Net Promoter Score

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Net Promoter Score

  1. 1. NET PROMOTER SCORE (NPS) Benefits & Drawbacks28.04.2008Michael Waltinger & Jörg Milde
  2. 2. NET PROMOTER SCORE (NPS)Stuttgart Media University | Summer Term 2008
  3. 3. BACKGROUND Chart 3SOURCE: REICHHELD, FRED (2003-12): HARVARD BUSINESS REVIEW
  4. 4. THE ULTIMATE QUESTION “HOW LIKELY IS IT THAT YOU WOULD RECOMMEND OUR COMPANY TO FRIENDS OR COLLEAGUES?” Chart 4SOURCE: REICHHELD, FRED (2006): THE ULTIMATE QUESTION
  5. 5. THE ULTIMATE QUESTION “HOW LIKELY IS IT THAT YOU WOULD RECOMMEND OUR COMPANY TO FRIENDS OR COLLEAGUES?” EXTREMELY NOT LIKELY LIKELY AT ALL 10 9 8 7 6 5 4 3 2 1 0 PROMOTER PASSIVE DETRACTOR Chart 5SOURCE: REICHHELD, FRED (2006): THE ULTIMATE QUESTION
  6. 6. NET PROMOTER SCORE (NPS) EXTREMELY NOT LIKELY LIKELY AT ALL 10 9 8 7 6 5 4 3 2 1 0 PROMOTER PASSIVE DETRACTOR E.G. 70 % E.G. 10 % E.G. 20 % PROMOTERS (70 %) – DETRACTORS (20 %) = NPS (50) Chart 6SOURCE: REICHHELD, FRED (2006): THE ULTIMATE QUESTION
  7. 7. NET PROMOTER SCORE (NPS) Chart 7SOURCE: NET PROMOTER INDUSTRY REPORT FINANCIAL SERVICES (2007) - BASED ON BAIN OR SATAMETRIXSURVEYS
  8. 8. NET PROMOTER SCORE (NPS)¢  Loyalty/Growth-Indicator¢  Word of Mouth-Index¢  Proven empirical relevance of recommendations¢  Simple to survey and assess (no „Black Box-Index ) Chart 8SOURCE: VOCATUS (2007): DER NPS AUS SICHT DER MARKTFORSCHUNG; GOLDMAN (2008): MEASURE THE LOVE
  9. 9. CRITICISM ON THE NPSStuttgart Media University | Summer Term 2008
  10. 10. Net Promotor Score Basics¢  NPS developed by Fred Reichheld and Consulting Agency Bain & Company¢  Main Criticism by Market Research Institutes Chart 10
  11. 11. NPS DRAWBACKS I¢  Just an Index, not a dedicated forecasting model¢  Not content relevant¢  MissingDimensions - Involvement - Attractivity of alternatives¢  Only Promotors and Detractors relevant - 20% in upper scale segment missing (passives?) Chart 11¢  Difference between ‚intention‘ and ‚action‘
  12. 12. NPS DRAWBACKS II¢  No international, intercultural comparability Chart 12à Cultures tend to vote on scales differently
  13. 13. NPS DRAWBACKS III¢  Notapplicable on all branches à different importance of mouth to mouth propaganda in various branches - low involvement: toilet brushes - high involvement: tourism industry¢  Ashby s law “The larger the variety of actions available to a control system, the larger the variety of perturbations it is able to compensate.” Chart 13
  14. 14. CONCLUSION¢  NPSrepresents only a tiny piece of empirical research.¢  NPSas a stand alone method to determine customer loyalty it not valid NPS as a first indicator which needs to be¢  à extended through further market research methods in order to create reliable results Chart 14
  15. 15. Thanks a lot & take care! Chart 15

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