Net Promoter Score – Just How Sentimental Are We?

Net Promoter Score – your customer feedback score. A measure of customer loyalty.

Steve Jobs was famous for saying that he never asked for Customer feedback. But when Ron Johnson was tasked with creating the Apple Retail store experience he needed a way to benchmark Customer loyalty. That same question had occupied the minds of management consulting firm Bain & Co. They found that many customer surveys failed to measure this important metric, and so they began a journey to develop a single question that could act as a customer loyalty benchmark. We’ll see how Ron fared later in this post.

The first thing they did was to seek out survey questions that had the strongest correlation with a repeat purchase. They examined thousands of surveys and found that just one question could accomplish this. That question is: Would you recommend us to a friend or colleague?

This is what the Bain & Co survey question looks like. It’s an 11 point scale from 0 to 10.

The survey starts with 0 rather than 1, since the number 1 can represent a “pole position” for some.

In analyzing the results, Bain decided to group responses into three distinct categories. The first group, known as Detractors, marked the answer 0-6. These guys don’t like you. The next group (answers of 7 or 8) and are known as Passives. They have no energy for your company. The final group really do like you and responded with a 9 or 10. These guys will recommend you and are most likely to repeat purchase.

Your score is calculated by subtracting the percentage of Detractors from the percentage of Promoters. Passives are discarded as they neither like or dislike you — but only for the purpose of the score calculation. Bain also recommends that a text question be added, so that context can be derived from the measurement with Sentiment analysis.

So now we have a score that can measure customer loyalty. It’s called the Net Promoter┬« Score, or NPS for short. What’s more, it’s a number we can trust because it’s an external measure and it’s a number used by our peers too. Every year Bain & Co publish a survey of scores so you can see how you measure up. Top firms like Apple, Amazon, and Costco score in the high 70’s That’s the number to beat !

The 11-point scale is nothing new, however. Thomas Juster came up with the same scale in 1966 as part of a buyer intention study. What’s new is that more and more leading firms are adopting this measure as their benchmark and employing tools that react quickly to feedback.

Dealing with the three categories of respondents

As mentioned above, Detractors simply do not like you. This is where all your bad profits are — “bad profits” because they are not repeatable. It’s very important to be able to identify this group and deal with them right away. The NPS app can send a “sorry for your experience” email immediately. Reacting quickly to a problem can often turn your detractors around! You can create different email messages based on each answer given, too.

As the name implies, Passives don’t really care one way or the other about your company. Typically they feel that they got what they paid for, but are also likely to defect as soon as a competitor appears with a similar offer. Identifying this group and sending them the right communications at the appropriate moment will be important. Sending the wrong message to the wrong group is a schoolboy mistake -one you can avoid with the NPS app.

Promoters are more likely to repeat buy, and are also less sensitive to price. Companies like Enterprise RAC actively use promoters in their marketing referral programs and they credit NPS with the success of that. All your good profits are here, because they are repeatable profits.

Thousands of companies like Lego, Facebook, Dell, and Apple use NPS. Let’s look at a few case studies.
When Ron Johnson was tasked with creating the great Apple store experience, he wanted to convert the local PC user using word-of-mouth and referral. NPS was perfect for that. Apple stores use email at POS to manage the score, so having a robust email capability was important to them too. Their NPS works so well they are also looking to add Net Promoter People, where the question is: “Would you recommend this as a place to work ?”

Container Stores, established in 1978, operate 60 locations across the US. Using the NPS app, they can see in real time the NPS for any given store and react when it goes up or down. That’s right — reacting when a score goes up is just as important as reacting when it goes down. Perhaps something good is happening that can be repeated in other stores! Each store manager can see how their individual unit is performing and their manager can see all stores for their region. If a store get’s a poor individual score, the manager get’s an email right away as does the customer. Being able to deal with detractors right away is a proven method to improve customer loyalty.

Harnessing sentiment analysis
Understanding what words customers are using to describe their experience is an important semantic measurement. The NPS app has built-in sentiment analysis so you can group customers by the words they use in their feedback.

Now that you know more about NPS what’s next?

Here are some questions to ask:

  • Are we measuring customer feedback in a robust and consistent way?
  • Are we using different survey methods in different stores or countries?
  • Do we react to feedback right away?
  • Do we know who our Detractors are?
  • Do we know who our Promoters are?

Credits: Net Promoter is a registered trademark of Satmetrix. In this article we used examples from the book The Ultimate Question by Fred Reichheld with Don Markey. We also referenced the published papers of Economist F. Thomas Juster, who devised the 11-point buyer intention scale.

Photo by Efren Barahona on Unsplash

Economics – Who does it serve?

Our World In the 2020s Has To Address This Issue.

Let’s take a little look back at the things we have been taught about Economics.

OMG…you just switched off and thought ‘boring…I’m not interested’ but here’s why you should be and why I’ve made it easy to understand.

Firstly, and quite astonishingly economics calls itself a science. It is one of the many social sciences that isn’t really a science. Secondly, economists cannot agree on the definition of ‘Economics’ or indeed why it isn’t a science in its present form. But it should be a science…so please, bear with me.

Economics is a belief. It is a guess at what we might need and how we all pay for it. (Or will we?) Maybe we don’t need to pay for it. Maybe this ‘brave new [AI] world’ will provide abundantly for us and ask nothing in return…maybe, just maybe, we are on the threshold of a utopian lifestyle revolution and, well, just maybe, it was how it was supposed to be…all along…can you imagine what would have happened if…

Please read on…

One of my oldest and dearest friends invited me for breakfast the other day. This person has worked hard all of their life. They have taken risks. They pay their dues and they support many good works and charities. They’ve made a small fortune through their hard work and tenacity. They have played by the rules and contributed massively to society. I admire this person very much and I trust them.

We had a great time. We caught up with tales about our family and friends. We talked about life and love. We pretty much have the same beliefs apart from one or two fundamental issues around work. They maintain that work is essential. It is necessary. It is good for the soul. It is what is expected of us. It is good and wholesome. It is honourable. It is the answer to poverty. People just need to go out and work hard if they want to get on in life. “If I can do it”, they said, “anyone can”. They were resolute that work = happiness.

Now I really don’t want to diminish what they have achieved or their aspiration for others to achieve what they have…starting from scratch and being kind on the way up. I deeply admire them and love them.

So Why Don’t We Agree?

But the concept of work is a modern phenomenon. It came about because of greed. It happened because humans became a means to an end. It spawned the construct of master and slaves. It became most corrupt when people were made to work in order to create wealth for those that didn’t work. It blended the notion that doing work was subordinated in favour of telling others to do work. Somehow, telling people to work became more rewarding than doing the work. Economics is about the management of grossly disproportionate inputs and outputs.

Modern economics came about when we stopped using our gross domestic product to support people and instead, we were made to feel that it was more important to use people to support and serve the money that was being made from our gross domestic product.

It was power that saw the opportunity to be powerful and this power came from a subtle invention that money became a just reward for our toil and could be used to buy the things that others toiled to produce. Profit was made and it filtered up to the powerful.

Where Did It All Go Wrong?

It starts with the word of God. Wait…bear with me (again). There’s a reason it starts with God. Virtually all of our moral constructs, our beliefs and values all started with God…or at least they started with what the church says about God. This doesn’t require that you believe in God, just that you understand where your beliefs came from. They got passed down. They asked us to do the right thing…or else.

So, God says (in the bible) that the first man (Adam) broke the covenant with God and as a result, all men were sent to toil the land with their hands (there’s no mention of getting others to toil with their hands on your behalf). The problem we are facing, more and more, is we are being updated and uprooted by robots and AI. They can work 24/7, they make the right decisions each time, every time and they have far better emotional intelligence.

I know, I hear ya…how can a machine have better emotional intelligence than a human? Well. it’s because they make the right decision each time and every time…humans don’t.

So How Do We Fix It?

Economics is an art form bounded by the science of finality. There is no infinity in economics, there is simply managing the effective use of resources and aligning our expectations downwards towards sustainability. So the glaringly obvious answer to our existential conundrum is that we should work less, live off life’s abundant provision and consume way less than we are doing right now. Interestingly, this is also mentioned in the Bible.

According to Benjamin Davis
“Economics is the science that studies how scarce resources are allocated to meet competing and unlimited wants and how human beings satisfy their material wants and needs.”

According to Bradely R. Schiller 
Economics is the study of how best to allocate scarce resources among competing uses.

According to Jackson and Mclver
“Economics is concerned with the efficient use of limited productive resources for the purpose of attaining the maximum satisfaction of our material wants.”

Two of them claim that it is the study of allocating resources and one claims that it is their practical application. One definition I have seen that sees economics as a PLAN > DO > CHECK > ACT cycle of actions and analysis, is the one put forward by Investopedia. As the name suggests, their slant is towards trade and the investment and allocation of resources. This, I believe, is how we focus our attention on economic ‘output’.

So What Is Economics Again?

“Economics is a social science concerned with the production, distribution, and consumption of goods and services. It studies how individuals, businesses, governments, and nations make choices about how to allocate resources. Economics focuses on the actions of human beings, based on assumptions that humans act with rational behaviour, seeking the most optimal level of benefit or utility. The building blocks of economics are the studies of labour and trade. Since there are many possible applications of human labour and many different ways to acquire resources, it is the task of economics to determine which methods yield the best results.” ***

Nah…not in my book (or God’s)…Economics is a system whereby money is used to serve humans rather than expecting humans to be used to serve money…

*** Investopedia – Guide To Economics – Terms

Photo by Evangeline Shaw on Unsplash