Net Promoter And Satisfaction Battle For King Of The Ring
July 6, 2007 10 Comments
Let’s start with a confession: I’m a big professional wrestling fan; so I really enjoy a good battle. One thing that I’ve learned from the WWE, is that it’s the storyline that makes a battle come to life. And the Net Promoter vs. Satisfaction debate has all of the story trappings of a great tag team match!
One one side of the ring in the blue trunks is the tag team of Fred Reicheld, “father” of the Net Promoter System (NPS) concept and Satmetrix Systems, implementor of NPS-based survey systems. On the other side of the ring in the red trunks, we find Claes Fornell, “father” of the American Customer Satisfaction Index (ACSI) and ForeSee Results, implementor of ACSI-based survey systems.
Both of these teams are fighting for their approach to be recognized as “THE” measure for tracking customer relationships. To put this into perspective, this type of measure represents only one of the five levels of a voice of the customer program (see my earlier post on voice of the customer programs).
Let’s start by handing out some awards to the teams:
- Best marketed: Net Promoter (Reichheld is very good at touting his concept — and in writing compelling books about it)
- Most mature: Satisfaction (The ACSI has been tracking data since about 1994 and satisfaction has been around as long as I can remember)
- Most quantitative: Satisfaction
- Sexiest: Net Promoter (it’s caused a lot of hooplah)
Net Promoter has gained a lot of momentum over the last few years as many large companies have adopted it. The methodology is pretty straightforward: ask people if they’d recommend your firm. Based on their response, they get categorized as a Promoter, Detractor, or neither. You take the percentage of Promoters and subtract the percentage of Detractors and that leaves you with a Net Promoter percentage.
This debate was enhanced by a recent study cited in the Journal Of Marketing which found that…
Using industries Reichheld cites as exemplars of Net Promoter, the research fails to replicate his assertions regarding the “clear superiority” of Net Promoter compared with other measures in those industries.
Well, if you’re wondering what I really think about this Battle Royale, then here it is. Just like wrestling — the storyline is much more exciting than the reality of the battle. Here’s my take on the contest:
- Net Promoter is not the “ultimate” measure for a customer relationship
- Then again, neither is satisfaction.
- But companies are better off when they have more satisfied than dissatisfied customers and more Promoters than Detractors.
- Don’t expect any single measure to be eutopia. Both measures are good, but neither one has enough information to fully guage customer relationships and to provide enough diagnostic information to make all of the necessary improvements.
- Focus on one measure to build alignment. Picking a single measure to focus on (whether or not it’s perfect) can be very valuable in aligning the organization. If you can get your entire company focused on either raising satisfaction or increasing the number of Promoters, then you will likely see some significant improvements in the reallt important metrics: retention, sales, etc. So, if in doubt, pick one and move on.
- Evolve your metrics over time. The previous two bullets may seem to contradict each other, but they don’t when you look at it over time. The value from locking into a single measure like Net Promoter is as much from aligning the organization as it is around the perfection of the metric. But after the organization gets aligned, firms will need to build out the portfolio of metrics — and find out for themselves which measures are both predictive and diagnostic.
- Look at Customer Advocacy. The ring was too crowded to add another contestant to the match earlier in this post, but for some industries we’ve found another measure that is a powerful indicator of loyal customer behavior. So, in the purple trunks is Customer Advocacy, the perception that the firm does what’s best for customers, not just what’s best for its own bottom line. We strongly recommend that financial services and healthcare firms take a very close look at this measure.
The bottom line: Don’t get too caught up in determining the winner of this battle. Just make sure that you do something and are prepared to learn and evolve over time.
If you’re a client of Forrester, then I also recommend that you read these two research documents: