process. The authors' methodology provides a statistical tool to recognize customer base compositions. The authors suggest a statistical test of the marginal distribution homogeneity of the table representing the index compositions at two times. Through the calculation of cumulative odds ratios, the authors discriminate against the hypothesis of equality of the NPS. Originality/value: The authors' contribution provides a statistical alternative that can be easily implemented by business operators to fill the known shortcomings of the index in the customer satisfaction's context. This paper confirms that although a single number summarizes and communicates a complex situation very quickly, the number is ambiguous and unreliable if not accompanied by other tools.

Cazzaro, M., Chiodini, P. (2023). Statistical validation of critical aspects of the Net Promoter Score. THE TQM JOURNAL, 35(9), 191-209 [10.1108/TQM-05-2022-0170].

Statistical validation of critical aspects of the Net Promoter Score

Cazzaro M.
Primo
;
Chiodini P. M.
Secondo
2023

Abstract

Purpose: Although the Net Promoter Score (NPS) index is simple, NPS has weaknesses that make NPS's interpretation misleading. The main criticism is that identical index values can correspond to different levels of customer loyalty. This makes difficult to determine whether the company is improving/deteriorating in two different years. The authors describe the application of statistical tools to establish whether identical values may/may not be considered similar under statistical hypotheses. Design/methodology/approach: Equal NPSs with a “similar” component composition should have a two-way table satisfying marginal homogeneity hypothesis. The authors compare the marginals using a cumulative marginal logit model that assumes a proportional odds structure: the model has the same effect for each logit. Marginal homogeneity corresponds to null effect. If the marginal homogeneity hypothesis is rejected, the cumulative odds ratio becomes a tool for measuring the proportionality between the odds. Findings: The authors propose an algorithm that helps managers in their decision-making process. The authors' methodology provides a statistical tool to recognize customer base compositions. The authors suggest a statistical test of the marginal distribution homogeneity of the table representing the index compositions at two times. Through the calculation of cumulative odds ratios, the authors discriminate against the hypothesis of equality of the NPS. Originality/value: The authors' contribution provides a statistical alternative that can be easily implemented by business operators to fill the known shortcomings of the index in the customer satisfaction's context. This paper confirms that although a single number summarizes and communicates a complex situation very quickly, the number is ambiguous and unreliable if not accompanied by other tools.
Articolo in rivista - Articolo scientifico
Cumulative logit model; Cumulative odds ratio; Customer satisfaction; Marginal homogeneity; NPS;
English
25-apr-2023
2023
35
9
191
209
open
Cazzaro, M., Chiodini, P. (2023). Statistical validation of critical aspects of the Net Promoter Score. THE TQM JOURNAL, 35(9), 191-209 [10.1108/TQM-05-2022-0170].
File in questo prodotto:
File Dimensione Formato  
10281-416300_VoR.pdf

accesso aperto

Tipologia di allegato: Publisher’s Version (Version of Record, VoR)
Licenza: Creative Commons
Dimensione 1.75 MB
Formato Adobe PDF
1.75 MB Adobe PDF Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/416300
Citazioni
  • Scopus 3
  • ???jsp.display-item.citation.isi??? 2
Social impact