Stop Using NPS (Net Promoter Score) But Please Save The Question!

(Note: Due to concerns that the strong language of my original blog would overshadow the message, I have rewritten the first paragraph. The goal of this blog is to stimulate conversation – admittedly, through confrontation – in order to determine what correlation NPS really has and how to best use it, or not!)

As the Customer Satisfaction (CSAT) analyst in the Market Insights Team, I get a lot of questions about Net Promoter Score (NPS). As the “ultimate question,” NPS is being positioned as a cure to all business ills and a way to understand everything you need to know about your customers . . . with just one question. Most market insights professionals struggle with NPS as it goes against our training to accept data correlations which have not been proven. Presenting actionable insights tied to NPS when correlation has not been proven? It feels like selling snake oil and is likely one of the drivers for the view that “researchers hate this metric.”

Has NPS — like Britney Spears’ singing — been overhyped?

My professional colleagues — including Timothy L. Keiningham, Bruce Cooil, Tor Wallin Andreassen and Lerzan Aksoy (A Longitudinal Examination of Net Promoter and Firm Revenue Growth) and Jeffrey Henning (Net Promoter Score [NPS] Criticisms and Best Practices) — have already beautifully, and very analytically, dissected and disproven NPS. They are not alone in their views or criticisms. So, why do we still use NPS when there is no clear statistical conclusions as to its effectiveness?!

The reality is that, for some, NPS may provide some correlation with customer action and be a potential indicator of customer spend (TBD in my book as I have yet to see sufficient evidence where this is the case). For many, it’s an easy way for executives to evaluate their business’ health and motivate, if not compensate, for improvements. Granted, if there is weak correlation between NPS and customer action and you’re compensating for improvements in NPS, well, does this make strategic sense?

For most, I would have to say: Stop using NPS. Or, better said, start using it more properly.

The central issue for me with NPS is the formulation: Score = Promoters (% of customers scoring 9-10 on a 10 point scale) minus Detractors (% scoring 6 or less on a 10 point scale). Why is this an issue?

  • It’s culturally insensitive. Case in point is a recent rating given to me by a European client. To preface, he told me “10 is for God. 9 is for el Maestro. So, 8 is as good as you can get.” He gave me between and 8 and a 9 and I was ecstatic! In NPS terms though, well, it just wasn’t good enough. There are other examples as well and research which demonstrates cultural skewing which needs to be factored into assessments (see Kristin Cavallaro’s article “Data Use: Are global scales as easy as 1-2-3 or A-B-C,” January 2011 — via Quirks or SSI).
  • It’s not a good motivator. I’ll be honest that I have not quantified the psychological impact of NPS but do question how motivated employees are to improve a 20% score to a 30% score (when best-in-class is sometimes only 40% to 60%!). Seriously, is this something you can commit to and then will brag about with your friends? As a motivator, NPS psychologically causes us to reset our bar to a much lower level. Should we strive for only 50% of our customers to be satisfied with their support interactions?
  • It has questionable correlation. The biggest concern with the formula is that there is not sufficient quantitative evidence to support a correlation between NPS and customer actions (renewals or even actual recommendations). Given its time in the field, SatMetrix should be able to show 100s if not 1000s of cases with high correlation coefficients (Pearson’s r=70%+). To date, they have only provided a totally unsupported position that “findings support the link between Net Promoter and financials.” Please provide us the proofs as I have several clients who disagree with your findings!

So, how can we potentially use NPS?

Once you get past the problematic formula and the dubious view that this “ultimate question” is the answer to everything, you end up with what is really a very good customer satisfaction question! Just realize that you are testing for perceived value, not intention and definitely not action! As such, treat it like any other customer satisfaction question and make sure you capture other input around your customers’ experience to ensure sufficiently robust Voice of the Customer (VoC) input. For some other good tips and input from your colleagues, check out the lengthy NPS discussion on the Market Insights Community page: http://community.forrester.com/thread/4449?tstart=0.

In upcoming Forrester research, we’ll dig a bit more into NPS (and look at some different ways to "fix the formula"), along with providing some input on how to make to make CSAT more actionable. As always, we would love to hear your views:

  • Do you use NPS as-is or have you made any modifications to make it work better for you?
  • What statistical correlation (please provide coefficient # and scale) do you find between NPS and your operational data?
  • How much is NPS being used at your company to motivate and compensate employees . . . and is this effective?
  • What do you think of the views expressed in this blog?

Please feel free to join in the discussion here or on the Market Insights Community page.

Comments

Missing the point here

As someone who has spent considerable time researching, working with, and discarding NPS - you are missing the point.

There is only one thing you say in your entire post that is worth pursuing, and even then -- carefully and further than you advocate. You will study, you say, how NPS correlates to operational data. You are on the right track, but that is not going to give you a lot of insight into how to use it better - just how to game it better. If you trully want to get value out of using NPS (which is a flawed model, decried both in theory and usage by virtually everyone out there with experience) then you want to make that correlation work against KPI - not operational data.

Why?

If people in the organization are going to try to game the metrics to show improvement in NPS correlation so they can get their bonus, at least have them do with with metrics that improve the business - not just operations.

I would've just stopped the title of your post at "stop using NPS, it does nothing for your business" and focus instead of how correlating effectiveness metrics with KPI is a far better model.

But, what do I know?

NPS what I call an "MBA

NPS what I call an "MBA number." It fills a hole in a spreadsheet, but means nothing and provides little insight. It falls into the "bad research is worse than no research at all" category.

NPS as it's used currently has been an albatross around researchers' necks for too many years. C-suite execs want to include it in every project, mainly because it's buzzworthy and simple, but they're flummoxed when it doesn't relate well to other measurement. And, of course, because NPS came to fame in an HBR article, it must be legit, right?

I agree with your suggestion for its wording's use in CSAT studies but, sadly, I don't see it being consigned to that role anytime soon. NPS is like the "right-brain/left-brain" false dichotomy. Once it's wormed its way into the popular consciousness of business, it's nearly impossible to get rid of.

NPS & <Insert other here>

Worthwhile having the conversation about NPS. A few points, hopefully, interrelated:

(1) Yes, companies game NPS and are incentivised to do so. Some of this can be removed through automation, but obviously not all;

(2) Why not run CSAT & NPS together and correlate ?

(3) Often "the measure" is general, and not related to a direct recent experience at a customer service touchpoint, yet that interaction is obviously going to effect the overall "brand NPS" right?

(4) I am not really convinced about any "management science statistics". I spent a few years stuck into them and correlation after correlation comes apart under "close reading".

Net Promoter is last decade measurement tool.

Net Promoter Survey is just a a hypothetical situation/question:

"How likely is it that you will recommend our company to a friend or colleague?"

Why spend money or time to measure what someone says they "would do", when for FREE, you can measure the actual net promoting they are doing just by listening to what people are saying about your brand/product on facebook, twitter etc.

Until a customer facebooks/tweets something to their friends, about your company/product/service, your net promoters are ZERO.

Seriously? SMM?

David,

Please, you cannot be serious. Stop drinking the SM kool aid. Unless you can prove to me one single episode of what you are saying and the correlation to real business metrics (read KPI) then all you are saying is just more hype and modern day buzz.

Are you honestly invested in the opinion that if no one tweets about your product you have no loyalty? what if your customers are not even close to twitter or facebook? (after all, twitter is 150-200MM people, facebook is 600-650MM people -- there are many more in the world -- and even from those, not all of them even express their opinions on those networks) Seriously flawed thinking, my friend.

All views (esp NPS defenders!) are welcome!

Hi all,

This is a very loaded topic for many of us, perhaps inflammed more by my choice of tactics to try to get NPS defenders to speak out. Let's keep any comments on topic and respectful of the individuals and their views. In this way, we all benefit by gaining more insights into views of NPS, as well as any other methods which others are using (or considering).

I would very much welcome defenders of NPS to this blog. The hope had been to provoke a strong defense of NPS with my strong position as discussions in various communities had not elicited much validation of NPS or insights on how this correlates to customer actions. The MI community can definitely benefit from your voices and how you have made this metric work. Everything has 2 sides. Please help us see the positive side of NPS!

Thanks,

Richard

Genuine interest? Or childish provocation?

Richard:

Most of us have refrained from responding because we have found it fruitless to respond to irresponsible and inflammatory comparisons of NPS to pop stars. It has never paid to respond to name-calling. And we have not felt it worth our time to respond to attacks on silly straw man arguments (such as "NPS is being positioned as a cure to all business ills and a way to understand everything you need to know about your customers . . . with just one question").

If you are truly serious about learning whether and how the Net Promoter system can be best used, then you have many options for doing so, none of which begin with false, inflammatory or irresponsible contentions.

If you were serious, you might have started by talking directly to people at companies where the Net Promoter system has been best developed. Companies like Allianz, Philips, Schwab, Vanguard, American Express, Progressive, Logitech, Dell, Symantec, Experian, Apple Retail, or PwC. Had you asked leaders from those companies -- including the market insights professionals responsible for their Net Promoter data collection and analysis -- you might have learned that each one has established a clear and deep link between Net Promoter scores and business results at both the individual customer level and at the enterprise level. For the most part, these companies won't be publishing their confidential internal data, and neither will we, but the correlations are strong and well-documented, which is one reason why they like the metric. If you had spoken to them, you might also have learned that none of them ask only one question.

Perhaps the most important thing you might have learned, were you to demonstrate genuine interest in learning it, would have been that finding a better metric was perhaps the least important reason these companies so enthusiastically use the Net Promoter system. Sure, the score's correlation to business outcomes is important. But they could have chosen any one of the dozens of more complicated, more sophisticated multi-variate loyalty models out there, each of which is more statistically precise. You can achieve far better statistical precision if you ask more questions.

Their reasons for selecting NPS go beyond its mere correlation to business outcomes. Their reasons lie in the intuitive logic of the metric. They lie in the low burden it places on customers to respond to just a handful of questions (likelihood to recommend, why, a few more). They rest in the elegant simplicity and effectiveness of providing the raw voice of the customer directly to customer-facing employees, and the robust learning systems they can build around it. The leaders of these companies love that even people who don't have a PhD in statistics can understand the metric and its derivation. They love even more the intuitive way they can describe how creating more promoters and fewer detractors is valuable to the business, and how that energizes everyone in their companies to learn, improve and stay focused on doing right by customers.

You and your colleagues at Forrester have direct access to many of these business leaders. Several of them have received awards from Forrester over the last few years for the quality of their voice of the customer approaches. Their entries place emphasis on their Net Promoter systems. Your colleagues praised these companies exactly because they were sophisticated and thoughtful Net Promoter adherents.

I might point you to the following:

2009 winners: http://experiencematters.wordpress.com/2009/06/22/congrats-to-voc-winner...
2010 winners: http://blogs.forrester.com/andrew_mcinnes/10-06-29-winners_forrester_voi...

I can't quite fathom why you would need to create an inflammatory blog post to learn more about NPS. Were you really interested in learning more? The answer seems quite self-evident.

So, Richard, you won't find me or many of my colleagues wasting our time responding here. As I have told your colleagues at Forrester, if you're really interested, I would love to help you learn. But it won't happen on a blog, and you'll need to demonstrate genuine interest. You know how to reach me, and you know how to reach the MI professionals at any of the companies to which Forrester has granted awards. I bet you even know how to find the professionals at some of the other companies known for having done a great job with NPS.

Rob Markey
Partner, Bain & Company, Inc.
Co-author of The Ultimate Question 2.0, to be published in September 2011

Bravo

Rob,

You and I have crossed swords at different times over this subject and we agree that we have different positions.

Nevertheless, I commend you on your response as it strikes to the core of this debate - hype versus fact.

Thanks for your contribution.

Esteban

NPS Owner Response (non-response?)

Hi Rob,

This is a GREAT response, even though I understand that you are not responding to the blog. I really appreciate you taking this effort, especially considering how inflammatory you found this post to be. You have my respect (even if it's not reciprocal).

I think all of us are interested in NPS and understanding how to better connect it to business results "at both the individual customer level and at the enterprise level" so that this metric can be insightful, as well as actionable. The frustration I hear from market insights professionals is that they are struggling to do just this!

So what is the secret which you and the companies you noted know? Is it really complicated or, like the question and formula, something simple which we're somehow missing? I look forward to speaking to you and would enjoy speaking to the other companies but it would be a disservice to Forrester's clients if this "secret" is only shared under NDA. As such, can you help everyone understand the mechanisms which will allow market insights professionals to see the causality and correlation of the Net Promoter Score to business results (at both the individual customer level and at the enterprise level) and recreate this in their own companies???

I absolutely concur with you about the simplistic elegance of this question and the low burden on customers. That's why I made it very clear that the question should be kept! It's great!

I think if the mechanisms to make this actionable (and controllable) were better understood and identifiable, then others would love this metric and be energized too. When the score jumps up and down every quarter (due to the sensitivity of the formulation), it's hard to feel empowered and energized.

I'm glad to take my licks for the inflammatory language (heh, I'm human and not perfect so sometimes I might misstep). My bigger concern though is that the analytical positions I've taken have not been disproven, or even confronted. My childish provocations and any marketing spin aside, how does NPS correlate to business results? How do you account for country/geo-centric skewing? What are the mechanisms we need to be able to show continual improvement in this metric (like we would expect with any other KPI)?

Other questions which I've received are: Does NPS work better in some industries versus others? Better in B2C than B2B? Is it more for the US than for Europe or Asia? Is it just a customer satisfaction metric or does it really predict actual promotion and/or actual purchase and renewal? Is it ok for companies to use just "the ultimate question" in their surveys or is it really not enough to gain a sufficient (actionable) understanding of the customer? The best counter to my silly straw man argument is to help us see where NPS should not be used and what NPS does not do.

I have a genuine interest in ensuring that market insights professionals are using the best methods and metrics to empower their understanding of the market and their customers. Please realize that these professionals are extremely bright quantitative analysts who do not accept black-box theories or things which they cannot proof themselves. For those who are struggling with NPS or who disagree with NPS (as several posters do), how do they take this simple question and simple formula and, simply, tie it to business results to make it actionable?

So, a lot of questions ... but I am genuinely interested! I hope you will still do me the honor of speaking with me and several of my colleagues who are also interested in joining in this conversation. Together, I hope we can find a way to help everyone see how to optimally use NPS.

Best regards,

Richard

NPS = Net Promoter Score

Just to clarify, NPS = Net Promoter Score in all of my posts. I'm not referring to the system.

Rob, just for clarification, which definition are you using or are these interchangeable for you?

Esteban, How likely is it

Esteban,

How likely is it that you will recommend GoDaddy to a friend or colleague?

You don't need to answer, I already know your answer. I got it for free and didn't need a NPS Survey to accomplish it.
-david

How likely is that my brother will?

you cannot answer that, since he does not tweet or facebook. Neither do the other 90% of the world that is not facebook, nor the other 97% that is not on twitter.

aren't you missing a scale factor in your argument?

Coming from the tech sphere

Coming from the tech sphere -- two quick comments to this thread:

1) I'm concerned about comments that undervalue Facebook or Twitter with notes about how their 600mm members aren't enough of the world. That shows a simple misunderstanding of the fundamental power of social media and the internet. This is like saying in 1998 that e-commerce is a fad. You are verging on obsolescence, please watch out.

Unless your business is something that caters exclusively to those over 80 or developing nations, your reality is the world of Facebook, and your customers are using Facebook to learn about your products and services - whether you like it, know about it, or not. And yes, that is the ultimate NPS score.

2) The beauty of using Facebook and Twitter as NPS proxies is that it should be more directly tied to results (has anyone studies this? Would be neat to see). Just like people hear about your brand through tv or print ads, they hear about it through social networks. Except in the social world, they're free messages, more credible, and come from people you know -- meaning they are far more powerful. Entire businesses have gone from nothing to billions of dollars through this (see Groupon, as an example). The power of recommendation through social media is incredible and transformative in how we run businesses -- and NPS is at the heart of it because it gets that recommendation is the root of all.

I completely agree that the next generation of market research will be more about "listening", than "asking". And the NPS score is so relevant because it is the natural precursor to that -- it's asking about social behavior in lieu of being able to effectively listen. But that ability is becoming possible!

Coincidentally, I co-wrote a white paper on this in business school 3 years ago: http://bit.ly/gZpw4P

(I'm not in the market research industry, so I have no skin in this -- just an observation from an internet entrepreneur).

Evan

SMA (Social Media Analysis) + NPS or SMA vs. NPS?

Evan and others bring up an interesting tie-in to this topic ...

As Net Promoter is, in one aspect, assessing whether your customers are satisfied enough to promote ... does social media listening and analysis (with tools such as Radian6, Google, etc) potentially replace doing Net Promoter? If so, how do you separate out the Voice of the Customer from the Voice of the Non-Customer (or even Competitor!)? How would you handle demographic skewing/differences between the social media sample and your target customers?

Or should they be used in conjunction with Net Promoter? If so, is there a way to cross analyze these effectively?

Or should they be used discretely ... Net Promoter to gauge satisfaction (with 'willingness to promote' being equivalent to high satisfaction) and Social Media Analysis to gauge actual promotion?

Feel free to add any thoughts. As this is an interesting direction, I'll also post this quesion on Forrester's Market Insights Community page: http://community.forrester.com/community/market_insights

Thanks,

Richard

Don't Stop Using NPS, Just Use It Correctly

I recently saw that my blog was referenced in Rob Markey's response, which drew my attention to this discussion thread. I've been working with companies and researching NPS programs for several years and find that any simplistic discussion of the measurement is quite naive.

You can not run your company with any single question/metric (Net Promoter, satisfaction, or anything else). So the success of these efforts is around the PROGRAM, not the measure. Having worked with dozens of companies and researched hundreds others that use NPS, I am absolutely sure that any PROGRAM that creates Promoters and reduces Detractors will improve a company. I am also equally certain that any PROGRAM that increases highly satisfied customers and reduced dissatisfied ones will also improve a company.

Here are some keys to a good NPS (or generically a voice of the customer "VoC") PROGRAM:

> Develop a set of feedback mechanisms (including questions like Net Promoted) that allow you track customer perception and diagnose what's causing the issues or opportunities
> Put in place processes that allow you to act on the insights. I often say that feedback is cheap; actionable insights are precious (I've defined the leading-edge practices as the 6Ds in a recent report: http://experiencematters.wordpress.com/2011/04/17/6-ds-for-voice-of-the-...)
> And when it comes to the NPS measurement, I encourage companies to set goals and track Promoters and Detractors separately. The "Netting" of the NPS score actually hurts your ability to take action; since the things that create Detractors are often different than the things that create Promoters. So you need to deal with them separately.

You can read all of my posts about NPS here: http://experiencematters.wordpress.com/?s=nps
I'd suggest that you start with my post called "Closing Thoughts About Net Promoter" http://experiencematters.wordpress.com/2009/01/29/my-closing-thoughts-on...

Many ways up the moutain but goal is the same

As the conversation progresses, we're starting to see some commonalities and my hope is - as I stated earlier - that we can find a way to help everyone see how to optimally use NPS ... which is really just a piece in optimizing CSAT and a piece in developing a best practice VoC program.

How many companies use just NPS? No need to name names but hopefully Rob's input that NPS should not be the only question will resonate and help these companies move forward from seeing NPS as the "ultimate" question toward gaining a better understanding of their customers through multi-question input.

How many companies still use NPS incorrectly because they don't understand the limitations and dynamics of the question and formula? Hopefully the NPS owners can take a stand on where and how to use (and not use!) NPS so that companies avoid the trap of misinterpreting results or using this metric in the wrong circumstances.

Bruce's "Closing Thoughts About Net Promoter" is a great read and I highly recommend it (which, for me, is an "8"). More to come from Forrester as well on this.

Where we all seem to agree is that we need a "program" or "system" around customer input and metrics to make them actionable, which can definitely improve the company, customer experience and ultimately business results. There is some question though whether this should be NPS, CSAT or some other metric(s).

The concern remains that using the Net Promoter Score (= Formula) may, as Bruce noted, "hurt your ability to take action" (and understand when you need to act, let alone how). Why do we still use the formula?

Is it perhaps time to move past the formula or, per Bruce's comment, approach it differently so we don't dilute insights by overly "netting" them out? Or do we still need this formula (and, if so, why)?

The bigger question ... once you get past NPS: How many companies have identified the metrics which allow them to "predict NPS"? Yes, that was written correctly. Do you know which metrics are key drivers of your customer's positive experience, purchase and willingness to then promote you? If so, what's your view from the top of the mountain, where does NPS fit in and what is your advice to those who are climbing this big berg?

To all, thank you for taking the time to contribute!

Please, get off NPS!

Guys,

Please stop talking about CSAT, NPS, and any single metric. Bruce and Rob talked about initiatives that tied NPS to something else. NPS sucks, is wrong, has not value and no meaning, and hurts companies that use it for the most part. Gives them the wrong perception that they can predict (impossible) or measure loyalty (even more impossible).

You can't measure loyalty, you can't measure satisfaction, and you cannot measure sentiment or feelings. Stop trying.

What you can do, you can take an opinion from a customer and correlate it to operational metric, time and time again, and over time you will develop a trend, that will give you an idea of the correlation. Why use the wrong question then? why use a question that gives the impression you are measuring more than you really are?

would you recommend me? that is something that i can only answer in this moment, and it applies to this moment. unless you track and measure every moment of my life, and how that influences my likelihood to recommend, you got no more than my feelings about something (your company) in a moment in time. If, right after you asked me and i responded you pissed me off sufficiently i won't recommend you anymore (at least, that is what 78% of americans and 62% of europeans said they would do -- do they? if they did, 3/4 of all consumers would be constantly switching providers for everything - do they?). how do you account for that shift? what are you going to do? go back and demand they do recommend you because they said they did? demand the go back to being satisfied?

you cannot measure, or rather use the measurements, that which changes over time and call it worth it.

If you really want to use a single question, one metric - and make sure you correlate it to operational metrics - ask the customers " do you like lemons?". you will get better correlation over time, probably, since the taste for lemons does not change over time. sentiment and dispositions to do something does.

final thought, and feel free to erase this if it goes against your beliefs and desires - anyone who is pushing a methodology so much definitely has something to gain from it. by telling me that you have great clients that use NPS within a methodology that has been proven is telling me, buy my services.

I am an analyst, i am not offering any consulting on the matter. just an unbiased, researched, and tested opinion.

Divergent opinions welcome

Hi Esteban,

Forrester welcomes divergent opinions and doesn't erase anything just because of different points of view. We buck a lot of strongly-held beliefs and desires ourselves (this being case-in-point) so we value others who take a stand.

I really like the point you made here: <>

Have you seen any best practice approaches to doing this? Do you see companies identifying key business levers which then become their (individual) "ultimate" questions?

Esteban's lemon question made me remember old days of doing psychology-based research where we would ask several baseline questions to determine the range of response and then use this to weigh scoring on the rest of the questions. Anyone include such questions in your surveys and, if you do, any which you've found to be universal and appropriate enough to apply?

Great blog!

Richard,
I really enjoyed this blog! I wish that I had seen the original post, but even this toned down version is great. I am really enjoying the comments as well. Personally, I am the fence about NPS, but many people are just so dedicated to it. I particularly agree with your comment about NPS not being a good motivator.

Thanks for the great post!
Sharon
www.sharonmarkovsky.com

So ... who gets your dance ticket?

Hi Sharon,

Thanks for your support. The original post was a bit more tongue-in-cheek (if not outright cheeky) and, given how empassioned people feel on this topic, the decision was made to tone it down to better stimulate conversation. As is, it's been somewhat heated but we've had a lot of great input (thanks to all!).

So, what is it about NPS which attracts you and what is causing you to hesitate? Do you have views on any of the other approaches out there (ACSI, Customer Effort Score, Secure Customer Index, etc)? It would be great to get some insights from someone embarking on a Voice of the Customer (VoC) program and presently evaluating the various options and paths.

For those just committing to VoC, what are you looking for? What's working out there and what not? Who ultimately gets your dance ticket and why?

Word of Mouth and Recommendation Are Not - Repeat Not - Advocacy

Creators and sellers of the single recommendation question as surrogate for profitability and growth also, increasingly, appear to be asking the business community to accept the premise that Recommendation = Word of Mouth = Advocacy. This thesis, though the usually unchallenged annexation of the concept of advocacy has audacity, fails on a number of bases.

First, recommendation can be purchased. Companies can, and do, directly incentivize customer referrals; and there are ‘viral marketing’ organizations whose sole business proposition is to use recruited, and compensated, individuals who will communicate their endorsement of selected products and services to others. This makes the referral scores for those products and services go up, of course, though the reasons for this increased recommendation are artificial.

Next, recommendation is clearly only one of several downstream communication and action behaviors which can take place after a transaction or an experience. Offline and online word-of-mouth between peers is one of them, and this behavior is certainly not coequal with either recommendation or advocacy (which also requires strong brand favorability). As the previous section has demonstrated, based on national polling results, customers can also communicate with the vendor or service provider involved; and this can take place in an array of ways, again both offline and online. Because the creators of the one-number approach favor very short surveys, it is unlikely that the technique would ever generate diagnostic information which leverages the type of downstream communication, or other, behavior taking place as a result of experiences and transactions.

Also, customers can be completely silent after a transaction or experience; and this very lack of post-event communication has an impact on their future behavior (known as ‘self-perception theory’ in academic circles) all the while their failure to communicate has no influence on the behavior of others. Even though generally silent on their preferred brands, these customers, which we identify as ‘Allegiants’, also demonstrate fairly strong loyalty. If companies can identify ways to build and bootstrap these quiet loyalists into more vocal supporters, the positive financial impact will be significant. Recommendation, as a single metric, cannot do this.

Another shortcoming of recommendation as a stand-alone measure, discussed somewhat earlier in the chapter, is that the same customer can, and often does, recommend or refer competitive brands, services, or suppliers in the same business sector. There is nothing in the one number technique which requires a customer to narrow the consideration set or justify why they might recommend one, or multiple, brands or firms offering the same product or service. Because customer advocacy is more rigorous, connecting as it does on future purchase intent, and driven by brand impression, and evidence of positive or negative word of mouth on behalf of the brand or company, there is often a natural reduction of consideration sets.

Customer advocacy behavior has been extensively discussed throughout the book; however, as it compares to individuals or customers who positively recommend, advocates are the deeply connected and brand-involved, energized, positive and vocal de facto sales force within a company’s, product’s, or service’s customer base.

Customer advocacy can, in part, be defined as the degree of kinship with, favorability toward, and trust of brands; but, principally, advocacy identifies the monetizing downstream customer behavioral impact of informal communication, by individuals on a voluntary, active, peer-to-peer basis (and as it influences their own downstream behavior, i.e. the self-perception effect, as a result of personal experiences). Inclusion of the ‘personal experiences’ qualifier is critical, because it represents a depth of individual knowledge unidentified in the one-number recommendation approach. Consulting firms such as McKinsey have determined that word-of-mouth drives 20% to 50% of customer decision-making, so it is extremely important; and it is every bit as leveraging as recommendation. Again, recommendation isn’t word-of-mouth, nor is it advocacy behavior. It should be added that, just as recommendation isn’t word of mouth or advocacy, neither is it customer loyalty (and can’t give management much guidance for creating loyalty or pinpointing motivations for individual purchase choices); however, as discussed throughout this book, much of true customer loyalty behavior can be identified in drivers of customer advocacy.

When considered as a core measure, or metric, of customer loyalty and business health, advocacy can be expressed as a combination of two key constructs: rational (tangible and functional) and emotional (service and brand impression) toward a brand, expressed through preference and narrowed consideration, or evoked, set, high share of spend, and positive, frequent communication behavior on behalf of the preferred company, brand or product, principally through offline and online word-of-mouth. As presented throughout the book, this approach, or framework, is far more robust, rigorous and actionable when compared to the single-number recommendation metric; and the willingness to refer or recommend can be considered one outcome of loyalty or advocacy behavior, rather than the behavior itself.

Again, advocacy behavior isn’t the same as promotion, nor is promotion the same as advocacy behavior.

The accuracy of the statement just made has been proven in multiple research studies. In a 2010 national study among customers of the fifteen largest banks in the United States, it was found that 90% of the customers identified as advocates were in the highest category of customers when the single-number recommendation metric was applied, while only 56% of these high single-number metric customers were found to be advocates. In the same study, results showed that the highest group of single-number customers were 1.8 times more likely to open new accounts at their primary bank when compared to the lowest group of single-number customers; however, using the advocacy framework, the advocates were 2.8 times more likely to open new accounts when compared to the antagonists, the lowest performing group of advocates.

In our work, we certainly don’t discourage clients from using the NPS metric. In fact, our advocacy research can target elements of performance and communication to increase NPS, if that is the customer-related KPI they are using as a gauge and to incentivize employees. Hope the above contributes to the healthy dialogue.

Recommendation, Loyalty, Advocacy - oh my!

Hi Michael,

Thanks for you in-depth input. You bring up some interesting points about what-drives-what and what is really important for the business. Am I understanding your position that Advocacy can drive purchase and the NPS metric (willingness to promote) ... but the reverse is not the case? This was a pretty complex position paper so I just want to see if I can net out (and hopefully not oversimplify) the key take-away.

Assuming advocacy is the primary driver of purchase, what would you suggest that market insights professionals focus on in their surveys to better understand the 'level of advocacy'? As I noted above, black box stuff doesn't work well for Forrester clients. Proprietary algorithms are fine ... but what are the primary mechanism which you see correlating to advocacy? Also, could you perhaps describe the behaviors of some of the identified segments: Advocates, Allegiants and others within this 'system'? That would really give us the right perspective with which to evaluate these positions.

Much appreciated!

Advocacy Identification, Analysis, and Application

NPS, like satisfaction, future purchase likelihood, and other solo metrics will provide some indication of likely downstream customer behavior. From our perspective, and through the research we've conducted, the best measure should reflect the current realities of customers and should lead to both new customer acquisition and organic growth. The principal cases for customer advocacy measurement are 1) close linkage to business outcomes and 2) ability of our approach to demonstrate the impact of enhanced customer experiences in monetary terms.

Advocacy is the highest form of customer involvement in the brand, with strong emotional connection and enthusiastic support for it. It is built on two key constructs: Long-term attitudes and beliefs based on both rational and emotional reactions to transactions and experiences, and how they receive information from others, and communicate, about these experiences.

Advocacy measurement, to your point, isn't a black box. It's a research framework which actively focuses on the dual, and behaviorally leveraging. impacts of brand-related or service-related peer-to-peer informal communication and level of brand favorability or brand impression on customer decision-making. In today's marketplace, more than satisfaction and recommendation are needed to drive business growth. Businesses require customers who will create influence by frequently and consistently communicating in favor of the brand or service, both online and offline.

In advocacy studies by interrnational consulting organizations, and also major corporations, we've identified statements on its benefits like the following:

"Leading companies want to build strong bases of loyal, profitable customers who are also advocates for the organization. Advocates spend more, remain customers longer, and refer family and friends, thus increasing the quality of the existing customer base and new acquisitions" (IBM Global Business Services)

"We predict that customer advocacy will be the new focus for business leaders." (Hitachi Consulting)

"Word-of-mouth is the primary factor behind 20 to 50 percent of all purchasing decisions. And its influence will probably grow.... (McKinsey)

"Advocacy is a deeply-rooted, emotional connection which relies on trusted, effective non-traditional communication and engagement channels" (American Express presentation to National Retail Federation)

As Professor Philip Kotler has stated: "Let your advocates do the marketing for you."

Market Probe didn't 'invent' customer advocacy. However, we are the first, and only, company to operationalize it into a performance metric which advances customer loyalty and satisfaction research. Our framework can delineate customers into key segments and offer prioritized tactical and strategic initiatives for enhancing customer experiences. For further information on how we define and evaluate the behaviors of customers in each advocacy level (Advocates, Allegiants, Ambivalents, and Alienateds), and our customer advocacy webinars, presentations, podcasts, and white papers, check the Market Probe web site (www.marketprobe.com), our own blog site (www.marketprobe.com/blog), or join the MRB Customer Advocacy Group on LinkedIn.

I am a believer in NPS; but

I am a believer in NPS; but obviously it cannot be used alone. One needs to get the factors behind why a survey taker would rate you a certain score. Once you have that data, you can use NPS to benchmark how you are doing today, and how well the improvements you make to your (Pareto-prioritized) customer-facing activities have impacted NPS.

Know some people that have taken the Satmetrix "program" and they have come back with a bevy of good ideas.

PPI is great for prioritizing investments/improvements

Hi Tito - thanks for jumping in on the conversation. Most seem to agree that you need more than just the one or two questions (although there are some NPS advocates who continue to see this as "the only question you need"). It's also clear from feedback that NPS alone is not actionable enough ... you need to dig deeper. In terms of using NPS as a benchmark, we've seen issues with this due to the scoring mechanism (easy for this thing to jump around a lot and it doesn't perform the same in different countries ... ergo my original post and issue with using the Net Promoter Score). Companies should definitely use smart survey design so they can do quantitative analyses to identify key factors and understand how much of a differential there is between these factors. Then, plug this into a PPI (Pareto Priority Index) type of analysis to determine which changes/investments will give you the biggest bang for your budget. It's a great system for identifying and prioritizing customer-facing activities. Absolutely agree. Thanks for adding it to the conversation!