Top

Net Promoter Score–the Ultimate Question? 

John Todor | Sep 4, 2007 1,729 views 10 Comments

Share on LinkedIn

There is a heated debate as to whether the question underlying the Net Promoter Score is the ultimate question. As an ex-academic, I find the energy and focus to be, well, a little too academic.
The argument doesn’t seem to be whether it predicts future growth. It seems to be whether it predicts it better than other measures like the ASCI.
I think the real question and debate should focus on what do you do if your Net Promoter Score or ASCI score are low. Sure, there should be continued effort to refine measurement tools. But to refine these tools we need to get at the variables that lead to customer commitment and advocacy.
In my opinion, the advocacy that is measured by the Net Promoter score has some predictive power because it reflects the level of customer engagement. By customer engagement, I am talking about the degree to which they are emotionally or mentally involved in discovering or pursuing new meaning. When customers are engaged in this way, they become passionate and make great advocates. Why? Because it matters to them and their recommendations matter to others like them because similarly, the experience matter to them.
Contrast this form of engagement with an emotionally disengaged customers, one who it indifferent—any product will do. They buy to fulfill an existing and well defined need or utility. Their indifference makes it hard for them to see meaningful difference between brands.
Indifference or disengagement makes it hard to become an effective advocate. At best, the experience meets utility expectation and the customer is neutral, at worst, the experience is notably bad.
Since the same customer is capable of being indifferent or engaged—
The Ultimate question in my mind is: which buying mindset is your company courting—the indifferent or engaged one?

Print Friendly, PDF & Email


Recent Editor's Picks:


Categories: BlogCustomer ExperienceCustomer LoyaltyCustomer StrategyDigital MarketingEditor's PickPerformance MetricsSocial Business

1,729 views

10 Responses to Net Promoter Score–the Ultimate Question?

  1. Paula Thornton September 17, 2007 at 10:29 am (3 comments) #

    I’m curious as to why you’d suggest that the score has any actionable relevance anyway (that a high score might not suggest a need for action)?

  2. Jodie Monger September 18, 2007 at 7:54 am (9 comments) #

    How you do feel about the NetPromoter score ignoring the group of indifferent consumers? Everyone seeks Promoters (P) and avoids Detractors (D). P-D=NPS

    The indifferent customers are not in the calculation. Do you think this group has some value as it would be easier to collectively change perception a little bit to move them into the Promoter category?

    Jodie Monger, Ph.D.

  3. Michael Lowenstein September 20, 2007 at 5:00 pm (18 comments) #

    Debates notwithstanding, the vast majority of contra response to NPS is strictly methodological. To be specific, one of the key findings made by customer research professionals, in highly focused studies, is that they have seen no consistent correlation between NPS score changes and real customer loyalty behavior. There’s overriding agreement that changes in recommendation level are an outcome of greater or lesser loyalty behavior, not the desired behavior itself. So, customer loyalty research methodologists question not just the concept associated with NPS, but its level of sustained actionability for clients.

    Michael W. Lowenstein, PhD CMC
    Vice President and Senior Consultant
    Harris Interactive Loyalty

  4. Graham Hill September 21, 2007 at 9:38 am (992 comments) #

    Jodie

    Your response to John’s blog is an interesting one. It goes to the heart of Customer Portfolio Management; the idea that a business has a portfolio of customers segments with different values and different associated risks, rather like a financial portfolio of stocks & shares.

    A business should look to manage the portfolio not only at the individual segment level, but also across the portfolio as a whole. Contrary to popular opinion, a customer of high value but high risk (they bought a single big-ticket item from you but only because it was in the sales) may not be any more valuable to you than one with low value but low risk (the senior citizen who has bought your budget line regularly for the last 20 years).

    Research in supermarkets has shown that it may be easier and more profitable to try and get medium-value, promiscuously loyal shoppers to add a few complementary items to their basket, than to get high value, highly-loyal shoppers who are already giving you 90% of their shop to add more items. Without the benefits of a portfolio view of customers, most companies still focus on the maxxed-out high value customers irrespective of how much more value there is to be squeezed out of them.

    And it goes without saying that customers use a portfolio of businesses to provide them with products & services too. This is the other side of the portfolio management coin.

    It remains to be seen how commitment-driven measures like Reicheld’s NPS or Rice & Hofmeier’s superior Conversion Model can be used to inform customer portfolio management approaches to business.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  5. Michael Lowenstein September 21, 2007 at 6:09 pm (18 comments) #

    Graham –

    The Conversion Model was ‘contemporary’ with respect to understanding customer behavior drivers for quite a while; however, it did not take into account the leveraging power of informal, voluntary, active peer-to-peer customer communication. As noted earlier, a customer’s predisposition to recommend is one element of advocacy (the active expression of commitment) behavior – and much more an outcome than the behavior itself. Also, as many customer researchers have noted, there are multiple challenges associated with endeavoring to correlate recommendation level to behavior metrics, such as wallet share.

    Michael Lowenstein, PhD CMC
    Vice President and Senior Consultant
    Harris Interactive Loyalty

  6. Graham Hill September 22, 2007 at 4:48 am (992 comments) #

    Michael

    An erudite correction. Thank you.

    I note that TNS (who bought out the rights to the Conversion Model) are now using agent-based modelling to simulate the power of customer advocacy. I am trying to get some more information about it from TNS, although they are not very responsive.

    I agree with you entirely about the complicated and complex way in which customer perceptions influence their attitudes, intentions and behaviours, and ultimately their profitability. In my continuous review of academic papers on all things to do with customer-business, I see literally hundreds of papers on the subject, many of them contradictory.

    I am torn between seeing Reicheld’s NPS as a valuable awareness raiser for the power of customer advocacy, or as a damaging dumming-down of the measurement of customer advocacy in the pursuit of an unatainable measurement silver bullet. This is going to be work-in-progress for a long-time.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  7. Bob Thompson September 29, 2007 at 12:50 pm (875 comments) #

    [quote=John I. Todor]
    The argument doesn’t seem to be whether it predicts future growth. It seems to be whether it predicts it better than other measures like the ASCI.
    [/quote]

    Yes, ACSI vs. NPS is one point of debate. A recent study found that ACSI and NPS offer similar predictive capability (for revenue growth) using Reichheld’s own data.

    And yes, as John points out, the focus should be on what to do when the scores are low.

    But, what’s the point of focusing on a low score, if the score itself is wrong? That’s like navigating a plane with faulty instruments.

    NPS has been promoted as “the one number you need to grow.” Having spent the last couple of months researching loyalty metrics, I couldn’t find any solid evidence that NPS is the “best” predictor, or necessarily even a valid predictor of growth for all companies.

    Furthermore, revenue growth is not the only type of business performance that matters. What about profit, market share, or stock price?

    My conclusion: there is no shortcut to figuring out the loyalty metric that’s right for your business. See my article: Find the “Ultimate” Loyalty Metric To Grow Your Business.

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  8. Bob Kaden October 1, 2007 at 3:36 pm (22 comments) #

    What’s the point of having one measure that is high or low if you don’t know the relevant factors that will push the needle. While customer advocacy may be an interesting and worthwhile market research metric, what’s the point of having that singular measure if you don’t know the actions you should take to increase your score?

    Say you have an advocacy score of 6.5 on a 10.0 pt scale. Say you are third from the top with two competitors that have higher scores and two that have lower scores? What do you do with that? Will say increasing customer service, lowering prices, increasing product variety or increasing the quality of products you sell be most influential in moving that score to 7.5, 8.5 or higher. The point is having one score might give you a general idea of where you sit vis a vis competition, it doesn’t give you a clue as to where to focus your efforts to get better.

    One score may be a harbinger to your position in the marketplace but without further metrics that explain the factors that are most important
    to increasing your business, that number of mostly impotent.

  9. Michael Lowenstein October 2, 2007 at 4:40 pm (18 comments) #

    At the risk of over-stirring the pot on this very heated subject, I’d just like to (rather briefly) address Robert Kaden’s point regarding how he defines advocacy. Advocacy is NOT a single number. Neither is customer commitment. We identify advocacy as the active expression of high behavioral commitment to a product or service brand. Advocacy, for us, represents a proportion of customers who exhibit an array of top-level attitudes and predispositions to behave, which leads to optimized customer loyalty (share of customer, likelihood to recommend, willingness to pay more, frequency of visits, narrowed consideration set, strong favorability, positive and frequent peer-to-peer communication, etc., etc., etc.). We arrive at our determination of the proportion of a company’s customer base who are true advocates through a proprietary research framework.

    Michael Lowenstein, PhD CMC
    Vice President and Senior Consultant
    Harris Interactive Loyalty

  10. Bob Kaden October 20, 2007 at 8:52 am (22 comments) #

    If advocacy is meansured by most as a combination of measures and as suggested in Michael Lowenstein’s comments above, I fully concur. This discussion, though, seems to have started around a single score which is being referred to as the Net Promotor Score. To my mind that suggests that only one score is needed to properly measure customer loyalty…be that perhaps an aggregate score from a combination of questions.

    I simply cannot see how effective research will ever be a one trick pony. It will always be necessary to gather data to explain the whats and whys that make up whatever magic score is put forth…if in fact that number can ever be proved to be the best advocacy benchmark

    To me it would be valuable for Lowenstein to elaborate on his company’s approach to meansuring loyalty and explaining the type of data delivered to clients that will explain how loyalty can be improved.

Add Your Comment (All comments are reviewed by moderator, no spam permitted!)