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					Net Promoter Score: A
Literature Review and
      Perspective


                        1
                               ACSI
   American Customer Satisfaction Index

   Leading index for customer loyalty/satisfaction until
    NPS

   Main aspects
    – Overall satisfaction
    – Expectancy disconfirmation
    – Actual performance vs. the ideal

   Main competition is NPS

For more information on ACSI, visit www.theacsi.org
For an example see Turel (2004), Appendix
                                                       2
                   What is NPS?
   Based on ―recommend intention‖
    – How likely is it that you will recommend us to a friend
      or colleague?
    – 0 to 10

   Net Promoter Score=
    % promoters (9-10) minus % detractors (0-6)

   Increasing promoters and decreasing detractors
    is key to growth
Reichheld (2003)


                                                            3
         Controversy over NPS
   Debate over NPS as ―the ultimate
    question‖ has surfaced

   Critics (Keiningham et al.)

   Supporters (Reichheld)



                                       4
               Weaknesses of NPS
   Not informative, not useful when it stands
    alone

   Not the best predictor of growth

   Too simplistic to represent all facets of
    customer loyalty

Keiningham (2007)



                                                 5
         Other Issues with NPS
   Not the cause of growth—an indication

   Categorization of customers is broad

   NPS=40

Brandt (2007), Mitchell (2008)



                                            6
          In a nutshell…
This is not to discount their importance,
but to point to the fact that any single
metric designed to explain customer
behavior across a diverse customer base is
unlikely to be an adequate gauge upon
which managers can act.
                  Keiningham et al. (2007, p.378)




                                                    7
                  Strengths of NPS
   Excellent starting point

   Identifies most valuable customers

   Standard question and scale

   It makes sense and it works (with
    feedback)



Cardis (2008), Anstead (2008), Blasberg et al. (2008) Mortimer
  (2007), Martin (2008)                                      8
Just ask: does it make logical, common
sense to you? Yeah, it does.
   Reichheld, in an interview with Mortimer (2007)




                                                     9
          Implementation of NPS
   A philosophy

   Some sectors discussed more
Ritson (2007), Auda (2007), Tiltman (2007), Reichheld (2003)




                                                               10
        NPS and Financial Services
   Financial services consistently have lower NPS
    compared to other sectors

   NPS highly strongly related to revenue growth
    for banking—single most reliable predictor

   4 key drivers of NPS in banking


Tiltman (2007), Keiningham (2007), Brandt (2007)
                                                   11
 What does NPS mean for financial
            services?
   Long-term strategy

   Non-traditional (i.e. online) banks have
    grown rapidly and have higher NPS

   Interpret NPS carefully

   Stay invested in mission for satisfied
    customers

Brandt (2007)                                  12
        How to Use NPS Effectively
   Know your customers and what they want

   Follow up

   Collect data regularly

   Act on feedback

Mittal & Kamakura (2001), Blasberg (2008), Nicks
  (2006)
                                                   13
            The Bottom Line
   NPS is a jumping off point…
    – Tells you how many promoters and how many
      detractors you have
    – Allows for comparison relative to other
      companies
    – Serves as gauge for customer loyalty


   …but follow-up is a must.

                                              14
           Future Research
 NPS in the B2B context
 NPS in financial services other than
  banking




                                         15
                                               References
Anstead, M. (2008). How & why to use net promoter scores. Credit Union Journal, 18 February: 8.

Auda, M. (2007) Net promoter score: What is it and should your company be using it? MRPerspectives: Emerging Trends, Topics, and Best Practices in
      Market Research, 22 June.

Blasberg, J., Vishwanath, V., & Allen, J. (2008). Tools for converting consumersinto advocates. Strategy & Leadership, 36(2), 16-23.

Brandt, D. R. (2007). For Good Measure. Marketing Management 16(1): 20-25.

Cardis, P. (2008) A score worth keeping. Professional Builder, January.

Gigliotti, A., Meyers, J., Morgan, N. A., Pingitore, G., & Rego, L. L. (2007). NPS not the only way. Marketing News, 15 September: 48.

Keiningham, T. L., Cooil, B., Andreassen, T. W., & Aksoy, L.(2007a). A Longitudinal Examination of Net Promoter and Firm Revenue Growth. Journal of
      Marketing 71(3): 39-51.

Martin, J. (2008). Get customers to sell for you. FSB: Fortune Small Business, 18(5).

Mittal, V., & Kamakura, W.A. (2001). Satisfaction, repurchase intent, repurchase behavior: Investigating the moderating effect of customer
       characteristics. Journal of Marketing Research, 38, 131-142.

Mitchell, A. (2008). The only number you need to know does not add up to much. Marketing, 3 June: 22.

Mortimer, R. (2007). Reichheld rates reputation. Brand Strategy, October.

Nicks, S. (2006). What not to do with net promoter. BusinessWeek Online, 1 August:12.

Reichheld, F. (2003). The one number you need to grow. Harvard Business Review, December: 1.

Ritson, M. (2007). Simple, a bit sloppy, but not stupid. Marketing, 5 September.

Thompson, B. (2007). Find the "ultimate" loyalty metric to grow your business. Customer Think: Customer-Centric Business Strategy, 1 October.

Tiltman, D. (2007). The only question you need to ask. Marketing, 21 February: 30-32.

Turel, O. (2004). User satisfaction with mobile services in Canada. Proceedings of the Third International Conference on Mobile Business, M-Business


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