Predicting The Path of Your NPS

© RedRoute International 2014

Beyond Net Promoter Score

Steering your Future NPS Performance

16th October 2014

Tony Dobbs

Steve Messenger

Robert Whiteford

© RedRoute International 2014 2

And Today’s Score is….

52


So Today’s Score is….

52

Yesterday’s Score was 54

Tomorrow’s Target is…. 58


Net Promoter Score

If tomorrow’s target is 58…

What happens when the actual comes in at 47?

How was it produced & what actions are needed to get back on a positive trajectory?

Should you fix each problem one at a time - or just look for patterns?

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Net Promoter Score

Key ‘dashboard’ metric for many companies

Quick and easy to collect

Industry norms

BUT

Links between NPS and financial performance criticised*

Boards convinced but implementation challenging

Understanding of the metric often poor

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* e.g. Keiningham, Cooil, Andreassen, Aksoy; Journal of Marketing, July 07


Five problems with trying to use NPS


1. NPS is a “Derived” Metric

Promoters Passives Detractors NPS Score

20% 80% 0% 20

60% 0% 40% 20

Different sentiments… different causes… but SAME SCORE!

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2. NPS is a “Limited” Metric

Only partial measure of the drivers of business performance

And links to actual behavioural loyalty difficult to define / measure

Like market share, a good NPS score can be ‘bought’

e.g. by incentivising respondents

Impacted by external events:

Economic trends

Competitor activities

Business discontinuities (e.g. new stores)

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3. NPS is the “Wrong” Metric

People feel loyalty to “Persil” , not to “Unilever”

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4. NPS is a “Retrospective” Metric

Based on (recent) previous experience

Senior management may respond by saying:

• “Yes but… we don’t work way any more so its OK”

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5. NPS is an “Insufficient” Metric

The best NPS score in the US telecommunications industry is 11

But best because of:

Its technology?

Its service?

Its coverage?

All of these?

Or more?

And if the score for your own telecommunications company is

below 11 – what do you do about it?

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5. NPS is an “Insufficient” Metric (cont.d)

“And what is the main reason you gave us that score?”

Even with (real time) individual verbatim responses…

Feedback seen as tactical or ‘one-off’

• Senior management not engaged

• Other departments not buying-in

• Too difficult to fix

Reflects current practice & content

• Not underlying issues / unmet needs

• Not tracking the ‘big picture’

• Limited impact at top line

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So Problems exist with NPS but…

13 * PRmoment.com **Kantar Till Roll Market Share Reports

NPS was indicating future problems for Tesco as early as 2011 – even

though Tesco’s market share in that year was at a high point of 31%

NPS 2011

Change in Share 2014 v 2011


Key Issue: NPS is a Summary Metric…

CX is multi-faceted

TUQ2* highlights WTR driven by both Functional Drivers &

Emotional Drivers

Functional: Price; Accessibility;

Quality; Features; etc

Emotional: Feel good about their

relationship with the brand/company/product

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Tesco “Value” rating on YouGov

BrandIndex™ Tracker declined

throughout 2011 : driving NPS down

If NPS is too high-level & non-diagnostic,

And individual feedback is too low,

What measures are needed?

*The Ultimate Question 2, Reichheld & Markey


Beyond NPS

Is there an easier way to “see the wood from the trees”?

One that…

Maximises senior management attention & action without losing

simplicity?

Links management of NPS to actual underlying business

performance?

Leads to fixing the real cause of the problem, not just the metric?

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AIME Beyond Net Promoter Score

Using the AIME Tracker to Drive NPS - A Case Example

AIME : The Analysis & Improvement of Marketing Effectiveness


Values & Attitudes

“What’s Important”

Background: Modelling Loyalty Card Data

Behaviour driven by interplay of needs, attitudes & circumstances

Behaviour

“What’s Best”

“What’s

Needed”

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Circumstances

“What’s Possible” Academic Background:

Dick & Basu NYU

+ many other studies


Motivations: Mix of Emotional & Functional

“Why people choose Brand X to meet Need Y in Circumstance Z”

*Behaviour can be of any type, e.g. from visit your web site to purchase your brand 18


Know From Modelling Customer Level Data

Five Key Motivational Drivers:

Relevancy - Do I need this?

Identification - Is this a brand I would be proud to use?

Accessibility - What’s the time, effort, & cost involved?

Value - Is the benefit I’ll get worth the effort/cost?

Confidence* - What are the chances I’ll be disappointed?

19 *Sometimes termed “Risk” (of being disappointed)


Does Your Offering….

Provide the Right Solution

From the Right Brand

For the Right Effort

At the Right Price

In the Right Way

ENP “Effective Net Preference”

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ENP = (weighted) Average


AIME Tracker: Measuring Perceptions

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Formal Surveys

Top-line Surveys

Social Media Tracking

Pre-Campaign

During

Campaign

Verbatim Responses

(e.g. to “And why did you give that rating?”)

Using data from

any sources


Effective Net Preference Measure

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Decision-maker Perceptions of..

ENP

Brand 1 Brand 2 Brand 3


Client Case Study (Office Supplies - Direct)

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Right

Sol’n

2011

Right

Brand

Overall

ENP

Right

Way

Right

Price

Right

Effort

Customer

Group

Poor score on ‘Right Brand’ holding back ENP by a substantial margin (at least 5 points)

US-owned

Multi-channel

c. £300m UK turnover

c. 500,000 customers

c. 4 purchases/yr ave.

Basket Item Trx data

Track NPS globally

Working with RRI

since 2009


Knew ENP Correlated with NPS

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Simple Correlation >67%, with modelling >85%

Scales = Percentages as decimals

Willingness to Recommend is also a “Behaviour”


Knew ENP Correlated with Share of Wallet

Stated Share of Wallet v Effective Net Preference (ENP)

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Based on a customer database of >500k and a survey base of >25,000 customers

Customer ENP Score

Share

of

Wallet

%


Knew ENP Predictive of Future Activity

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Customer ENP Score

% Spending

Again in 18m

Post-ENP

Measurement

If ENP could be increased by 1%, it was estimated sales would increase by 0.7%


Media Campaign to Address Branding Issue

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Impact of Media Campaign

Brand perceptions improved over a series of bursts

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Other Driver Scores Largely Unchanged

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Feb 2011 Feb 2014

Right

Brand

Right

Brand

Right

Sol’n

Overall

ENP

Right

Way

Right

Price

Right

Effort

Right

Sol’n

Overall

ENP

Right

Way

Right

Price

Right

Effort


WTR & NPS follow the Direction of ENP

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Brand Performance Recovered

Improvement in ENP created c.£18m per year extra sales

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Other Uses of the ENP Metric

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Major UK Supermarket


Implications for Managing WTR & NPS

ENP summarises customer opinions on 5 key

strategic dimensions that drive behaviours

By managing overall ENP, the future direction

of WTR, NPS (and sales) can also be managed

AIME Tracker measures ENP using your

available (big) data sources

Providing the Board with predictive diagnostics

beyond NPS creates engagement & action

It Works!

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