The Evolution of Net Promoter Score: The Advocate Mobilization Score
May 4, 2011 Leave a comment
I am a big fan of the Net Promoter Score. In my view it is one of the most important business metrics discoveries of the past 100 years, in the same league as Dupont Analysis, Discounted Cash Flow, and Economic Value Added, It has tremendous predictive ability as to the future growth and profit of an enterprise, and yet is relatively easy to source and analyze. NPS works because it measures the volume of delighted and angry customers, and these customers have a powerful influence on new customer acquisition and the costs of this acquisition – for many companies, the most important cost that they have to manage.
Promoters and detractors work on all phases of the buying cycle, from awareness to renewal and advocacy, so improving net promotion has an exponential effect on growth and profits. Having a group of unpaid but enthusiastic and impartial “sales reps” – happy customers and advocates – promoting your company’s product does wonders for the top and bottom lines. And having a bunch of boo-birds can be catastrophic, especially in this age of the hyper-connected market.
I’ve witnessed its power up close. As an executive, I mandated the use of NPS as a component of variable compensation and witnessed dramatic benefits in customer growth and satisfaction. As a strategy consultant at Bain & Company, the firm that invented NPS, I saw compelling evidence from multiple industries that loyalty and promoter leaders are also industry leaders.
What is Net Promoter Score?
For the uninitiated, NPS measures the difference between the proportion of promoters and detractors in the customer base. Promoters are defined as people that score 9 or 10 in the question below, and detractors are defined as people that score 6 or below:
For years, this survey has worked. It is reported to be effective, with predictive power for company growth and profitability. It is relatively easy to gather the data, and also has been more resistant to gaming than the traditional customer satisfaction surveys – people tend to be more honest as to their willingness to refer as opposed to a more nebulous satisfaction score.
Gaming an NPS System
Predictably, as the metric has skyrocketed in usage, local managers are gaming the system to increase net promoter scores and defeating its usefulness as an analytical and management tool.
Last year I was at a major bank in Shanghai and they had a net promoter “machine” on the counter – I could pick a number between 0 (unhappy face) and 10 (happy face) to indicate how satisfied I was with the transaction. The teller flashed me a flirty smile after I received my cash, motioning for me to give her a 9 or 10 on the machine. She was clearly trying to bias my evaluation. An associate in an NPS implementation company mentioned a similar story, of a major chain of car dealers who routinely tell customers to give them a 9 or 10 because “no other score really matters.”
Clearly, NPS gaming works across cultures and industries!
Really though, even setting aside gaming for a moment, should we be leaving this crucial metric – one of the best, if not the best, predictor of future growth and profits to a survey of customers’ subjective predictions of likeliness to refer? Frankly I am surprised that NPS has worked as well as it has, given the flimsiness of the data collection methodology.
We should be measuring actual referral and reference behavior for our customers. With just a little more effort we can detect what they actually do rather than what they say that they will do. With the pervasiveness of the web and social platforms, surely there must be a way to get the real data.
I propose that we go a step further than measuring willingness to refer. Customers express their advocacy in different ways. Some people are merely content to take a reference call now and again. Others have great ideas for service improvement and new products. The connected generate new referral leads. The younger generation is often more comfortable expressing their advocacy publicly in social tools than spending time interacting with people one on one. The most valuable – what we call full-spectrum advocates – do it all.
The net promoter score was a fantastic metric for the past 15 years, but it is time for it to evolve. It is time to consider an advocate mobilization score, measuring real advocate contribution on their terms. At Influitive we are pumped about making this a metric part of the management system for the considered-purchase companies that we serve.
How would this work? We’re still working on the details, but we do have some solid ideas as starting point. We are going to make the tools available to our early customers and work together with them, constantly testing, experimenting and learning to come up with right formula.
I would divide advocacy into private and public components:
- Private components would include such items as reference and referral behavior.
- Public components would include social media, community, press release and case study contributions.
The weighting between these items is probably variable on industry – I would imagine that the more complex the buying process and value of a new customer, the more the private components should be given greater weight. That is the area that we are focusing on in the near term.
Adapted from Haven, B. (2007). Marketing’s New Key Metric: Engagement, Forrester Research [PDF version].
I think that the key is to match together advocates with the prospects that they influence, and track this interaction through the buying process. This is especially true for considered-purchase companies. Shortening the buying cycle is the primary way that advocates express their influence, it is important to track the impact on the buying process on an individual basis.
Making Advocacy Work
I want to give a shout-out to one of my full-spectrum advocates from my former company, I’ll call her M. M was a force of nature, contributing in all phases of advocacy for us, but especially shining in the private sphere, reflecting her C-level position. When we matched her up with an appropriate prospect, or she referred us to one of her industry colleagues, we knew that the deal was going to close, and close fast. M, from the bottom of my heart, thank you for everything that you have done for me. You have inspired me to build a company to make you and people like you happy and productive.
Can we use technology to make people like M even more effective, and help create more M’s? I think we can. And use the same tools, processes, and metrics to help make companies grow their profits by delighting their customers, transforming their fans into advocates and evangelists.
What do you think? How do you measure advocacy in your organization? What do you most value? Let’s get the conversation started, nobody has written the book on it yet, so it’s up to all of us to figure it out and make it happen.