Mark Ritson: Why I would recommend NPS to my friends

 

Lego Club placed an ad for a marketer in last week’s Marketing Week. Keen to demonstrate just how savvy and ambitious its marketing department is, Lego revealed that it was aiming for 5 million club members by 2015 and a net promoter score (NPS) of 75%.

A thousand miles away in New York, the chief executive of Citigroup’s consumer banking division had some good news for his team. After two years of crisis and more than £20bn in losses, the bank’s NPS had risen to 54%. That was 9% higher than a year earlier, and the first time the bank had risen above the 50th percentile since the data was first collected.

On the other side of the planet, 30 Australian superannuation funds concluded their annual Net Promoter conference. Each fund had provided 300 names from their membership base and a research firm had collected their recommendation levels and placed the funds in a league table. Fund managers would mull over the results for weeks and then adjust their respective strategies and wait patiently for next year’s survey results to confirm whether their actions had worked.

I could go on for hours. Suffice to say, somewhere on the planet right now a consumer is being asked how likely they would be to recommend a brand and somewhere else a marketing manager is poring over the results.

In the eight years since Frederick Reichheld introduced his single item method for measuring customer satisfaction, a quiet revolution has taken place. Against the recommendations of professors and jealous research agencies (that despair of any metric simple enough for clients to use without their assistance) thousands of marketers have become advocates of NPS.

And I am one of them. I love NPS because it is eminently comparable across brands. I can, for example, tell you that O2 is a much better mobile phone service than Vodafone. I say that not because of any bias or personal agenda but because in a recent representative survey of British mobile phone consumers O2 members were far more likely to recommend their service than Vodafone customers.

That clarity of comparison is important when so many managers and marketers have a skewed and overtly positive perception of their customer service. A study by Bain & Co recently revealed that 80% of companies believed they offered a “superior experience” to their customers. When Bain surveyed the customers in question, only 8% agreed. You need the harsh comparability of NPS to counter the typically unrealistic view often held by out-of-touch company executives.

NPS is a single number derived from a method so simple a 10-year-old could calculate it

The early advocates of NPS were not lowly marketers with little or no organisational influence. They were the bosses of companies like Enterprise, Dell and General Electric, who proclaimed that they finally had a measure of customer satisfaction they could understand, monitor and compare against their competitors.

This simplicity also worked at the other end of the organisation. Marketing managers and the research companies that serve them love complexity. The average research report or brand tracking document often runs to more than 100 pages.

That’s great if you are trying to justify your six-digit invoice, but research is meant to change an organisation, not stultify it. Because NPS is a single number derived from a method so simple a 10-year-old child could calculate it, you can take it out onto the shop floor and show the people who deliver the service how they are being measured. I have seen first-hand the impact of explaining NPS to front-end staff and then reviewing the bonus payments based on the subsequent scores that are achieved. It’s a radical idea, but why not let the people who actually serve the customers become part of the way they are assessed?

There are some caveats to NPS. I do not think it is useful for low involvement products and FMCG. There is also no point comparing your score with brands in other industries. It’s also a mistake to use NPS to compare how a brand performs in different countries because different nationalities are more or less likely to recommend. The only comparisons that count are your NPS versus your competitors and how your score has changed compared with previous years.

NPS will also never tell you why you suck or why you are improving. For diagnostic data you need to use the NPS to set up focus groups of promoters and detractors. I have never seen more insight than the hour I spent behind a one-way glass with the CEO of a finance company and nine very pissed off detractors of his brand. Pure learning.

And at the end of the day isn’t that what we are here for? We are meant to understand our consumers, and then change our organisations to make them serve these people better. The dirty secret of marketing is that happens all too infrequently. And anything like NPS that helps us do it more has to be a good thing.

I’d be very likely to recommend NPS to my friends and colleagues.

Mark Ritson is an associate professor of marketing, an award winning columnist, and a consultant to some of the world’s biggest brands