Relative NPS, Not Absolute NPS

Definition

Net Promoter Score only becomes a strategic signal when compared against direct competitors in the same carefully defined market — not against a universal "good score" threshold, and not across countries or business lines with different cultural scoring norms. What predicts growth is whether a business leads, trails, or ties its immediate rivals.

In the Book

Chapter 3 uses Royal Philips Electronics, under CEO Gerard Kleisterlee, as the central case: chief marketing officer Geert van Kuyck chose NPS over each division's homegrown satisfaction metric specifically because none of the existing systems linked to financial performance, while NPS did. Philips ran double-blind benchmark surveys against named competitors for each defined business (e.g., "shavers in China") and found that businesses in outright NPS leadership grew 8 percentage points faster than competitors on average, while businesses trailing all competitors grew 5 points slower; in Philips's U.S. healthcare imaging business, relative NPS explained 90% of the swing in market share against competitors. Allianz ran the same analysis with similar results, and both companies built strategic targets — and, at Philips, executive bonuses — around relative NPS leadership rather than an absolute score. The book also flags the trap of comparing absolute scores across countries: customers in the Netherlands and Japan rarely give a ten, while tens are common in Latin America, so the only valid comparison is against local competitors facing the same cultural baseline.

Why It Matters

It corrects the natural instinct to treat any metric as meaningful in isolation — "our NPS is 42" tells you almost nothing without knowing what your closest substitute scores. The insight generalizes to any performance measure subject to context-dependent baselines (grading curves, regional pricing, cultural response styles): the fix is never to normalize the number itself but to fix the comparison set, benchmarking like-for-like rivals rather than chasing an arbitrary universal target.