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Sunday, September 30, 2007

For a critical (less-than-enthusiastic) review of this book, see this blog entry by Steve Field
The Net Promoter Score Controversy
The idea is alluring -- if marketers could ask one key question to determine their success in achieving true customer satisfaction and loyalty and this question could fit easily into business management systems -- we would gain insights and capacities to measure our success or failure in our true marketing objective.
Fred Reichheld, director Emeritus at Bain & Co. developed a simple tool, the "Net Promoter Score" based on one question: "How likely are you to recommend our company to friends of colleagues?"
This is a question that can be easily embedded into client surveys. Reichheld's book, The Ultimate Question: Driving Good Profits and True Growth, published by Harvard Business School Publishing Corp. has attracted attention and significant followings among several leading businesses including American Express Co., Dupont, General Electric Co. and Intuit Inc.
But some disagree with the the validity of this measuring tool, according to an article in the September issue of BtoB Magazine (an excellent periodical for business-to-business marketers).
"Claims of Net Promoter's superiority in predicting firm growth, or in predicting customers' future loyalty IPSOS Loyalty and co-author of a recent article in the American Marketing Association's Journal of Marketing. "The consequences are the potential misallocation of resources as a function of erroneous strategies guided by Net Performer on firm performance, company value and shareholder wealth."
Meanwhile, the magazine quotes Gary Slack, senior partner at b-to-b agency Slack Barshinger in Chicago as saying: "Frankly, we don't know what or who to believe now.
"NPS Loyalists dismiss the Journal of Marketing paper as the work of economically threatened customer satisfaction consultants. NPS critics say it's about time NPS is getting this level of scrutiny. We need a respected third party to sort out the controversy and tell us if and how we should be talking about NPS."
I agree -- but also like the idea behind NPS. I've always advocated that the best form of marketing we can do is to treat our current clients with such respect that they will want to do business with us in the future; and refer others. The question: "How likely are you to recommend our company?" can easily be incorporated into follow-up surveys and obviously, if there is a good response, you could then use this as a basis to invite these satisfied clients to refer others.
In fact, I really like the set of survey questions used in conjunction with NPS by PayCycle, a payroll company.
BtoB Magazine reported: "Three times a year PayCycle surveys a sample base of its customers and asks them four questions; What was your previous payroll method? How likely is it that you would recommend PayCycle? What is the main reason for the answer you gave above? What can we add or change to improve PayCycle?
"The company then follows up on the data and makes changes when necessary," BtoB reported. "It has a huge impact on the way we run our organization," the magazine quoted Mindy Eiermann, senior product manager at PayCycle, as saying.

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