The Digital Signage Insider

In-store media and the Net Promoter Score: Optimizing for the ultimate question

Published on: 2007-04-30

When loyalty marketing guru Fred Reichheld of Bain and Company set out to create a universal metric for predicting corporate growth and profitability, he decided that all he needed to know was the answer to one "ultimate" question: how likely are you [the customer] to recommend the product or company in question to a friend or colleague? The responses to this question are used to generate what Reichheld dubbed the "Net Promoter Score," or NPS. This concept has been applied to everything from internal job satisfaction to nationwide advertising campaigns to see where companies are doing a good job, and where there's room for improvement. While not designed specifically to measure media effectiveness, a recent blog article by consumer psychologist Paul Marsden got me thinking: can we use the same concept of promoters and detractors to help plan and improve retail media projects?

For those new to NPS, it warrants a bit more explanation. The premise behind the NPS is that in any sufficiently large group of people using a product or service, there will be some segment (known as "promoters") who are so enthusiastic about their product/service experience that they don't just increase their own purchases, but they'll also refer their friends and colleagues to do the same. Likewise, there will also be a group of "detractors," or customers who have negative feelings and experiences that not only cause them to stop purchasing, but will also compel them to warn others to stay away from the company. NPS data is typically aggregated by consumer studies that ask the ultimate question and ask for a response on a scale of 1 to 10, with 1 being "not at all likely to recommend" and 10 being "extremely likely to recommend." By subtracting the number of detractors from the number of promoters, we're left with the overall Net Promoter Score.

Such a metric might seem to favor a middle-of-the-road result, since many people tend to pick a number in the middle of the range, rather than the low or high extremes. To combat this, the question's scale is calibrated heavily towards detractors. Customers who give an answer from 0 to 6 are all put into the "detractor" category, answers of 7-8 are labeled "neutral," and only scores of 9 or 10 fall under the "promoter" category. Thus, only respondents who are extremely enthusiastic about their experience are considered to be promoters.

Armed with this knowledge, some groups have already tried to use the Net Promoter Score to determine media effectiveness. In one study, the researchers re-examined one of the most influential advertising studies ever conducted, which looked at the impact of advertising on Presidential Election campaigns. As Marsden notes:
The research in question was conducted by Elihu Katz and Paul Lazarsfeld way back in the 1940s. The Columbia University team was trying to resolve, once and for all, the thorny problem of marketing effectiveness, taking the 1940 Presidential Campaign as a case study. Specifically, did all the money poured into advertising the virtues of the two Presidential candidates, Democrat Franklin D. Roosevelt and Republican Wendell Willkie, actually make any difference to who people voted for?

[W]hat the Columbia University research found was that advertising had absolutely no influence on the vast majority of voters - most people were far more likely to be influenced by the people they knew than by advertising.

However, the Columbia research did find that for a small minority of voters, advertising was highly influential and highly effective - but not for the people or the reason we might think.

This small minority (later quantified to represent about 10%) of voters who were influenced by the Presidential Campaign was what we would call today "Political Promoters", people highly likely to offer their personal opinion on political matters, including who to vote for. The advertising worked, not necessarily by influencing who these Promoters would vote for, but by influencing what the Promoters would say to influence others. In other words, advertising works by stimulating Promoters to promote by giving them compelling reasons to recommend.
So, should NPS change the way you think about retail media? If you're designing your networks and your content in a way that addresses your promoters and helps them extol your product's virtues, then you're already on the right track. However, I'm sure that many network owners and content creators have never thought about their audience in this context. Many of us are so driven to attract new customers that our marketing messages get stretched out and generalized in order to reach the widest applicable audience. The takeaway from NPS research is that we may be doing this at the expense of reaching our existing happy customers, who, as promoters, could extend our marketing reach by evangelizing our products for us.

With that said, there are plenty of marketers who have avoided this trap, instead finding ways to reach their promoters as part of traditional advertising campaigns. State Farm has a series of TV commercials based on "true stories" submitted by actual customers, and of course the rise of consumer-generated content has allowed anybody with a camera and a computer to become a product evangelist, capable of getting his message out to millions of people. Still, considering how much effort many brands put into explaining the virtues of their products to the uninitiated, a relatively small amount is dedicated specifically to giving customers and would-be promoters the tools they need to go out into the world singing the brand's praises. To me, in-store seems to be the ideal environment for this kind of promotion, given the great target specificity and contextual relevancy that the media has. Plus, reminding repeat customers of the reasons they already buy your product helps reduce the cognitive dissonance that might otherwise occur if they only saw messages promoting competing brands. Instead of wondering if they're still making the right choice, these customers leave the store even more confident in their purchase and ready to tell others about why they're so loyal to you. In other words, NPS teaches you to treat existing customers as a unique and influential psychographic group.

New audiences are clearly still important, and in-store media still needs to promote product and service benefits in such a way that those unfamiliar with the advertisement, how-to video or other content will quickly have an understanding of the salient bits. However, network owners and content creators would benefit from dual-use content that can not only introduce a product to a new audience or reinforce its position to casual and indifferent customers, but also encourage good customers to become promoters -- and provides them with the necessary know-how. As Marsden says, "the relevance of NPS to advertising? Simple: good advertising should help your promoters articulate what's so great about what you sell."

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