Net promotion score set to takeoff

Too many marketing professors spend their lives just with students or bashing away at arcane academic research that no-one will ever read. Here, I thought to myself, is what marketing professors should be doing. I was attending, and speaking at, the first annual net promoter score session for superannuation funds initiated by Fund Executives Association Ltd (FEAL). As I listened to fund managers share experiences about member satisfaction, marketing tactics and consumer research I became increasingly convinced that this was an essential day for all those involved – including me. It was a long time in the making. More than two years earlier Michael Baldwin, CEO of FEAL, and I had talked long and hard about the possibility of offering superannuation funds the chance to measure their member satisfaction and share insights on their performance. At the time, many funds still seemed unsure of whether they were offering a competitive service or had truly satisfied members. With the market for superannuation likely to open up over the next decade it was a precarious position to find yourself in.

So with FEAL’s help, we set out to do something about it. We brought Customer Service Benchmarking Australia (CSBA) in and asked them to use their national network of researchers to collect and analyse Net Promoter Score [NPS] data for funds that signed up for the research. The plan was simple – we would approach a random selection of each fund’s members and ask them the NPS question: how likely would you be to recommend your super fund to friends of colleagues? An NPS is a rather bold little calculation. The concept was developed by Fred Reichheld, a consultant, strategist and author on loyalty and was introduced in December 2003. Respondents answer the recommendation question on an 11 point scale from 0(not at all likely) to 10 (extremely likely). Members who provide a rating of nine-10 are “promoters”; those who give ratings of six or lower are “detractors”. The net promoter score itself is a simple, single number obtained by subtracting the proportion of detractors from the proportion of promoters. Reichheld argues that this single question and its resulting score is the only metric you need to measure satisfaction. He also claims a correlation between a high NPS and future revenue growth. And the metric has taken off.

Online forums have sprung up, full of managers keen to discuss it. Highprofile chief executives have publicly praised NPS and added it to their management systems. But two audiences are genuinely unhappy with NPS. The first is market research firms, which make their money from long-winded analyses of the market that are so complex they require lots of researchers to explain the findings to befuddled clients. A second group, even more appalled by the apparent over-simplicity and over-exposure of NPS are marketing professors – particularly those who study customer satisfaction. Publicly outraged that sloppy statistical methods and clear research bias were being accepted at face value, privately they were also unhappy that their complex statistical analyses, which have had next to no impact on marketers, were being superseded by a single score and percentage from an ex-management consultant who did not even have a PhD. Market researchers and academics are correct to question the lazy analysis and over-selling of NPS. Certainly the link between a high NPS and future business growth has yet to be fully proved. Despite this, I remain a big fan of NPS for very prosaic reasons. For starters, I have seen more non-marketing executives quote NPS in the past 12 months than all the other marketing concepts put together.