Most marketing professionals can agree that what customers say about their brand to their peers is more important than what brands say to their customers. Word-of-mouth referrals are still the most powerful form of advertising – according to a Nielsen consumer survey, “ninety-two percent of consumers around the world say they trust earned media, such as word-of-mouth or recommendations from friends and family, above all other forms of advertising…an increase of 18 percent since 2007.” Given the ever-increasing importance of word-of-mouth, it is imperative for marketers to have an understanding of how their brands stack up to their competitors.
Net Promoter Score (NPS) is a highly effective brand research tool developed by business strategist Fred Reicheld in 2003, and measures a particular brand or product’s reputation among customers. NPS is measured through a simple survey question: How likely is it that you would recommend our company/product/service to a friend or colleague? Respondents are asked to assign a rating from 0 to 10 in response. NPS is then calculated by subtracting the percentage of detractors (ratings of 0-6) from the percentage of promoters (ratings of 9-10). The calculation will generate a score for your brand that ranges anywhere from -100 (absolute worst score) to +100 (absolute best score). Any positive NPS is considered good, and a NPS of +50 or higher is considered excellent. (Reicheld, 2003)
While its application and measurement are relatively easy, the implications of NPS – positive or negative – are difficult to understand, and frequently lead to more questions. Why is there a wide gap between our brand and our competitors’ brands? Why did our brand’s NPS drop while our competitors’ NPS increased? Additional data points and insights – both quantitative and qualitative – are crucial to understanding the whole picture of how your brand is perceived by customers and, just as important, why it is perceived that way. For this reason, it is almost always preferable to measure NPS in the context of a comprehensive branding study.
Once you have baseline data around your brand’s perception and reputation, a branding study should be repeated at least once per year to monitor trends and measure the effectiveness of marketing campaigns and strategies.
While NPS is only one piece of the puzzle when it comes to a marketer’s brand, it is an essential one. Measuring your reputation among customers will give you a starting point for unlocking your brand’s true potential.
Do you want to know what your customers think of your brand? Roadmap Market Research can help. Contact our Director, Andy Specht, for a free consultation on how we can design a customized branding study that will provide your organization with needed insights.