Consumer Marketing Roundup: May 28, 2019
Is NPS Overrated?
A recent article in the Wall Street Journal, "The Dubious Management Fad Sweeping Corporate America" examined the use of the Net Promoter Score (NPS) in recent years by U.S. corporations -- and it wasn't good. Specifically, the article examined the rise in the use of NPS by corporate executives in earnings calls, as well as its ability to predict future sales and other customer behavior. NPS was introduced in 2003 by Fred Reichheld in a Harvard Business Review article, in which he called it the "simplest, most intuitive and the best predictor of customer behavior" and a "useful predictor of growth." A couple of choice quotes from the article to whet your appetite, starting with the original author, director emeritus at Bain & Company when his article was published:
- "Since then, the metric has taken on a life of its own, so much so that the inventor, Fred Reichheld, said he is astonished companies are using NPS to determine bonuses and as a performance indicator. 'That's completely bogus,' Mr. Reichheld, who still consults for Bain, said in an interview. 'I had no idea how people would mess with the score to bend it, to make it serve their selfish objectives.'"
- "Some academics have questioned the whole idea, suggesting that NPS has been oversold. Two 2007 studies analyzing thousands of customer interviews said NPS doesn't correlate with revenue or predict customer behavior any better than another survey-based metric [s]. A 2015 study examining data on 80,000 customers from hundreds of brands said the score doesn't explain the way people allocate their money."
- "The science behind NPS is bad," said Timothy Keiningham, a marketing professor at St. John's University in New York, and one of the co-authors of the three studies. "When people change their Net Promoter Score, that has almost no relationship to how they divide their spending."
While NPS can be a useful metric, the article -- along with its originator -- takes the position that it's become over-used, though still useful:
- "Bain, which now refers to NPS as a "net promoter system," said some companies are focusing too heavily on the score, but still defended the approach for some practical benefits. It is simple to communicate to employees, provides an easy way to follow up with customers, and can be used to benchmark against rivals."
Deloitte Study: Exploring the Value of Emotion-Driven Engagement
"The opportunity to build more emotionally intelligent platforms to recognize and use emotional data at scale is one of the biggest, most important opportunities for companies." That, according to Deloitte, prompted a research study to examine the role that emotions play in customer engagement and in the overall customer experience. Four key themes emerged from the data:
- Emotional factors inspire brand loyalty, while rational influences play a key role at the beginning and end of relationships.
- Emotional connection requires developing two-way relationships between brands and customers that mirror human relationships.
- Knowing what (and when) data is okay to use is vital to building and maintaining trust with customers.
- Customers expect a consistent, contextually appropriate experience of brands across all interactions.
The research also examined the balance between what it called three defining factors driving consumer behavior: emotional connections, rational connections, and value-based connections. The research showed that each factor is significant at distinct moments.
The study, "Exploring the Value of Emotion-Driven Engagement," was conducted by Deloitte Digital in the fall of 2018 and is downloadable at no charge.
IAB Issues Guidelines for Marketers on User-Generated Content
The Interactive Advertising Bureau (IAB) has released a buyer's guide on user-generated content (UGC) in marketing and advertising. One of the key points in the guide, User-Generated Content for Marketing and Advertising Purposes, is to differentiate between UGC and influencer-generated content. Other useful information in the guide includes definitions, key benefits, sources and types of UGC, proven effectiveness of UGC, how UGC is being used in advertising and marketing today, how brands can get started with UGC, and legal considerations related to its usage. The IAB says the goal of the guide "is to help brands and their agencies understand how UGC can help meet their marketing and advertising objectives." For more on this from Susan Borst, IAB vice president, Mobile Center of Excellence, click here.
Social Media Mechanics (Nuts & Bolts) from Social Media Examiner
Social Media Examiner (SME), founded by Michael Stelzner in 2009, publishes reports, how-to articles, interviews, podcasts, and much more. He's also created the Social Media Marketing Society, a paid membership online community of marketers. Here are some of their latest offerings:
- How To Measure Your Instagram Stories ROI: Advanced Techniques -- Learn how to combine Instagram Insights and Google Analytics to better report the ROI from your stories.
- 2019 Social Media Marketing Industry Report -- This 11th annual study reveals that more than 4,800 marketers are planning to do with organic social activities, video marketing, social ads, and more this year.
- 3 Ways To Use Facebook Ads To Promote Your Products -- Discover three types of advertising campaigns you can use to start promoting your products and services on Facebook.
- How Local Businesses Can Drive More Foot Traffic -- How to incentivize customers to visit your store and refer your business to others. How partnering with other local businesses on contests and giveaways can expand your social following and credibility.
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