More Trouble for Net Promoter Score? A Longitudinal Examination of 'Net Promoter' on Firm Revenue Growth

The latest critique of the Net Promoter Score is now available for free download from the Journal of Marketing. The article is titled "A Longitudinal Examination of 'Net Promoter' on Firm Revenue Growth" and written by Timothy L. Keiningham, Bruce Cooil, Tor Wallin Andreassen and Lerzan Aksoy.

I wrote about this article in an earlier post (one of many in a series on the Net Promoter Score topic). Although there are still some differences in methodology (like slightly different wording for the likelihood to recommend question and different time periods used in the analysis) this study is the closest to an apple-to-apples comparison between the net promoter score and satisfaction and loyalty indicators.

Here's the abstract:

Managers have widely embraced and adopted the Net Promoter metric, which noted loyalty consultant Frederick Reichheld advocates as the single most reliable indicator of firm growth compared with other loyalty metrics, such as customer satisfaction and retention. Recently, however, there has been considerable debate about whether this metric is truly superior. This article (1) employs longitudinal data from 21 firms and 15,500-plus interviews from the Norwegian Customer Satisfaction Barometer to replicate the analyses used in Net Promoter research and (2) compares Reichheld and colleagues' findings with the American Customer Satisfaction Index. 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.

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Tags: WOM word of mouth Word-of-Mouth Marketing buzz marketing viral marketing marketing communication Net Promoter Score

Bon Nuit Geneve

I just had a wonderful experience in Geneva, Switzerland where I spoke at the Marketing and Direct Focus Europe 2007 conference hosted by Baptie and Company. I gave the keynote address on the second day which is traditionally reserved for an academic offering her/his view on the state of marketing (thanks to Paul Marsden for the referral). This conference was focused on the B2B sector, and specifically the technology industry. I feel like I contributed a lot to the conference -- I spoke on the implications of Web 2.0 to companies and the four phase model of conversational marketing that I've been developing (oblivious, monitoring, listening and responding, and joining in) -- but ultimately I feel like I took away more than I contributed.

The people there were incredibly smart, representing marketing professionals for many of the large and middle-sized tech firms in Europe, Middle East, and Africa. Attendees included Google, Microsoft, HP, Siemens, Alcatel-Lucent, and Oracle just to name a few of the larger firms.

The Chatham House Rule applied to the workshops and presentations -- which is the UK version of "What happens in Vegas stays in Vegas" -- so I won't go into a lot of the details about what the main themes and take-aways were. However, I will comment on my reflections for how Web 2.0 played out at the conference.

I found that many companies were focusing on Web 2.0 and the implications to their business. This is quite understandable and happens anytime something as powerful as this cultural shift comes along. However, I couldn't help but think that people were focusing too much on how to leverage Web 2.0 technologies, like Second Life, LinkedIn, YouTube, etc., without a clear articulation of WHY they would even want to leverage them. That is, I think it's more productive to START WITH the goals they would like to accomplish, and then think of the range of ways these goals could be accomplished, perhaps including Web 2.0 technologies and perhaps not. It's a subtle, but I think important point.

As I mentioned above, I found this conference extremely valuable for my understanding of the B2B tech sector in Europe and the people extremely pleasant. People were genuine and willing to share their own insights with others. It was a wonderful experience. Thanks to Rod Baptie and crew for their incredible efforts at organizing this conference. I look forward to the opportunity to participate in such an event again!

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Tags: WOM word of mouth Word-of-Mouth Marketing buzz marketing viral marketing marketing communication

New Media Summit 2007 Resources

Well, the folks at Edelman and PRWeek outdid themselves in putting on an informative and interactive conference on the implications of social media for the communication industry (esp. PR and journalism) and educating current students.

I started blogging during the event (see my last post) but was unable to keep up with all that was going on. Fortunately, the organizers taped everything and posted it on its New Media Summit 2007 website. I understand that summaries and/or transcripts of the sessions will also be available. These will make for great teaching tools as well. (Hopefully Edelman will leave this site up for a while or enable educators to load the videos on to faculty members' course management systems for when we teach classes).

A consistent theme for the conference was the following observation offered initially in the opening panel last night:

People have a tendency to overestimate the short-term consequences of the new social media technologies, and underestimate the long-term consequences.

Clearly, we're still in the early days of these consequences and it's an exciting time to be researching and teaching in this space.

It's hard to say which was the best panel of the day, but if you are going to view just one or two of them, I would pick the "Co-creating Content" panel or the "What's Next for New Media" panel. On the Co-creating Content panel I really enjoyed hearing from the Zagats because they talked about how they were involved in customer reviews and co-creation many years ago when first starting their Zagats guides. Plus, some of the jokes from Bob Mankoff were very, very funny (even more amusing were Jackie Price's attempts to reign him in and keep the panel on topic -- eventually even she had to give in to his wit; by the way, if you want to learn how to do an excellent job of transitioning between speakers as a moderator watch how Jackie did this -- they were seamless!).

Of course, you can watch my panel session as well ("Enabling the Digital Generation"). Having the chance to participate with David Weinberger and Merrill Brown was a pleasure!

Anyhow, enjoy the videos and thanks again to Edelman!








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Tags: WOM word of mouth Word-of-Mouth Marketing buzz marketing viral marketing marketing communication Edelman New Media Summit 2007

Live from New York, It's Friday Morning at the New Media Academic Summit

Blogging today from the Harvard Club on 44th street in the Big Apple at the Edelman New Media Academic Summit. The first panel was about engaging consumers through social networks. Panelists include Scott Donaton (Publisher of Advertising Age), Babs Rangaiah (Director, Media & Entertainment, Unilever USA), Scott Heiferman (co-founder and CEO of Meetup), and moderated by Pam Talbot (President and CEO, Edelman US).

Babs talked about the Axe, Dove, and Whisk initiatives. For the Whisk laundry detergent campaign he talked about where people were able to upload their own photos of kids being dirty and place them on the cover of Sports Illustrated. Then people had the ability to print this picture as well as forward an e-version to other people. A key take-away for me from what he had to say was the following quotation: "Build the brand in a way that makes customers want to play." This is a key point because it's about providing tools and resources that give people sufficient flexibility to do things that are relevant to their lives.

Scott Donaton from Advertising Age talked about how he sees the challenge as moving from an intrusion model to an invitational model for marketing and advertising. A key point here is figuring out what elicits the invitation. A first answer to this question that he provided was "relevancy". The invitational model forces companies to come up with something useful and relevant to people's lives that make those people want to invite the brand in.

Scott Heiferman from Meetup anticipates a backlash from people living their lives too much in front of screens and feels there is tremendous power of offline networks of people who can use Meetup to help "organize people" (as distinct from Google's motto of "organizing information"). He explained how Meetup groups are locally organized and are built around shared interests. For example, in New York City dog lovers are organized by sections of New York and by dog breeds (for example, doxon lovers on the upper East side). On their own, the organizers of each of these Meetup groups banded together and went to retailers who specialized in dog products and services (like Doggie Day Care) and made a proposal. They basically said that if the retailers would provide a discount for their Meetup members, then the Meetup members would promote those retailers among their social networks. I found this to be an interesting idea of people initiating interactions and inviting companies in based on what was relevant to themselves (and, coincidentally, mutually beneficial to the company as well).

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Tags: WOM word of mouth Word-of-Mouth Marketing buzz marketing viral marketing marketing communication Edelman New Media Academic Summit

New Media Acadmic Summit 2007

I'm very excited to announce that I will be participating on a panel at the New Media Academic Summit 2007 in New York City next week. It's hosted by Edelman and PRWeek is the media partner.

As stated on the summit website, the summit will...

...convene business leaders, academics, journalists, bloggers and communications professionals to discuss the challenges facing universities in preparing the next generation of graduates.

The agenda is terrific and includes such topics as:

The Changing Media Landscape
Engaging Consumers Through Social Networks
Co-Creating Content
Building Corporate Reputation from the Inside Out
Advocacy and Grassroots Engagement
The Era of Citizen Journalism
Ethics and Rules of Engagement in New Media
Enabling the Digital Generation
What's Next for New Media

I'll be on the "Enabling the Digital Generation" panel which is billed as a "brainstorming session [that] looks at the digital Q of college graduates and expectations employers have of a college graduate’s digital knowledge." My co-panelists are David Weinberger from Harvard's Berkman Center for Internet & Society and John Edelman, Managing Director of Global Human Resources at Edelman.

There look to be about 80 participants from a number of leading academic programs across the country. I'm told they will be webcasting each session so be sure to check it out!

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Tags: WOM word of mouth Word-of-Mouth Marketing buzz marketing viral marketing marketing communication New Media Academic Summit 2007