 VP, Marketing
Robin Simkins
Net Promoter in the New Economy
Influential Marketing Theory – Does it Hold True in the Web 2.0 World?
Is being a “fan” or having a “friend” on Facebook today’s equivalent of the Net Promoter? Is the methodology proposed by Fred Reicheld, author of “The Ultimate Question,” unnecessarily algorithmic in 2007? Can we handle this more simply by reviewing the number of associates on a given page to understand the viability and likelihood to recommend a particular business to a similarly situated colleague (or friend)?
How do marketers grow their businesses? According to Reichheld, ”growth occurs by delighting consumers to the extent that they rave about their experiences to their friends and colleagues.” Consumers are willing to put their reputation on the line in order to promote a marketer’s exceptional product or service. What better way to advertise online than to have your own customers do it for you and free of charge?
Reichheld explained that the best way to gauge the efficiency of a marketer’s growth is to calculate their Net Promoter Score. The Net Promoter Score, NPS, is based off one simple question, “Would you recommend us to a friend or colleague?” The NPS is derived from the customers’ rating of their likelihood to recommend a marketer’s product or service. The resulting score is essentially a way to quantify word of mouth, the most trusted type of advertising among global Internet users (Nielsen, Online Global Consumer Study, April 2007).
The NPS calculation tracks a marketer’s “promoters” and “detractors.” Promoters are highly enthusiastic customers who will definitely recommend a marketer’s business; detractors are considered to be extremely dissatisfied customers, warning others about their unfavorable experiences. The percentage of detractors is subtracted from the percentage of promoters to reveal the NPS. The NPS quantifies word of mouth to help marketer’s determine the health of their business.
Eighty-one percent of U.S. consumers consider word of mouth as the most trustworthy source for purchase ideas and information (eMarketer, Word of Mouth Works Worldwide, October 2007). This type of communication has exploded with the emergence of Web 2.0. based communities that facilitate information exchange among individuals with common interests. Individuals join together to learn about each other, share their experiences and provide thoughts, including valuable reviews and recommendations. This social medium in turn has vast potential for online marketers who wish to grow their business. They can benefit from the trusted networks by advertising to their customers and their customers’ closest friends. According to The Nielsen Company, 78 percent of Internet users rated recommendations from consumers as the number one type of trusted advertising among 13 other channels of media including newspapers, brand Web sites, TV and magazines (Nielsen, Online Global Consumer Study, April 2007).
Facebook’s new advertising platform, Facebook Social Ads, is a great example of how marketers can leverage online communities and incorporate the customer’s voice in their messaging. Using Facebook Social Ads, marketers bid on impressions or clicks from targeted Facebook users. Users who become “fans” of a product or brand basically become “promoters,” with their endorsement showing up on their personal profiles and in news feeds visible to their friends. Friends may also see the endorsement piggy-backing on a targeted ad. Essentially, the ad will include the user’s picture and description of the action they took in association with the marketer’s product or service.
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