The approach was first presented in a Harvard Business Review article titled: The One Number You Need to Grow in December 2003. The author of the article, Fred Reichheld, was well known in the customer loyalty industry and had performed some unique research.
He wanted to find out if one question could be used to predict a customer’s loyalty. So he asked tens of thousands of customers, lots of different questions, and then cross referenced their loyalty using actual purchasing data.
By testing different approaches, empirically, he discovered that NPS was most often the best indicator of customer loyalty.
Until that time organisations had been using “customer satisfaction” or complex calculations of several different variables to try to predict loyalty. In general customer satisfaction was found to be a quite poor predictor of customer loyalty. The other approach, complex calculations, was found to be accurate but difficult to implement and understand.
In identifying the simple approach, Reichheld had identified an easy to use metric that actually predicted customer loyalty.