So Richard Owen, Satmetrix CEO and co-author of “Answering the Ultimate Question” is boiling down six years of research and experience in implementing high-impact Net Promoter customer loyalty programs into 10 key insights. Sweet.
Of the 10 insights, noted below for your delight and delectation, #7 is the one that I'd like to comment on - Word of Mouth Trumps Advertising.
First, my take-outs from Richard’s wisdom in a nutshell
- Winner Takes All – Your goal should be a Best-in-Class Net Promoter Score. Why? NPS leaders grow faster and keep customers longer. Compare Verizon with Sprint: Verizon NPS = 40%, growth = 13%, churn 1.1% - Sprint NPS = -15%, growth = -13%, churn = 2.4%
- Inertia is the True Enemy – The biggest obstacle in growing your NPS to grow your business is internal resistance to change. You need to cultivate internal momentum with top management sponsorship to make it happen
- Relative Performance is All the Matters – Your NP Score is utterly meaningless – in isolation. It’s your score relative to your (local) competitive set – and your past performance that makes Net Promoter meaningful
- Pick Your Battles – Using Net Promoter to grow your business usually involves delivering a differentiated customer experience that underpins a key reason to recommend. Few brands can be great at everything, find your inner experiential strength and build on it. (Amazon – logistics, Virgin – culture, First Direct – service)
- Frontline Staff Are Key– A key driver of successful customer experience redesign is where humans meet humans. It’s difficult to overestimate the role of customer facing staff and partners in driving experience
- It’s How Customers See You – 80% of senior managers believe their brands deliver a superior experience, 8% of their customers agree. Customer Experience Management begins with the customer experience from the perspective of the customer.
- Word of Mouth Trumps Advertising – ‘Happy Customers Talking’ is the best advertising and acquisition tool you can get. Consider Amazon, Zappos, and Overstock – brands built on delivering *remarkable* experiences, not paying for ads. Advertising is the last recourse for the mediocre.
- Understand the Economics – it’s all about money, the rest is just conversation. Unless you know the economic value of a Promoter and the cost of a Detractor to your business – and use it to build a solid business case your Net Promoter program is unlikely to get traction
- Be Like Finance – It’s all about money, the rest is just conversation (2). To succeed, make your Net Promoter program CFO friendly, with language, processes, and rigor of your finance department. Excel not Powerpoint is your new best friend.
- Don’t Confuse Simple with Easy – The goal of any Net Promoter program is simple – delivering customer delight. But just because it’s simple to get, doesn’t mean its easy to deliver. Consider the iPod and iPhone; years of development (perspiration as much as inspiration) underpin the elegance of simplicity.
So a useful 'reality checklist' for brands looking to walk the customer experience talk. And as the guy known as “Buzzman” in consulting circles, you can guess it’s at #7 ‘Word of Mouth Trumps Advertising’ when I started cheering.
It’s true, it’s true – just about every research study shows that word of mouth is more powerful than advertising. But the problem for brands is that you have to EARN word of mouth (by delivering a *remarkable* experience), you can’t buy it (word of mouth agencies notwithstanding).
But, and it’s a big but (and where I’d qualify Richard’s point) Word of Mouth trumps Advertising, but Advertising Activates Word of Mouth. Our own research shows that up to 50% of promoters are mute promoters – and that advertising can activate them and the Word of Mouth potential of a brand (transforming promoters from “would recommend” to “do recommend”). How? By helping promoters articulate the reason to recommend (think Sony Bravia ads and their creative focus on color).
The truth (as we see it) is that advertising and word of mouth are stronger together.