We've seen the concept of the Net Promoter Score (NPS) gain popularity as brands look to better tie loyalty measures to guest behavior and growth. Without question, the attraction to NPS for many is its simplicity. Are the raves outnumbering the rants? But the simplicity is an issue in itself: Many believe NPS is too simple and too good to be true.
Why do we need NPS or even the ability to benchmark loyalty? You could argue that the beauty of social media is that it gives businesses the opportunity to cull the Web for their own data as well as that of all their competitors. Which leads directly to today's challenge for brands: If social media is dominating any conversation about customer feedback, and its connection to guest loyalty is in its infancy, how does NPS fit into this evolving frontier?
NPS is described as a management tool that can be used to gauge the loyalty of a brand's customer relationships, serving as an alternative to traditional customer satisfaction research. Social media and various monitoring tools available today make similar claims.
The ease of NPS is that only your nines and tens are considered Promoters. The bottom tier--the zeros to sixes--are the Detractors. Subtract the percentage of Detractors from the percentage of Promoters and voila--you have your NPS. But let's look at the hospitality industry, for instance. What about all these existing guest surveys that for the last decade have focused on moving ratings from an 8.4 to an 8.6? Can we get our best performing hotels to maintain their superior service? Move the worst to less bad? And maybe along the way help those middle performers inch up the scale? We thought an eight was tolerable, and in some brands even commendable. However, if you're calculating overall satisfaction or other measures counting eights, nines, and tens as high marks, your percentage is likely overinflated due to the preponderance of eights--or satisfied customers who are unenthusiastic about your brand and just as open to competitors. Ouch!
The same goes for social reputation score. Trends show improvements across the board, as the vast majority of ratings and reviews are positively skewed. The bulk of the remaining are neutral, and only a small percentage are negative. TripAdvisor was reported in 2012 to have a global average of 4.04, which means good news for operators, but how does that translate for NPS?
Using some basic numbers that have been reported over the years, let's assume that 65 percent of all reviews are positive, 25 percent are neutral, and 10 percent are negative. As a result, the NPS for the entire hospitality industry sits at a +55 (on a scale from -100 to +100). Not bad. Now how useful is it? In time, it would be worthwhile to know if this is trending upward or downward. Is it seasonal? How are a business' competitors doing comparatively? This is a good starting point, but it doesn't tell the complete story.
NPS is an easily digestible measure of loyalty, especially for those organizations that feel that focusing on overall satisfaction fails to deliver results. The mantra of simplicity has marketers wanting to find a way to compare apples (traditional surveys) and oranges (social media), or at least put them on level playing fields.
Will there be a unified standard? NPS has major obstacles to overcome before it can be widely recognized in many industries, let alone in social media. While the insights gained by using NPS can be useful, without a proper customer-centric system to support it, the score alone is flawed and incomplete.
A perceived lack of actionable insight from more traditional approaches to customer satisfaction or NPS is one of the elements pushing companies to investigate how they can best leverage social media intelligence to augment the this information. Marketers are just now understanding how social media analytics can fill in information gaps. Digging into customer sentiment to find out more about what influenced a customer decision is the current priority. Including sources such as reviews, ratings, and qualitative comments gives marketers a broader view of their business, but any single source is only that--a single measure.
For social NPS to have real viability, the mechanics on how to calculate it must be applied uniformly. Marketers must also acknowledge that social NPS is limited because of the bias in representativeness. This means that social, even at its very best, does not represent the full breadth of your customer base. Increasing the number of enthusiastically loyal customers, your Promoters, is a worthy endeavor. NPS is simple a metric, not the means to do so.
Janet Gerhard is the founder of Hospitality Gal, which helps companies generate new and repeat business as well as create strategic partnerships to add value and growth to the bottom line. Most recently, she led the hospitality sector of newBrandAnalytics, a provider of social market intelligence tools.