Tuesday, September 1, 2009

Another Challenge to the Ultimate Question

Once again there is a challenge to the use of the Ultimate Question. The Ultimate Question is used to create a Net Promoter Score (NPS) and has become very popular as a process to understand customers. It is a single question used on customer surveys that is used to compute a Net Promoter Score, a measure which its developers believe is the best predictor of business growth. A new book entitled Beyond the Ultimate Question takes aim at NPS and states that NPS is no more predictive of business growth than other commonly used customer loyalty questions such as overall satisfaction or likelihood to purchase.

The author, Dr. Bob Hayes, states that these three questions (likely to recommend, likely to purchase and overall satisfaction) all measure advocacy loyalty. Dr. Hayes suggests there are three robust, reliable measures of customer loyalty and then demonstrates how each of the three metrics predict different types of business growth. The three metrics are:
1. Advocacy
2. Purchasing
3. Retention
The idea proposed is that when a business measures these three components they will have a more complete picture of the customer relationship and will be able to maximize growth through new and existing customers.

The key to Dr. Hayes approach is to build a successful customer feedback program. Thus a company needs to look beyond the simple question of NPS and work on improving the entire customer feedback program.

Some companies have top executive support and others don not.Some companies use customer feedback results as part of their employee incentive programs while other companies rely on more tradition incentive programs. Some companies integrate their custom feedback data into their daily business processes while others keep them separate. Then there are other companies that conduct in-depth customer research using their feedback data while other rely on the data alone to provide them customer insight.

The bottom line is everybody seems to think they have the best metric to use to predict business growth. Since all the people and companies who are espousing their metric are in the business to make money, it seems reasonable to wonder how much of what they say is based on generating business and how much is valid. I suggest we wait and let the market or some unbiased organization sort the metrics out. I have written previous blogs about other metrics as well as NPS and the three metrics of Dr. Hayes. I would give the most credibility to ACSI if they would take the challenge to sort out which is better. I doubt they will take on this challenge.

1 comment:

Neil Hartley said...

Dr. B - I enjoyed your post, thanks. I think the key (which you intimate) is, whichever metric is used, to get beyond the "score" and improve the overall customer feedback experience. This should include taking action and then closing the loop with the customer base (either 1:1 or as a group). Enabling this action through qual insight analysis is the focus of our business www.toprightcorner.net
Regards, Neil


web visitor stats
OptiPlex 755 Desktops