Sep 12

Promoters, word-of-mouth and Net Promoter Score: we discussed these themes with Giuliano Pezzano, Marketing Director by Media World and Saturn

In the early nineties, in the period of maximum diffusion of the customer satisfaction’s culture, Rank Xerox made a rather surprising discovery. Most customers who declared to be satisfied, were willing to consider other competitors’ offers and showed a limited inclination toward brand loyalty. Only very satisfied customers had a clear tendency to loyalty and redemption. In subsequent years, word-of-mouth claimed many industries’ attention, as a very important tool for generating new customers and new sales. We all well know, from our personal experiences, that only when we are very satisfied or dissatisfied, we tend to talk about what we experienced during a purchase or, more generally, during the moments of interaction within a company. All satisfying but not exceptional experiences are not remembered and do not generate word-of-mouth.

The Net Promoter Score (NPS) is an indicator, used to support traditional customer satisfaction measurements. It is spreading rapidly and helps, with ease, to better understand the ability of a company to generate word-of-mouth. The NPS is measured through market researches, asking customers: "How would you recommend this brand (or product) to a friend or colleague?". The responses are categorized in a 0-10 scale, which corresponds to the following categories: "Promoters", i.e. customers who expressed a vote of 9 or 10; "Indifferent" or neutral, i.e. customers who expressed a vote of 7 or 8; "Detractors ", i.e. customers who expressed a vote between 0 and 6. The NPS measures the difference between the percentage of Developers and Detractors. Indifferents are not taken into account. For example, if the 50% of the buyers is a Promoter (i.e. score between 9 and 10), 40% is Indifferent (i.e. score between 7 and 8), and 10% is a Detractor (i.e. score between 0 and 6), the NPS is +40% (50% of Promoters - 10% of Detractors).

We discussed these themes with Mr. Giuliano Pezzano, Marketing Director by Mediamarket, the distribution colossus that in late 2012 will manage about 120 point of sales in Italy with the brands Media World and Saturn. We asked him if and how the NPS is used: "We started to use the NPS in 2008 during a project that still involves the whole international group. The project has the objective to measure and monitor over time the level of satisfaction of customers who make a maintenance warranty claim. We are very proud of this service, that is also a very critical moment for our customers. We also measure the NPS on customers who visit our stores through a larger project, called Customer Experience Management, that we are developing with the support of Valdani Vicari & Associati ". Why is the NPS so successful? "First, it is simple and intuitive. It is also a standard indicator, because each market research uses the same question and the same scale. It is used throughout the world, in every sector, so you can easily find benchmarking data by surfing the Internet. Then, NPS has an advantage with regard to traditional satisfaction measures: traditional measures typically bring to small differences in results. For example, if you measure the level of customer satisfaction for various competitors, you generally obtain that average values are all compressed into a limited range. Often, on a 1-10 scale, all competitors obtain results between 7 and 8, so the research produces limited percentage differences. The visual effect of an histogram, for example, is that all companies appear more or less similar. The NPS instead amplifies the differences, both due to the kind of question used, and, most of all, because of the calculation process. For example, a competitor may have a NPS of -20% and another competitor may have a NPS of +40%. The effect is therefore very effective, also from a visual point of view. "

Furthermore, NPS is characterized by another aspect. Even if the NPS rate is the same, results could bring to different mix of Promoters, Detractors and Indifferent. For example, in the limiting case, a NPS equal to 0 could be generated either by a 50% of Promoters and a 50% of Detractors, or by a 100% of Indifferent. How can you interpret this peculiarity of NPS? "The NPS must be interpreted as well as we interpret the average satisfaction, i.e. by understanding how data are dispersed around the mean. For example, if we evaluate the NPS with respect to the overall brand, the same NPS value could represent two types of companies. The first kind of companies concerns what we might call "Love & Hate", i.e. companies with high percentages of Promoters, but also high percentage of Detractors. These Brands are capable of influencing customers’ perceptions and emotions, thus generating passion or hate. The second kind concerns brands that generate many Indifferent. So, we can suppose that these brands are not capable of significantly affecting customers’ perceptions and emotions. In a very simple way, NPS allows to interpret different customers profiles through these kinds of readings. Maybe also for this reason, it is having a big success."