Thursday, 30 September 2010

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