Predicting The Path of Your NPS

© RedRoute International 2014
Beyond Net Promoter Score
Steering your Future NPS Performance
16th October 2014
Tony Dobbs
Steve Messenger
Robert Whiteford

© RedRoute International 2014 2
AndToday’s Score is….
52

SoToday’s Score is….
52
Yesterday’s Score was 54
Tomorrow’s Target is…. 58

Net Promoter Score
 If tomorrow’s target is 58…
 What happens when the actual comes in at 47?
 How was it produced & what actions are needed to get back on a positive trajectory?
 Should you fix each problem one at a time - or just look for patterns?
4

Net Promoter Score
 Key ‘dashboard’ metric for many companies
 Quick and easy to collect
 Industry norms
BUT
 Links between NPS and financial performance criticised*
 Boards convinced but implementation challenging
 Understanding of the metric often poor
5
* e.g. Keiningham, Cooil,Andreassen,Aksoy; Journal of Marketing, July 07

Five problems with trying to use NPS

1. NPS is a “Derived” Metric
Promoters Passives Detractors NPS Score
20% 80% 0% 20
60% 0% 40% 20
 Different sentiments… different causes… but SAME SCORE!
7

2. NPS is a “Limited” Metric
 Only partial measure of the drivers of business performance
 And links to actual behavioural loyalty difficult to define / measure
 Like market share, a good NPS score can be ‘bought’
 e.g. by incentivising respondents
 Impacted by external events:
 Economic trends
 Competitor activities
 Business discontinuities (e.g. new stores)
8

3. NPS is the “Wrong” Metric
 People feel loyalty to “Persil” , not to “Unilever”
9

4. NPS is a “Retrospective” Metric
 Based on (recent) previous experience
 Senior management may respond by saying:
• “Yes but… we don’t work way any more so its OK”
10

5. NPS is an “Insufficient” Metric
 The best NPS score in the US telecommunications industry is 11
 But best because of:
 Its technology?
 Its service?
 Its coverage?
 All of these?
 Or more?
 And if the score for your own telecommunications company is
below 11 – what do you do about it?
11

5. NPS is an “Insufficient” Metric (cont.d)
 “And what is the main reason you gave us that score?”
 Even with (real time) individual verbatim responses…
 Feedback seen as tactical or ‘one-off’
• Senior management not engaged
• Other departments not buying-in
• Too difficult to fix
 Reflects current practice & content
• Not underlying issues / unmet needs
• Not tracking the ‘big picture’
• Limited impact at top line
12

So Problems exist with NPS but…
13
* PRmoment.com **KantarTill Roll Market Share Reports
NPS was indicating future problems forTesco as early as 2011 – even
thoughTesco’s market share in that year was at a high point of 31%
NPS 2011
Change in Share 2014 v 2011

Key Issue: NPS is a Summary Metric…
 CX is multi-faceted
 TUQ2* highlights
WTR driven by both
 Functional Drivers &
 Emotional Drivers
 Functional:
 Price; Accessibility;
Quality; Features; etc
 Emotional:
 Feel good about their
relationship with the
brand/company/product
14
Tesco “Value” rating onYouGov
BrandIndex™Tracker declined
throughout 2011 : driving NPS down
If NPS is too high-level & non-diagnostic,
And individual feedback is too low,
What measures are needed?
*The Ultimate Question 2, Reichheld & Markey

Beyond NPS
 Is there an easier way to “see the wood from the trees”?
 One that…
 Maximises senior management attention & action without losing
simplicity?
 Links management of NPS to actual underlying business
performance?
 Leads to fixing the real cause of the problem, not just the metric?
15

AIME Beyond Net Promoter Score
Using the AIMETracker to Drive NPS - A Case Example
AIME : The Analysis & Improvement of Marketing Effectiveness

Values & Attitudes
“What’s Important”
Background: Modelling Loyalty Card Data
 Behaviour driven by interplay of needs, attitudes & circumstances
Behaviour
“What’s Best”
“What’s
Needed”
17
Circumstances
“What’s Possible”
Academic Background:
Dick & Basu NYU
+ many other studies

Motivations: Mix of Emotional & Functional
 “Why people choose Brand X to meet NeedY in Circumstance Z”
*Behaviour can be of any type, e.g. from visit your web site to purchase your brand
18

Know From Modelling Customer Level Data
 Five Key Motivational Drivers:
 Relevancy - Do I need this?
 Identification - Is this a brand I would be proud to use?
 Accessibility - What’s the time, effort, & cost involved?
 Value - Is the benefit I’ll get worth the effort/cost?
 Confidence* - What are the chances I’ll be disappointed?
19*Sometimes termed “Risk” (of being disappointed)

DoesYour Offering….
 Provide the Right Solution
 From the Right Brand
 For the Right Effort
 At the Right Price
 In the Right Way
ENP
“Effective Net Preference”
20
ENP = (weighted) Average

AIME Tracker: Measuring Perceptions
21
Formal Surveys
Top-line Surveys
Social MediaTracking
Pre-Campaign
During
Campaign
Verbatim Responses
(e.g. to “And why did you give that rating?”)
Using data from
any sources

Effective Net Preference Measure
22
Decision-maker Perceptions of..
ENP
Brand 1 Brand 2 Brand 3

Client Case Study (Office Supplies - Direct)
23
Right
Sol’n
2011
Right
Brand
Overall
ENP
Right
Way
Right
Price
Right
Effort
Customer
Group
 Poor score on ‘Right Brand’ holding back ENP by a substantial margin (at least 5 points)
US-owned
Multi-channel
c. £300m UK turnover
c. 500,000 customers
c. 4 purchases/yr ave.
Basket ItemTrx data
Track NPS globally
Working with RRI
since 2009

Knew ENP Correlated with NPS
24
Simple Correlation >67%, with modelling >85%
Scales = Percentages as decimals
Willingness to Recommend is also a “Behaviour”

Knew ENP Correlated with Share ofWallet
Stated Share ofWallet v Effective Net Preference (ENP)
25
Based on a customer database of >500k and a survey base of >25,000 customers
Customer ENP Score
Share
of
Wallet
%

Knew ENP Predictive of Future Activity
26
Customer ENP Score
% Spending
Again in 18m
Post-ENP
Measurement
If ENP could be increased by 1%, it was estimated sales would increase by 0.7%

Media Campaign to Address Branding Issue
27

Impact of Media Campaign
 Brand perceptions improved over a series of bursts
28

Other Driver Scores Largely Unchanged
29
Feb 2011 Feb 2014
Right
Brand
Right
Brand
Right
Sol’n
Overall
ENP
Right
Way
Right
Price
Right
Effort
Right
Sol’n
Overall
ENP
Right
Way
Right
Price
Right
Effort

WTR & NPS follow the Direction of ENP
30

Brand Performance Recovered
 Improvement in ENP created c.£18m per year extra sales
31

Other Uses of the ENP Metric
32
Major UK Supermarket

Implications for Managing WTR & NPS
 ENP summarises customer opinions on 5 key
strategic dimensions that drive behaviours
 By managing overall ENP, the future direction
ofWTR, NPS (and sales) can also be managed
 AIME Tracker measures ENP using your
available (big) data sources
 Providing the Board with predictive diagnostics
beyond NPS creates engagement & action
 It Works!
33

Predicting The Path of Your NPS

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