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Article
Publication date: 4 March 2014

Is the NPS a trustworthy performance measure?

Kai Kristensen and Jacob Eskildsen

In 2003 Reichheld published an article in HBR, in which he claims that the net promoter score (NPS), is the only number you need to grow, and the only number you need to…

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Abstract

Purpose

In 2003 Reichheld published an article in HBR, in which he claims that the net promoter score (NPS), is the only number you need to grow, and the only number you need to manage customer loyalty. The purpose of this paper is to demonstrate that the NPS is inferior to the standard measures of loyalty used by the American Customer Satisfaction Index (ACSI) and EPSI rating.

Design/methodology/approach

In 2006 a customer satisfaction survey of the entire insurance sector in Denmark was conducted. The survey design was based on the questionnaires from EPSI rating and ACSI supplemented with insurance-specific questions, consumer sentiment questions and the basic Net Promoter Question. The sample consists of approximately 2,000 observations.

Findings

The analyses presented in this paper show that the NPS it not what it claims to be: the one number you need to grow. The NPS is found to be a very poor predictor of both customer loyalty and customer satisfaction. The measure is very sensitive to changes in the underlying distribution, and finally the precision of the NPS was found to be low compared to other measures of loyalty, and it is not possible to predict the NPS categorization and hence it is hard to say precisely, how organizations can influence corporate growth based on the NPS.

Research limitations/implications

The analysis is only conducted on data collected in a Danish business-to-consumer setting. More research is needed to shed light on the performance of the NPS across cultures as well as in a business-to-business setting.

Practical implications

The paper demonstrates the dangers of using the NPS as an input to managerial decision making. Organizations are far better off using a standard customer loyalty measure such as those employed by the ACSI or EPSI instead of the NPS.

Originality/value

Previous studies of the NPS have not replicated the methodology directly. Either there have been differences in scale length or in wording. The authors have constructed an experiment in the Danish insurance industry that answers some of the questions concerning the NPS without the shortcomings that most of the previous studies have suffered from.

Details

The TQM Journal, vol. 26 no. 2
Type: Research Article
DOI: https://doi.org/10.1108/TQM-03-2011-0021
ISSN: 1754-2731

Keywords

  • Customer loyalty
  • EPSI rating
  • Net promoter score

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Article
Publication date: 7 March 2008

Tools for converting consumers into advocates

John Blasberg, Vijay Vishwanath and James Allen

Executives need a more advanced tool for examining consumers' loyalty, one that provides a sharper, more precise view. this paper aims to introduce such a tool.

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Abstract

Purpose

Executives need a more advanced tool for examining consumers' loyalty, one that provides a sharper, more precise view. this paper aims to introduce such a tool.

Design/methodology/approach

The paper looks at Bain's Net Promoter Score (NPS).

Findings

The paper finds that the tool needs to focus not on satisfaction and market share but on consumer advocacy, which is key to creating enthusiastic consumers who come back to buy offerings again and again – and are happy about doing it. Bain's NPS can reveal whether consumers identify emotionally with a brand and feel listened to and understood by the company that makes it. NPS scores help identify groups of consumers who feel well served by your product and groups that do not, whose needs you can then probe further. NPS opens a window into how well mass brands are actually serving profitable consumer segments, as opposed to catering to a statistically “typical” consumer who exists only in theory.

Practical implications

Because NPS scores help uncover determinants of future behavior, they provide a much better basis for spotting product weaknesses, evaluating a brand's health and helping gauge whether new products will succeed.

Originality/value

By producing and evaluating NPS data on a regular basis, organizations can institutionalize a cultural shift, making consumer metrics just as practical and auditable as financial metrics like profit and return on equity. They can make performance in the eyes of consumers just as critical a goal as financial performance.

Details

Strategy & Leadership, vol. 36 no. 2
Type: Research Article
DOI: https://doi.org/10.1108/10878570810858176
ISSN: 1087-8572

Keywords

  • Customer loyalty
  • Advocacy
  • Consumer behaviour
  • Brands

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Article
Publication date: 2 December 2020

Customer categorization using a three-dimensional loyalty matrix analogous to FMEA

Peter Madzík and Arash Shahin

The purpose of this study is to present and explain a new customer segmentation approach inspired by failure mode and effect analysis (FMEA) which can help classify…

Open Access
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Abstract

Purpose

The purpose of this study is to present and explain a new customer segmentation approach inspired by failure mode and effect analysis (FMEA) which can help classify customers into more accurate segments.

Design/methodology/approach

The present study offers a look at the three most commonly used approaches to assessing customer loyalty:net promoter score, loyalty ladder and loyalty matrix. A survey on the quality of restaurant services compares the results of categorizing customers according to these three most frequently used approaches.

Findings

A new way of categorizing customers through loyalty priority number (LPN) is proposed. LPN was designed as a major segmentation criterion consisting of customer loyalty rate, frequency of purchase of products or services and value of purchases. Using the proposed approach allows to categorize customers into four more comprehensive groups: random, bronze, silver and gold – according to their loyalty and value to the organization.

Practical implications

Survey will bring a more accurate way of categorizing customers even in those sectors where transaction data are not available. More accurate customer categorization will enable organizations to use targeting tools more effectively and improve product positioning.

Originality/value

The most commonly used categorization approaches such as net promoter score, loyalty ladder or loyalty matrix offer relatively general information about customer groups. The present study combines the benefits of these approaches with the principles of FMEA. The case study not only made it possible to offer a view of the real application of the proposed approach but also made it possible to make a uniform comparison of the accuracy of customer categorization.

Details

International Journal of Quality & Reliability Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
DOI: https://doi.org/10.1108/IJQRM-05-2020-0179
ISSN: 0265-671X

Keywords

  • Customer loyalty
  • Segmentation
  • Loyalty levels
  • Loyalty priority number
  • LPN

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Article
Publication date: 25 December 2020

Antecedents and consequences of stress in retailing: environmental expectations and promoter scoring

Laura Lucia-Palacios, Raúl Pérez-López and Yolanda Polo-Redondo

The aim of this paper is to examine the effects of the disconfirmation of expectations of crowding and mall accessibility, on stress and two marketing outcomes…

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Abstract

Purpose

The aim of this paper is to examine the effects of the disconfirmation of expectations of crowding and mall accessibility, on stress and two marketing outcomes, satisfaction and promoter scoring.

Design/methodology/approach

Data were obtained through two face-to-face surveys from mall shoppers that answered them at two different moments of their shopping experience, before entering the mall and before leaving it. Results are obtained from 230 customers that answered the two questionnaires.

Findings

The findings suggest that stress indirectly influences customer promoter scoring through satisfaction, while disconfirmation of expectations influences it directly and indirectly.

Practical implications

These results also suggest that stress and disconfirmation of expectations about crowding and accessibility are important in determining promoter scoring. To reduce stress and increase satisfaction and promoter scoring, managers should focus on exceeding customers' expectations about mall accessibility and on ensuring that customers experience a lower level of crowding than they expected.

Originality/value

The article examines Net Promoter Scoring, an outcome that has attracted managers' attention but little is known about its antecedents. The paper provides evidence of the effect of disconfirmation of expectations and negative emotions on promoter scoring.

Details

International Journal of Retail & Distribution Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
DOI: https://doi.org/10.1108/IJRDM-03-2020-0117
ISSN: 0959-0552

Keywords

  • Promoter scoring
  • Stress
  • Disconfirmation of expectations
  • Crowding
  • Accessibility

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Article
Publication date: 15 January 2018

University students’ heuristic usability ınspection of the national library of Turkey website

Yavuz Inal

The purpose of this paper is to evaluate the usability of the National Library of Turkey website developed for all citizens in the country to retrieve information…

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Abstract

Purpose

The purpose of this paper is to evaluate the usability of the National Library of Turkey website developed for all citizens in the country to retrieve information available in a wide range of areas.

Design/methodology/approach

The evaluation performed by 57 undergraduate university students involved the identification and analysis of usability problems in the selected website. The assessment process was mainly based on Nielsen’s Heuristics. The data obtained in the evaluation process were enriched using the System Usability Scale (SUS) and the Net Promoter Score (NPS) to conduct a more detailed analysis.

Findings

The participants identified many usability problems concerning the evaluated website and considered it as having low usability characteristics. The most violated heuristic item was found to be “consistency and standards” whereas the least violated heuristic item was “match between system and the real world.” The total number of the usability problems in heuristic evaluation correlated significantly and negatively with the SUS and the NPS results indicating that the more participants identified usability problems, the less they considered the website as usable and recommendable.

Research limitations/implications

The participants were not usability experts, however they were selected from among the students who received the Human Computer Interaction course to ensure that they had sufficient information and experience concerning the evaluation of a website with heuristics. Besides, the study was limited to a small number of university students. The implication is that results of this study have potential to guide libraries, which plan to adapt themselves to the digital world by delivering web services, by addressing critical points influencing users’ points of views toward library websites and their usability evaluation result.

Practical implications

Depending on the changes in user habits regarding the retrieval of information, libraries have made considerable investments in web technologies to meet their users’ demands, and recently, digital libraries have begun to take over physical libraries. Users always need to perform tasks efficiently, effectively and satisfactorily when using websites. As one of the most crucial sources of digital materials, library websites are expected to have usable characteristics that satisfactorily meet user requirements. Therefore, the practical implication is that the findings of the study will guide designers, developers and practitioners in the development of library websites.

Originality/value

In the context of usability evaluation of digital libraries, this is the first study to analyze effects of usability problems identified by users during the heuristic inspection on their overall evaluation score and willingness to recommend the website to their friends or colleagues.

Details

Aslib Journal of Information Management, vol. 70 no. 1
Type: Research Article
DOI: https://doi.org/10.1108/AJIM-09-2017-0216
ISSN: 2050-3806

Keywords

  • Digital library
  • Information retrieval
  • Information system
  • Library website
  • Usability evaluation
  • Heuristic ınspection

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Book part
Publication date: 13 November 2017

Measuring Market Strategy Results

Robert Kozielski, Michał Dziekoński, Jacek Pogorzelski and Grzegorz Urbanek

The term ‘strategy’ is one of the most frequently used terms in business, and its application in marketing is particularly common. Company strategy, market strategy…

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Abstract

The term ‘strategy’ is one of the most frequently used terms in business, and its application in marketing is particularly common. Company strategy, market strategy, marketing strategy, sales strategy, promotion strategy, distribution strategy, low pricing strategy – it would take a long time to list all of them. Although this term is so commonly in use, its definition is not as straightforward and it can be interpreted in different ways. In comparison with tactical decisions, strategy is much more significant for an organisation as it brings long-lasting consequences. It is implemented by higher level managers on a regular basis, and it is based on external, often subjective information, so decisions – especially at the time they are made – are difficult to evaluate.

Taking into consideration the fact that strategy refers to a long-term rather than a short-term period, strategic decisions serve as the basis for undertaking operational activities. However, marketing refers to the market and the competition. It is possible to claim that marketing strategy is trying to find an answer to the question to which path an organisation should follow in order to achieve its goals and objectives. If, for example, a company has a goal to generate a profit of PLN 1 million by selling 100,000 pieces of a product, the market strategy should answer at least the following two questions:

  1. Who will be our target group, for example, who will purchase the 100,000 pieces of the product?

  2. Why is it us from whom a potential buyer should purchase the product?

Who will be our target group, for example, who will purchase the 100,000 pieces of the product?

Why is it us from whom a potential buyer should purchase the product?

The target market will be defined if a reply to the first question is provided. The second question identifies the foundations of competitive advantage. These two issues, that is, target market and competitive advantage are the strategic marketing issues. You cannot change your target group unexpectedly while competitive advantage is the basis for changing decisions regarding prices, promotions and sales.

This chapter describes the measures of marketing activities which refer to strategic aspects and testify a company’s market position – the measures of the performance of target groups and competitive advantage. Readers’ attention should be also focused on the indices that are less popular in Poland and, therefore, may be underestimated. It seems that some of them, for example, the index of marketing resources allocation and the marketing risk index, provide a lot of valuable information and, at the same time, make it possible to show the value of marketing investments. Their wider use in the near future is only a matter of time.

Details

Mastering Market Analytics
Type: Book
DOI: https://doi.org/10.1108/978-1-78714-835-220171002
ISBN: 978-1-78714-835-2

Keywords

  • Strategic business metrics
  • brand value metrics
  • customer relations ratios
  • customer satisfaction indices

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Article
Publication date: 14 January 2019

The Finna service: meeting the new measurement challenges in libraries

Timo Laine and Markku Antero Laitinen

In the transformed information environment, the impact and value of the services are not adequately shown using the traditional library metrics. It needs to be…

Open Access
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Abstract

Purpose

In the transformed information environment, the impact and value of the services are not adequately shown using the traditional library metrics. It needs to be supplemented with user-centered ways of measurement. The paper aims to discuss these issues.

Design/methodology/approach

The paper is a case study of the new Finna service and the measurement challenges it presents.

Findings

The standards guiding the measurement and evaluation of libraries cannot offer a “cook-book” for the organizations to follow. The paper suggests that as a one possible response to this, the Net Promoter Score can be used as one indicator in measuring the impact of new services.

Research limitations/implications

The findings of the paper are preliminary, because so far there is not a wide experience of the use of NPS in libraries. This calls for further study. The results are encouraging, but more testing is needed with different services.

Originality/value

NPS has not been widely used in libraries before.

Details

Library Management, vol. 40 no. 1/2
Type: Research Article
DOI: https://doi.org/10.1108/LM-02-2018-0007
ISSN: 0143-5124

Keywords

  • Libraries
  • Digital library
  • Impact assessment
  • Digitalization
  • Library standards
  • Net Promoter Score (NPS)

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Article
Publication date: 3 April 2018

Digital banking, customer experience and bank financial performance: UK customers’ perceptions

Cajetan I. Mbama and Patrick O. Ezepue

The purpose of this paper is to examine customers’ perceptions of digital banking (DB), customer experience, satisfaction, loyalty and financial performance (FP) in UK banks.

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Abstract

Purpose

The purpose of this paper is to examine customers’ perceptions of digital banking (DB), customer experience, satisfaction, loyalty and financial performance (FP) in UK banks.

Design/methodology/approach

The research consists of a survey of UK bank customers’ perceptions of the above themes; use of banks’ financial reports to obtain FP ratios; multivariate factor analysis; structural equation modelling; and analysis of variance tests to explore research hypotheses on the relationships among the study factors.

Findings

The main factors which determine customer experience in DB are service quality, functional quality, perceived value (PV), employee-customer engagement, perceived usability and perceived risk. There is a significant relationship among customer experience, satisfaction and loyalty, which is related to FP.

Research limitations/implications

This study concentrates on UK bank customers which limits its generalisability to other banks globally. However, the fact that banks typically adopt common standards in bank financial management implies that the findings are potentially robust for global bank management. Replicating the study in banks in other countries will further enhance this robustness.

Practical implications

Some significant effects of customer characteristics on the study factors were observed, which have useful implications for DB, bank marketing services and bank FP.

Originality/value

Unlike previous studies, this study uses both Net Promoter Score and financial ratios as dependent variables, to provide a combined study of the relationships among 14 study factors, with implications for bank marketing and FP.

Details

International Journal of Bank Marketing, vol. 36 no. 2
Type: Research Article
DOI: https://doi.org/10.1108/IJBM-11-2016-0181
ISSN: 0265-2323

Keywords

  • Service quality
  • Financial performance
  • Customer satisfaction
  • Customer loyalty
  • Customer experience
  • Digital banking

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Article
Publication date: 1 November 2006

The radically simple loyalty question

David Rader

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Abstract

Details

Strategy & Leadership, vol. 34 no. 6
Type: Research Article
DOI: https://doi.org/10.1108/sl.2006.26134fae.002
ISSN: 1087-8572

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Article
Publication date: 21 May 2020

The determinants of season ticket holder advocacy in the NCAA football bowl subdivision

Heather Jane Lawrence, Norm O'Reilly, Alexandra Speck, Chris Ullrich and Kayla Robles

The objective of this paper is to respond to four research questions. The first two as how likely are college football season ticket holders to recommend (1) purchasing a…

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Abstract

Purpose

The objective of this paper is to respond to four research questions. The first two as how likely are college football season ticket holders to recommend (1) purchasing a similar season ticket package and (2) attending a home football game, to a friend or colleague. The third question examines if there is a difference between advocacy toward purchasing season tickets as compared to advocacy toward game attendance. Finally, we identify what factors impact advocacy for college football season ticket holders.

Design/methodology/approach

An online survey of 57,240 season ticket holders from 69 different National Collegiate Athletics Association (NCAA) Division I Football Bowl Subdivision programs was undertaken. The data were analyzed to build a model of the drivers of advocacy in season ticket holders from a conceptual base of advocacy, trust and loyalty.

Findings

The identified drivers include both institutionally influenced factors and factors related to season ticket holder behaviors/demographics. The season ticket holder is arguably the highest level of fan for any sports organization from an affinity perspective and clearly the most important from a business perspective. This research argues that the season ticket holder should not only be the focus of ticket sales efforts but also leveraged as marketing advocates with the objective of attracting additional fans.

Originality/value

The value of this research is the large sample of data from season ticket holders of NCAA Division 1 football clubs and the resulting learning it provides to researchers and practitioners.

Details

Sport, Business and Management: An International Journal, vol. 10 no. 3
Type: Research Article
DOI: https://doi.org/10.1108/SBM-05-2019-0035
ISSN: 2042-678X

Keywords

  • Advocacy
  • Fandom
  • Loyalty
  • Sales
  • Regression
  • Segmentation
  • Primary market

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