Take a brand away and people will find a replacement. Take a Lovemark away and people will protest its absence.
Kevin Roberts, Saatchi & Saatchi.
I have been following the methodology for raising brands to Lovemark status since I first read The Future Beyond Brands in 2006 believing, like Roberts, that emotional connections and inspirational individuals can change the world.
More recently, Fred Reichheld’s The Loyalty Effect, first published in 1996, and his later 2011 work The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World also attracted my attention.
To create a community who believe that the purpose of companies and other organisations is to enrich lives they touch and create relationships worthy of loyalty, and who think that an organisation’s best chance for long life prosperity and greatness requires measuring performance on this dimension, just as carefully as it measures profits.
The key here is ‘performance measurement’. How do you measure emotion and sentiment? Enter the arena – Net Promoter Score. In my experience say these three simple words and there are only two responses: The first: “It’s just another buzz word.” The second: “I’ve never heard of it.” However, the market awareness driven by Satmetrix and Bain & Company – along with some of the world’s major brands now using it –seems to have endowed it with some credibility.
Who Utilises Net Promoter Scores?
As we can see from Google Trends, Net Promoter Score is popular in the UK, second to Australia. If we disregard the purists who cite numerous shortcomings to the model and view it as a simple way of informing us how we are doing as a business, then it is at least one stable measurement of our progress. And we would be able to compare ourselves with some hefty brands:
Apple, Google, Microsoft, Qantas, Porche, Virgin, Hertz, eBay, John Lewis, Zappos, American Express, Deutche Post World, Centrica, Lego, Procter & Gamble, Johnson & Johnson, KPMG, Siemens, Sony, BBC, Vodafone, Thomson Reuters
are just a handful of organisations who use Net Promoter; there are hundreds more.
So How Does It Work?
The Net Promoter Score [NPS] is an index ranging from -100 to 100 that measures the willingness of consumers to recommend a company’s products or services to others. It is used as a proxy for gauging a consumer’s overall satisfaction with a company’s product or service, and the consumer’s loyalty to the brand. (The consumer is the customer, employee, or respondent to an NPS survey.)
The primary purpose of the NPS methodology is to evaluate consumer loyalty to a brand or company, not to evaluate their satisfaction with a particular product or transaction. The ability to measure consumer loyalty is a more effective methodology to determine the likelihood that they will buy again, become a brand ambassador and resist market pressure to defect to a competitor.
The NPS is based on a direct question:
How likely is it that you would recommend our company/product/service to a friend or colleague?
The scoring for this answer is most often based on a 0 to 10 scale. Based on their rating, consumers are then classified in three categories: Detractors, Passives and Promoters.
Detractors respond with a score of 0 to 6. It is unlikely they would purchase from the company again and could potentially damage the company’s reputation through negative word of mouth.
An NPS that is positive (higher than zero) is classed as good; an NPS of +50 is excellent. Promoters are those who respond with a score of 9 or 10 and are considered loyal enthusiasts. They love the company’s products and services. They are the repeat buyers, are enthusiastic evangelists who recommend the company’s products and services to other potential consumers.
NPS scores of 7 and 8 are passives and only count towards the total number of respondents, and do not directly affect the formula. They are ‘somewhat’ satisfied, but fickle as a result of the experience and could switch to a competitor’s offering given the opportunity. However, the probability of them spreading negative word-of-mouth is unlikely, but simultaneously they are not enthusiastic enough about your products or services to actually promote them either.
Net Promoter Score Calculation
Your NPS is calculated by subtracting the percentage of consumers who are Detractors from the percentage of consumers who are Promoters.
The popularity and widespread use of the Net Promoter Score is down to its simplicity. Benchmarking your performance is the second most fundamental aspect of Net Promoter success. To understand your Net Promoter Score, you must compare that score within your industry and against direct and indirect competitors. Companies with scores higher than their competitive set grow faster and are more successful.
A company’s NPS not only acts as an easy tool with which to motivate employees to improve and to provide the best customer experience possible, but it is a good gauge of how you are doing compared to your competitors who also use NPS. Either a congratulatory pat on the back that you have a healthy business, or early warning system to steer it back in the right direction!
The Future Of Consumer Experience Forrester’s Customer Index shows that:
Great customer experiences create and sustain customer loyalty.
Customer-centric companies gained 43% in performance (2014) compared to a 33.9% decrease for companies who neglected customer experience.
To quote my colleague, IT performance expert Rich Torr, when I asked his opinion of Net Promoter:
We want consumers to not only come back (Frequency, Yield), but tell their friends and family what a great experience they had with us (Reach).
The real power of Net Promoter is the simplicity of how it can drive strategy execution by changing behaviour at the coal face!
In 2015, companies will need to continue to recognise that a better consumer experience improves consumer satisfaction, increases loyalty and, as a result, improves retention.
Bain & Company
The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World
Emotional Branding – Marc Gobé
The Loyalty Effect – Fred Reichheld
The Future Beyond Brands – Kevin Roberts
Introducing Forrester’s Next-Generation Customer Experience Index
The Customer Experience Maturity Playbook For 2015
JobsTheWord used Net Promoter to analyse responses from over 360 candidates to understand the impact slow or no feedback can have on your brand. Full results are included in the latest JTW White Paper: