As I said, I thought we were in the same space and now it’s clear that we are. Silver bullets don’t exist in life or in business and a range of approaches is always needed.

With regards to additional well designed and published research on NPS, other than that directly related to Satmetrix or Bain, it is a little hard to come by; although some does exist. This paper, “Advocacy Drives Growth”, London School Economics, December 2005 provides some additional independent validation. http://www.ianbrooks.com/useful-ideas/articles_whitepapers/Advocacy%20Drives%20Growth.pdf

I’d be happy to guest blog over at Result Count.

Adam Ramshaw

I think that you “nailed it” in your reply. The key is truly a balanced score card of measures that includes NPS as well as results outcomes.

In this economy, far too many US companies have rushed to NPS and focus on it as the exclusive measure of satisfaction and loyalty. While they may have simplified and cut costs, a single NPS metric is a very dangerous strategy.

My PhD is in statistics and measurement, and I am very interested in finding more research with analyses of co-variance that quantify the predictive value of NPS for results outcomes like sales, mix, market basket. I would be very interested in learning more … or having you point me to some qualtiy research with careful design, sampling and stat.

I’m starting to look for guest bloggers. I like your style and the quality of your blog very much. If you have an interest in being a guest blogger on Result Count, please let me know.

Chris Petersen

Yep I think we in the same space here but we maybe disagree on how.

Every metric can be poorly implemented, including NPS and traditional sales reporting; do we include or exclude bad debt, how bad, etc? So we must not discount an approach just because it can be poorly done.

Incidentally, in general, I favour a traditional (can we use that term yet) balanced scorecard of measures, rather than just one.

The real issue with any metric approach is turning feedback into action. Measuring for measuring’s sake is worthless.

The best NPS implementations do not use NPS as an end in itself. The NPS process is a diagnostic to find the areas and touch-points in the business that are letting down the side. You then extend the NPS process with additional quant and qual feedback to understand how to fix the business and drive up value.

Adam Ramshaw

I would generally agree with your comment that we are in agreement on “do what matters”.

I have no qualms about the utility and use of NPS as one potential indicator of customer satisfaction. It is elegantly simple in design and execution.

While a number of studies have shown that NPS can correlate with company growth, far too many companies fall into the trap of just making the assumption that a) NPS will correlate to their growth, and b) correlation equals causation.

NPS is a potentially vaulable loyalty predictor, but companies need to balance the scorecard with actual results outcomes in terms of sales generated by satisfied customers.

In short, NPS is one loyalty metric … we can NOT always assume that it accurately predicts, especially if the sampling and execution are poorly executed. We also need to balance the scorecard with outcome metrics, which in turn enable intra company validation.

Thanks for the dialog … and useful background information on NPS and how to make it more valuable as a predictor metric.

Chris Petersen, PhD
CEO Integrated Marketing Solutions

I agree that you can’t ask a question like “do you feel loyal” with a yes/no response and expect to get a useful answer. I don’t like the use of the term “feeling loyal” in any case because it can be so many things to so many people. Instead we use the concept of “empirical loyalty”, i.e. loyalty proven by spending patterns and repurchase. If someone re-purchases your product they are empirically loyal. Where I use the term loyalty I mean this empirically loyalty not emotional loyalty.

The Net Promoter Scores process appears to be able to predict which purchasers will be empirically loyalty even if cannot encapsulate a neat value on emotional loyalty and so it is useful in helping to shape your customer management approach.

Adam

If a person would happily recommend a product/brand, does it necessarily mean that this person would answer “yes” to a question like “Do you feel loyal to brand X?”

Thank you for your comment

Gwarlann

This post was mentioned on Twitter by timwtyler: Good response to an NPS negative post on Clickz by Adam on the Genroe blog http://bit.ly/7dhxuF...

Finding a proxy for customer loyalty is the first step in creating a system to build and improve loyalty. If you can determine which customers are feeling more and less loyal then you can determine how they are different and why they feel that way. Then you can act on those areas to improve your business.

Critically, NPS is not an end in itself; it is but a means to an end.

(PS — I know that correlation does not automatically mean causation but it’s a better starting point than no correlation.)