Net Promoter Score (NPS) is often dismissed as a vanity metric. The data proves it is a leading indicator of value. In *Net Promoter 3.0*, Fred Reichheld and Bain & Company analyzed the "Earned Growth Rate"—revenue growth generated by returning customers and their referrals. The study found that companies with the highest NPS in their industry grew at more than 2x the rate of their competitors. Furthermore, these firms consistently delivered higher Total Shareholder Returns (TSR) over 10-year periods, proving that customer love is a compounding financial asset.
https://www.bain.com/insights/net-promoter-3-0/We distinguish between "Bought Growth" and "Earned Growth." Bought Growth comes from paid ads and discounts; it destroys margins. Earned Growth comes from happy customers referring others; it expands margins. We scrutinize NPS trends to determine the *quality* of a company's revenue. High NPS signals a low Cost of Customer Acquisition (CAC), which is the most durable form of operating leverage.
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