One Metric to Rule Them All

How likely are you to recommend this blog to family and friends? The question is that simple. Net Promoter Scores have a near ubiquitous status in market research. The simple metric that can be calculated by asking customers how likely they are to could recommend your organisation to a friend or colleague on a scale from 0-10 can be used by almost all types of organisation. It also has the benefit of a proven record of being closely related to business growth and profits.

The score was invented by Fred Reichheld and you calculate it by subtracting ‘detractors’ from ‘promoters’. Promoters are the customers answering 9-10, while detractors are people answering 0-6. Reichheld’s original point of view was that it is the only metric you need. He is right in some ways because the connection to growth keeps marketers on track and helps them not to ask unnecessary questions. However, in order to be able to respond to the results some follow-up is clearly needed.

But how do you follow up if your NPS is -40 or 15 or anything else? As with any metric your success depends on how you respond to results.

Comparison is one route; this could be comparison with previous results or between departments/areas of your organisation or benchmarking against competitors. This requires you to examine qualitatively what the differences in customer experience stem from. You can do this using the information you already have. Ask employees. Ask your customers, what do they state themselves as the causes? This can take you far, but there is a bigger risk that you look for what you think the root causes are and fail to actually find them.

Another route is inferential analyses using a more quantitative approach. Here the clever marketer should be careful not to ask too many questions. Remember that 3-4 minutes are about the longest time people want to spend answering questionnaires. Regression analyses with NPS as the dependent variable or relative impact analyses can be very enlightening and yield results that can open an organisation’s eyes to new perspectives. The risk here is that the results does not engage the organisation as a whole. It is a good idea always to make sure to use market research to create debates and discussions throughout the organisation.

See how an educational organisation uses NPS and read more here (in Danish): http://www.surveyxact.dk/files/SurveyXpert_no__20.pdf

The Greatest Thing Since Sliced Bread – Social Media and Market Intelligence

Marketeers have been quick to praise social media in branding and intelligence efforts. However, it seems that this piece of toast has gone a bit stale - the pay-off is not immediate and efforts often seem half-hearted. A company does not become a social media pioneer by having a facebook group.

Social media offer the marketeer and the intelligence professionals an immediate pipeline to the customer and potential customer. It holds the promise of unseen connections between companies and customers and to tie them closer together in a more relational than transactional relationship. In terms of intelligence creation, social media offer forewarnings of drifting brand value and the opportunity listen in on customer discussions about your organisation/products. It can be quite revealing for a company to google or search itself on facebook. Try to compare if you have fans or hate-groups and also monitor your competition and notice and react to adverse commentaries.

With all of these promising things social media can do for a company, why does it seem that so many companies are fumbling?

Social media are at their core relational. Many companies act in a more transactional way and are not ready to really listen and co-create their brand with their customers. Using social media means giving up strict control with your brand. If you are not ready to do this, you should let customers create social groups around your company themselves – and you just remember to keep an eye on what happens.

Lego is a very good example of how to co-create well. Their Mindstorms concept allows Lego-fans to create their own models and ever so often it inspires Lego designs. Nike has also set up forums for customers to discuss products and make their own designs. However, they fell into the control trap in 2002, when a customer wanted to add the word ‘sweat-shop’ on the back of his trainers. Nike refused and the correspondence between customer and Nike was all over the Internet. This showed that there were limits to co-creation and Nike's brand suffered. The same thing happens if a company tries to control discussions in forums by for instance having employees pose as ‘regular’ customers to review products or answer questions. When you use social media be honest and open and if you open up for co-creation or exchange of opinions, you - as a company - have to be ready for that. Otherwise, your efforts will be perceived an non-authentic and perhaps even insincere, which is worse than not going all-in on social media.

Conflicting Objectives

When you gather information it always serves some purpose. It is a good idea to be aware of the roles the information you gather is intended to play. Otherwise you are at risk of gathering the wrong kind of information or get caught in an inherent conflict between what your information/data is supposed to be able to do.

Paul Simons (2000) writes about performance management and the roles of information. He lists five uses of information.

• Decision making
• Control
• Signaling
• Education and learning
• External communication

Think about it, at least five uses and ownership of these objectives is placed in different departments and with different managers. No wonder that analysts and intelligence staff can get stuck in the middle and sometimes produce information and data that cannot serve all objectives.

If we look at the five uses in turn. Information for decision making is about improving decision processes. It refers to giving managers the information they need to plan and coordinate business objectives. Information as control refers e.g. to the use of information in giving out bonusses. Here informations serves the objective of aligning organisation and individual goals, which is inherently difficult.

In terms of signaling, it is all about the classic phrases; "what gets measured, gets done" or "everyone watches what the boss watches". Information is a powerful tool in making the organisation aware of what is important. However, it comes with the risk of neglecting what does not get measured. It is important for this reason that intelligence activities are constantly reviewed.

Education and learning are about the things that we usually associate with creating insights. Information also serves the role of making employees and managers aware of changes in their environment. Thus, making them able to adapt and change. The last of the five uses is information for External communication. This deals with information's role in communicating with stakeholders. Not only shareholders and others with a direct monetary interest but also customers and potential interest groups.

Looking at all these uses it is no surprise that we can experience conflicts as soon as we start to measure something. But if you keep in mind the five uses and consider what your data is supposed to do, then you can preempt some of the conflict.

A Department of One

A challenge, which I often see at smaller private clients and many public sector clients is the isolation of analyses and measurement in nominal departments.
This creates a feeling of isolation in the staff and often a lack of involvement in results by the rest of the organisation. However, this does not mean that all organisations should have massive intelligence departments. But it means that management has a responsibility of creating focus on the results coming from these departments.

Especially in the public sector isolated intelligence departments risk churning out ritualised evaluations, which has little or no impact in the practice of the wider organisation. This is a pity since there could be massive potential in activating these resources better. But how can this be achieved?

• Planning the communication and actions from intelligence at an early stage. This is one of the elements, which require management focus.
• Networks between organisations with few resources for intelligence staff is a way of adding inspiration and creating a sense of coherence.
• Making the intelligence staff aware (or 're-aware') of their role in the wider setting.
• Re-assess the surveys, evaluations etc. at regular intervals. Are they still what the organisation needs to grow, are they beeing used and if not why?

Even with a department of just one person dedicated to gathering intelligence, market insights can be created. But only if the organisation is geared towards really using the numbers they collect and embed them in the day-to-day practice.

IT and insights - adversaries or best friends?

IT is often seem as the panacea for all information ailments. However, it cannot replace the analysis and market sensing (Day, 1994), which happens through people in an organisation.

IT holds remarkable potential for gathering information. But in my experience it often leads to information overload because the cost of acquiring information has been dropping rapidly. This means that market information for a time has paradoxically stopped being as strategic as it used to be. An organisation need no longer think as hard about what information it needs and what it needs it for. It just collects as much as it can. Hopefully, we will se a move towards a different trend. IT can help there too -synthesizing and condensing information.

In terms of helping create insights, I see great opportunities in network IT, which enable discussions and spreading of information across an organisation. It puts people back into the loop. Basically, people need to meet and talk, that is when the magic happens. The sparks that form insights, the patterns, ideas and breakthroughs an IT system can never provide. So are insights and IT best friends forever? You can have market insights without IT, but the information beneath the insight is more easily spread and gathered using smart IT.

Communicate to Create Employee Interest

Employee interest and commitment is central to creating a market-oriented organisation. Internal marketing plays a fundamental role in enabling this interest. Actually, organisations should run campaigns directed at employees just as they do to customers. The customer experience and business success depend on it.

This can be especially challenging in technical cultures, where 'soft' concepts from marketing just does not ressonate well. For Bang & Olufsen, I suggested that they use their own technology to communicate being market-oriented to employees. B&O's 'Beolab 5' loud speakers have the special quality that they emit a sound and calculate their position in a room and then send out sound that is optimally calibrated to that room. Being market oriented is not that far from this analogy. You need to intelligently collect information, process it and determine what to use to make better 'music'.

But this is certainly not a one size fits all solution. Marketeers and managers should carefully consider the culture and central elements not only in the organisation as a whole, but also in various departments. The Beolab 5 example will probably work best in the most engineer-heavy divisions.

Is In-sourcing the Solution

In the current economic climate many companies in-source research and analyses. Which means that they move from having consultants plan and coordinate their collection of market data (or citizen data in the public sector) to doing more themselves. This means high growth potential for tools and systems that enable DIY-analyses and for consultancies that help enable clients and train them to take the lead themselves. It also means that research can become more deeply embedded in the organisation. This is an advantage in terms of making sure that data is put to use and made available in the organisation and also that the organisation regains ownership of their own market information.

However, these benefits will not happen by themselves. They require a deliberate effort going beyond resource management. The people inside an organisation must be able to communicate the data they collect in order for the data to develop into insights and organisational knowledge. Internal marketing is important in this respect, a company should advertise its knowledge internally in order to create employee interest and thus more market oriented behaviour.

I have come across several sub-optimal examples of in-sourcing through my work. One example is a large production company, that stopped having customer surveys done by a consultancy and instead bought an online survey-tool and hired a parttime project-employee to handle the survey. This could have been an opportunity to embed the knowledge. But what happened in this case was that after the part-time employee left, the organisation was back to square one. What was the benefit of that customer survey? Was it just measuring for measuring's sake? That company could take this experience as an opportunity to learn and have an internal strategy for using the information they collect. The more every employee know about the market a company serves the more market orientated it will become with higher employee satisfaction and higher overall profitability as a result.