Net Promoter Score and Your Brand Reputation
by Clive Hickman, European Insight Manager at SmartWorld
Over the past few years there are two popular business themes that have accounted for many articles, blogs, presentations and even enough books to fill a shelf or two. However they never appear to be mentioned in the same article, let alone discussed together. Yet these two phenomena are interrelated and need to be considered at least side by side as two facets of the same thing.
The first is 'Word of Mouth' a phenomena that has always existed. Since man gained the power of speech he has told stories of his experiences and expressed his opinions. After all, that is exactly how reputations are built.
|However, 'Word of Mouth', or WoM as it is commonly called, has come to real prominence more recently as social media has rocketed into everyone's life (or at least into their vocabulary). Its current status is dominating Marketing and Media teams focus and is causing Brand Managers to have sleepless nights.||
|One or two unfortunate tweets about poor customer experience that get endlessly re-tweeted, or a YouTube video that goes viral, is all it takes for your brand, company and career to go down like the Titanic. In business, reputations are everything, especially today.|
For example, Nielsen's latest Global Trust in Advertising report, which surveyed more than 28,000 Internet respondents in 56 countries, shows that 92% of consumers around the world say they trust earned media, such as recommendations from friends and family, above all other forms of advertising (an increase of 18% since 2007).
Online consumer reviews are the second most trusted source of brand information and messaging, with 70% of global consumers surveyed online indicating they trust messages on this platform (an increase of 15% in four years).
So, not surprisingly, WoM is attracting millions to be spent on social media, marketing and analytics.
Much of this is because a growing number of studies over the past few years have highlighted the importance and value of WoM. Despite the money invested in the more traditional 'above the line' advertising such as TV, cinema, and print, it is repeatedly WoM that is found to be the most important factor when people are asked what really influences their purchasing decisions.
The second business theme is 'Net Promoter Score' (commonly known as NPS) which was brought to us by Fred Reichheld and Bain & Co back in 2006. NPS in its essence is an attempt to create a single metric that can be used to help measure the relative health of a business.
It is based upon the single question:
'How likely is it that you would recommend [this outlet/business] to a friend or colleague?'
With responses collected by a rating scale of:
10 'Extremely Likely' to ... 0 'Not at all Likely'
As with all business models there are those who believe in NPS and those who don't. Much of the criticism tends to be around the naiveté of the suggestion that just one metric can really cover customer satisfaction and help drive your business forward. However, it is arguable that it's the simplicity that is the core strength of NPS.
If more people are saying good things about you than the number of people saying negative things, then you are undoubtedly better off than a competitor who has more 'critics' than 'supporters'. So, in some respects, NPS is a measurement designed to monitor brand 'Reputation' reflecting the 'word on the street'.
The criticism of NPS is the way it is calculated with those scoring 9 or 10 being considered 'Promoters' while those scoring 0-6 are said to be 'Detractors'. To many this seems to be unbalanced, indeed, almost a way of 'fixing' the results to meet the academic arguments. But let's be honest and just think about our own experiences for a moment. If we get a bad customer experience (or product) that disappoints us we will almost certainly tell someone, in the office, at home or over a beer. If we get a reasonable level of service then we probably won't tell anyone because 'good' is what we all expect. The service, experience, or product has to be something special before we start talking about it, something a little above and beyond expectation, ie a nine or ten, but not a seven or eight! A seven or eight may be acceptable but not really something that you would talk about or promote. So the calculation simply attempts to reflect the reality of those likely to be saying 'Good' or 'Bad' things about the business, and the net effect of this. Put simply, is your reputation in credit or debit?
To my mind the NPS calculation also reflects the harsh reality that bad news gets shouted louder and travels faster and further than good news ever does. The damage to your reputation can cost millions.
NPS is a very simple and easy to use metric that helps you keep your business focused on ensuring that your customers have the best possible customer experience and thus have the highest propensity to recommend. The sole objective is to ensure your business has a good and stable reputation, amongst both the general public and those hard earned existing customers.
This way your growing reputation through WoM can assist in reducing the churn in valuable customers and help you attract new ones. In hard times it can become a more credible and more effective method for the promotion of your business than TV or any other traditional media.
Perhaps we should start to think of NPS as something that can not only help you track and drive improvements in your customer experience, but also enhance your reputation 'on the street'. NPS then becomes a means by which you can simultaneously help stimulate the power of WoM to promote your business.