Member Since: 14th Mar 2001
Director PRISM Consulting (UK) Ltd
My discussion replies
15th Oct 2009
The core principle of recommendation as loyalty predictor, and the method and score derived from that, are a valid metric that can be particularly useful for rapid assessments, preventive monitoring, or even as an ingredient in more sophisticated (and balanced) measurement toolkits.
Like every successful tool, there is a high risk of believing the hype that it is a panacea for all needs and purposes. Many of the proponents - from the originators to various solution- and service porviders, would claim that it is 'the one and only number you need' to build and maintain great customer relationships. Which is (severely) misleading.
Recommendation is a highly correlated proxy, but only one aspect of the complex set of behaviours that define a loyal customer. How about a 'promoter' who frequently recommends, but never buys our product, preferring instead our rival's cheaper (or better quality) option? He is less loyal than a similar recommender, who buys a lot of our stuff every month. How about those, who recommend, but do not give us permission to contact them - as opposed to those, who not only trust us, but actively participate in discussions helping to improve our processes or products?
There are many other metrics that would, in combination, more accurately reveal the strength of our relationship with customers and help us make better decisions. NPS can be one of them, sure. Never 'the only one' as sometimes peddled.
Another aspect demanding caution is the formulation of the 'ultimate question'. Stemming from a belief that loyalty is an attitudinal category, too often customers are asked 'Would you recommend XYZ to your friends and colleagues?' This, at best,can only capture good intentions. Even not necessarily intentions to act, but just the intention to give a good answer to the question.
Loyalty is a behaviour (or set of behaviours). As much as attitudes can motivate behaviours, it is far more reliable if we measure what people do, rather than what they say they may do. I would always prefer, and recommend to clients, to use evidence of actual recommendation - which can be captured through dedicated mechanisms like variations on the 'meber get member' schemes, or by monitoring and analysing social media.
In cases where we have no other choice but to trust customers and 'take their word for it' - we can ask a slightly different question: 'To how many other customers have you recommended us in the last X months?' This is about action, not intention. People would sure stop and think: 'Have I...?' And the quantitative element of 'how many' prevents them from giving the 'easy and polite' answer of just 'Yes'. Most respondents would try to count the occurences in their memory - and may be shocked to discover that not all good intentions result in actions. Scores will be lower using this method - but far more accurate and useful to drive our decisions.
There are no simple answers to the complex challenge of customer relationships - and asking simple questions should only be done with great caution.