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Trends with Traction: Meaningful "social" measurement with Net Promoter Score

Posted by Adam Kleinberg on August 5th, 2010 at 3:28 pm

If you're a CMO, you might feel like many of the business metrics you're chasing around in social media seem futile. The tactical click-throughs and engagements on marketing programs are straightforward, but the aggregate business ones don't quite make sense under close inspection. Volume of brand mentions kind of are relevant if you can measure if the mentions are positive, but take a close look at sentiment analysis tools and you'll notice they don't work very well.

Of course, you must measure something. But what?

A growing number of companies are maturing their social media measurement programs by shifting their focus to optimizing their Net Promoter Score. I'm seeing this more and more in the marketplace and I think it's a damn good idea.

What is Net Promoter Score?
There's been a zillion blog posts and a great Wikipedia entry on exactly how NPS works, so I won't go into detail of that here. It is a concept that was introduced first in Harvard Business Review, then in a book called The Ultimate Question by Frederick Recihheld. Essentially, you take a survey of your customers, add up the people (promoters) who are most likely to recommend you to others, subtract the people who are less than enthused with your brand (detractors) and you've got your Net Promoter Score.

Why NPS is a vital metric.
According to Forrester Research, over 83% of purchase decisions today are influenced by word-of-mouth. That means traditional "top-down" approaches to marketing their wares through advertising are simply not enough. Marketers today have no choice but to be concerned with creating an entire brand experience that delights their customers.

NPS shows you if you're doing that. Counting tweets doesn't.

Too simple to be valuable?
No, it's not. Not only does its simplicity make it relatively easy to measure accurately, it also makes it understandable to everyone on your team—both internally and externally. And because they can understand it, they can make it their mission in life to make it better.

Contrast that to most brand valuation measures. They're based on some kooky formula. They're abstract. They're not tangible to your people. They don't deliver accountability.

And if logic isn't enough to cover your arse, NPS is being used right now by brands like GE, American Express and Intuit.

How it's impacting agency/client relationships.
In recent months, my agency is getting more and more requests from clients to help optimize the brand experience for their products. One such client is a Fortune 500 company selling consumer software online. They came to us with a challenge to increase their conversion rates—and to increase their Net Promoter Score. There was a different cast of characters in the room when we presented our approach to their problem than we're used to seeing: alongside the Marketing Director was a Product Manager who had never worked with an agency before.

Increasing NPS is a new area where agencies experienced in both interaction design and in unearthing the kind off insights that fuel great advertising can provide great value to their clients. But NPS is not just something for your agency to enhance from the outside. It's a measure that can get your whole organization on a path to creating happy customers. And that's important because you don't control the conversation anymore—your customers do.

Make sure they say nice things.

2 Responses to “Trends with Traction: Meaningful "social" measurement with Net Promoter Score”

  1. I'll add this perspective by quoting Christine Overby (with Bruce Temkin):

    "Net Promoter has become a popular way to measure customer satisfaction and loyalty. But, as with any single measurement, it doesn't tell the entire story. To put a Net Promoter Score — or any customer metric — into action, companies need to analyze it alongside other insights, operational metrics, and ongoing customer improvement efforts."

    Net Promter Score (tm) has been around for some time now. I am surprised it's the subject of discussion in 2010, but it's a great opportunity to deepen the conversation on social strategies.

    From my earliest research days when I studied the relationships between attitudes, traits, motivational states, behavior and longer term behavioral propensities in consumers to my recent work in business intelligence, social media, and the strategy and design of impactful marketing, no tool serves as a panacea for an organizations tactical and strategic marketing challenges. Yeah, that's a long sentence, but sometimes "long form thinking is required in marketing" just like "long form reading" is driving Jeff Bezos to another victory securing a high-value market segment for Amazon.

    What are the points I'm making for CMOs and marketing leaders in general:

    1) Admit it. "Charming little graphs of click-throughs and engagements look great when displayed with panache in the boardroom, and make CEO's eyes get the sparkle of gold."

    But, that can quickly turn to fool's gold if your organization lacks depth to quickly and properly segment responders, engage each segment appropriately, and have the right mix of products and services to profitably monetize the engagements over time.

    2) Don't adopt a casual, comic-book view of "loyalty" because this kind of a consumer sentiment runs deep into the individuals psyches.

    Fred Reichheld's Net Promoter Score (tm) is a powerful index because it integrates many elements of the consumer experience into a 'summary' number. It does not necessarily give you, the marketer, direct insight into what you're doing, rightly or wrongly, to affect your NPS. That is where your organization's depth of strategic and tactical expertise comes into play. You need to know, quantitatively and qualitatively, what specific elements of the experience you give to your customers actually make them "tick" and draw deeper, profitable engagement. Some marketers have understood this as far back as when Ted Levitt first published "Marketing Myopia."

    3) Net Promoter Score (tm) is just a tool; albeit a good one. Remember, it's neither a "tractor beam" to pull customers toward you nor a "traction beam" that will magically improve your marketing effectiveness by just shining it on your organization. It is a feedback device to help shape marketing strategy toward relational effectiveness. Its real impact comes from how you use its findings to assist in your marketing leadership and your organizational strategy as a whole.

    4) Going "deep" and really putting a social marketing strategy in place changes everything.

    In some ways, "social" marketing has always been part of the marketing strategy of great organizations, but for decades in was tacit and implicit because the mediums of communication were historically so much more one-way (Organization-to-Consumer). The technologies of democratization have changed that situation for the time being. The new forms of media have created an "openness" far beyond even what Gorbachev hinted at as the physical walls fell. If you feel the walls of nations today are porous; the walls of corporations are more so. The impact of this more open marketplace affects not only our businesses but also our manner of thinking, acting and living. We know the impact of "social" upon the marketing experience because each of us feel and experience in our personal lives and experiences with products, services and the "personas" of the vendors we use.

    The big question is "do we connect of own personal experience of marketing strategies" to the strategies we cook up, promulgate, and execute in the marketplace. Do we do the thought experiment of putting our "self" in the place of our organizations' customers, and seriously ask, "At the one-to-one level, would I really like that? Would I buy this? Would I come back? What would I tell my friend about this?" And, we can't hide behind the rationale of saying, "Well, I really don't fit that 'demographic', etc." My friends, classic demographic segmentations are eroding by virtue of the virtualization of 21st century experience so we've got to stop hiding behind the 'tools of marketing,' no matter how effective they are, and put those tools in service of the heart of marketing by putting taking advantage of the openness of communication tools effect more genuine and authentic customer relations. If we delay in doing that, the emerging "social" consumer will socialize our businesses right out of the value chain and onto the street.

    Is Net Promoter Scoring useful? Of course it is? Is net authenticity the real goal? I think so.

    How about you?

    Andy
    PS - Why not post some of your experiences that relate to this?

  2. CORRECTED VERSION: Social traction challenges us to move beyond measurement alone.

    I'll add this perspective by quoting Christine Overby (with Bruce Temkin):

    "Net Promoter has become a popular way to measure customer satisfaction and loyalty. But, as with any single measurement, it doesn't tell the entire story. To put a Net Promoter Score — or any customer metric — into action, companies need to analyze it alongside other insights, operational metrics, and ongoing customer improvement efforts."

    Net Promoter Score (tm) has been around for some time now. I am surprised it's the subject of discussion in 2010, but it's a great opportunity to deepen the conversation on social strategies.

    From my earliest research days when I studied the relationships between attitudes, traits, motivational states, behavior and longer term behavioral propensities in consumers to my recent work in business intelligence, social media, and the strategy and design of impactful marketing, no tool serves as a panacea for an organizations tactical and strategic marketing challenges. Yeah, that's a long sentence, but sometimes "long form thinking is required in marketing" just like "long form reading" is driving Jeff Bezos to another victory securing a high-value market segment for Amazon.

    What are the points I'm making for CMOs and marketing leaders in general:

    1) Admit it. "Charming little graphs of click-throughs and engagements look great when displayed with panache in the boardroom, and make CEO's eyes get the sparkle of gold."

    But, that can quickly turn to fool's gold if your organization lacks depth to quickly and properly segment responders, engage each segment appropriately, and have the right mix of products and services to profitably monetize the engagements over time.

    2) Don't adopt a casual, comic-book view of "loyalty" because this kind of a consumer sentiment runs deep into the individuals’ psyches.

    Fred Reichheld's Net Promoter Score (tm) is a powerful index because it integrates many elements of the consumer experience into a 'summary' number. It does not necessarily give you, the marketer, direct insight into what you're doing, rightly or wrongly, to affect your NPS. That is where your organization's depth of strategic and tactical expertise comes into play. You need to know, quantitatively and qualitatively, what specific elements of the experience you give to your customers actually make them "tick" and draw deeper, profitable engagement. Some marketers have understood this as far back as when Ted Levitt first published "Marketing Myopia."

    3) Remember, Net Promoter Score (tm) is just a tool; albeit a good one. Remember, it's neither a "tractor beam" to pull customers toward you nor a "traction beam" that will magically improve your marketing effectiveness by just shining it on your organization.

    It is a feedback device to help shape marketing strategy toward relational effectiveness. Its real impact comes from how you use its findings to assist in your marketing leadership and your organizational strategy as a whole.

    4) Be prepared to go "deep" and really put a social marketing strategy in place; that changes everything.

    In some ways, "social" marketing has always been part of the marketing strategy of great organizations, but for decades it was tacit and implicit because the mediums of communication were historically so much more one-way (Organization-to-Consumer). The technologies of democratization driven by the World Wide Web have changed that situation for the time being. The new forms of media have created an "openness" far beyond even what Gorbachev hinted at in the early nineties as the physical walls fell between nations. If you feel the walls of nations today are porous; the walls of corporations are more so.

    The impact of this more open marketplace affects not only our businesses but also our manners of thinking, acting and living. We know the impact of "social" upon the marketing experience because each of us personally feel and experience it in our lives and experiences with products, services and the "personas" of the vendors we use. We also understand that "social marketing" increases perceived strategic risk to some marketing leaders, and perhaps there's even some evidence of actual risk increase at times. On the other hand, risk often begets rewards; especially for the well prepared and agile organizations. The social media driven changes to the marketing environment are unlikely to go away while they are likely to change in shape and expression. The bigger risk may be in not proactively embracing and appropriately implementing such strategies within our market spaces.

    The big question related to understanding loyalty and affinity to ur brands and products isn't whether or not we choose to measure, or what measure we choose to use. The questions are: Do we connect our own personal experience of marketing strategies to the strategies we cook up, promulgate, and execute in the marketplace? Do we do the thought experiment of putting our "self" in the place of our organizations' customers? Do we seriously ask, "At the one-to-one level, would I really like that? Would I buy this? Would I come back? What would I tell my friend about this?" And, do we remind ourselves daily that we can't hide behind the rationales like saying, "Well, I really don't fit that 'demographic', etc." My friends, classic demographic segmentations are eroding by virtue of the virtualization of 21st century experience so we've got to stop hiding behind the 'tools of marketing.'

    No matter how effective the tools we have at hand to measure loyaltly, are we ready to put those tools in service of the heart of marketing by taking advantage of the openness of today’s communication tools so we can effect more genuine and authentic customer relations? If we delay in doing that, the emerging "social" consumer will socialize our businesses right out of the value chain and onto the street.

    Is Net Promoter Scoring useful? Of course it is? Is net authenticity the real goal? I think so.

    How about you?

    Andy
    PS - Why not post some of your experiences that relate to this?

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