Trust is illusive! So why use NPS?Back to blog >
‘let’s go somewhere else for dinner, I know a nice small place…’ And this while I had just made a reservation for at least 12 people! I was flabbergasted when I heard this. Especially from my nice ex-colleagues. I asked myself, is this what they call ‘the new normal’?
Do you collect them too? Airmiles? Or do you have another loyalty card? So once the program is cancelled, do you still visit that place? Now would you say that you are loyal to the brand? Or to the discount of the air miles?
Build and Lose Trust
Companies spend millions building a brand, building trust. However these days we see a humongous loss of brand value. In Holland we ‘lost’ big names like Perry Sports, department store V&D and several shoe- and fashion stores. Or, taking it international, think of BP’s leaking Macondo Well in the Gulf of Mexico. Or think back a bit further. Do you remember Toyota’s massive recall in America? Or simply have a look at our neighbour, reliable Germany. What do you think of the manipulated software they created? So who can you trust? Boris J. or Donald T.?
A Little attention goes a long way
Research in the past has shown that for many companies an 80/20 rule exist: 20% of your customers represent 80% of the turnover. Jay Curry invented the Customer Pyramid, which you can use to divide prospects from A to D. The intention is to move D-customers upwards so they become A – customers. However, during each step upwards the number of customers becomes smaller, hence the shape of the Pyramid. It is the idea that the most loyal (and profitable) customers end up on top. So they become the 20% that get all the attention, as they represent 80% of the turnover.
So when you own a hotel, would you really want to invest, building trust, with such a small group? These guests have internet too, and they often follow review websites like Tripadvisor and Yelp.
Brick and Mortar revival?
So can you outperform given this situation? A company called Coolblue seems to think so. Owner of at least 300 websites they are not the cheapest, but totally committed to customer satisfaction. So much so in fact that they even opened up a few brick and mortar stores to serve customers better. Customer Satisfaction is serious business for Coolblue. And Coolblue is a resounding success, here to stay. So how would this be for Cool Cat, the fashion store?
Annoying but Free Apps
How many apps do you have on your phone? And what did you pay for them? If you own an Android phone, probably nothing and when you own an iPhone probably something less than a Euro. So does this mean that everything is for free? One year ago I installed Dropbox to save my pictures. But Dropbox is now filling up automatically with all kinds of pictures from all of my apps. And it keeps on nagging to buy more space. To me that doesn’t feel quite right. In fact I don’t really trust what Dropbox does with my collection of photos’ and data! Perhaps Dropbox is the source of all the daily spam-mails I receive in my ‘IN’ box! Now imagine what I will say, when asked: ‘will you recommend dropbox to your friends?’
NPS – don’t lose sight of the small customer
In various online articles it is written that Coolblue is very keen on NPS (Net Promotor Score). A score that is based on the question: ‘would you recommend this to a friend?’ NPS is a score that is based on a simple principle: take the delighted customers and subtract the dissatisfied and not fully satisfied customers. A smart score. It calls the attention to a group of very satisfied customers but at the same time it makes you pay attention to the prevention of incidents and overly eager and active apps like Dropbox! Clearly it is not a value used by Dropbox.
Two Balancing acts: NPS and Review sites.
So does NPS work? Well, Professor H. Reichheld has proven that the NPS score is a true predictor of future profits. And when you think of all the review sites (with opinions of both satisfied and dissatisfied customers) you can see the logic of his research findings.
We at Market Vision have used the NPS score in our research for hotels, restaurants and theatres for many years now. And the nice thing is, we found that ‘it just works’. Want to read more? Check out my Blogs on our website: https://www.marketvision.nl Or call me at (+31) (20) 6400980.
Jan Mulder, Market Researcher and founder at Market Vision
Jan Mulder leads research activities at Market Vision. Jan he founded Market Vision in 1996 after gaining marketing experience at one of the first Personal Computer companies (Kaypro) and legal experience at Fokker Aerospace and Fokker Space. His current experience is based on a more than 15 years of research in the hotel industry with hotel chains like Radisson and Novotel. Jan also taught research at Windesheim Flevoland for five years. Jan lives and works in Amstelveen, near Amsterdam, Netherlands. Jan holds a B.A. from the University of Puget Sound and a M.Sc. from the University of Oregon.