ANN ARBOR (WWJ) — ForeSee, a provider of technology-driven customer experience analytics, today released the Word-of-Mouth Index (WoMI): Top 100 Brands Edition report – highlighting customer recommendation scores for the top 100 U.S. brands across industries.
Scores were calculated using the groundbreaking WoMI measurement, introduced by ForeSee in May to improve and evolve the popular Net Promoter Score (NPS). ForeSee’s research, conducted over the course of nearly two years and involving 1.5 million survey responses, also highlights NPS’ statistical shortcomings — which can cause unsuspecting companies to squander millions of dollars each year.
ForeSee’s WoMI benchmark is the most in-depth study on NPS to date. In the research being released today, ForeSee found that NPS overstates detractors by 299 percent on average for the 100 largest brands in the U.S., as identified by a 2012 Interbrand study.
With NPS, customers answer a single question: “On a zero-to-10 scale, how likely would you be to recommend this company?” with responses categorized as follows: brand promoters (9-10), passive (satisfied but unenthusiastic) customers (7-8) and brand detractors (6 or lower). ForeSee’s data shows that this method of classifying detractors is often inaccurate and usually vastly overstates detractor behavior. Many people that NPS would label detractors are actually neutral toward or even advocates for a brand — so allocating budget to win them over represents wasted spending.
Simple to implement, WoMI augments NPS by adding a second critical question: “How likely are you to discourage others from doing business with this company?” As with NPS, companies receive a single metric — but WoMI weighs and incorporates both positive and negative word-of-mouth for a more precise, accurate and actionable picture.
In extreme cases, some companies surveyed by ForeSee saw that NPS had overstated their brand detractors by 1,000 percent or more. Average overstatements by industry were:
Automotive: 85 percent, ranging from Hyundai (270 percent) to Audi (minus 30 percent) BtoB: 96 percent, ranging from 3M (225 percent) to Caterpillar (minus 12 percent) Computers and electronics: 264 percent, ranging from Samsung (1,050 percent) to IBM (64 percent) Consumer packaged goods: 399 percent, ranging from Heinz (1,700 percent) to Danone (Dannon) (minus 8 percent) Financial services: 527 percent, ranging from Visa (1,450 percent) to Goldman Sachs (53 percent) Retail: 222 percent, ranging from H&M (533 percent) to Burberry (minus 8 percent)
“NPS was too simple and couldn’t meet our needs,” said Jason Faria, director of customer service at flash sale online retailer Ideeli, a company using ForeSee’s WoMI measurement. “WoMI eliminates overstated detractors and has allowed us to concentrate our efforts on areas where we’ll get the greatest return.”
Adds Mario Castano, Internet and e-commerce technology manager at Nikon Inc.: “Unlike NPS, WoMI enables us to clearly understand our ROI. WoMI helps us have ‘AHA’ moments. It supplies us with information that is much more actionable, which makes it easier for us to understand what our customers are saying.”
Additional information about WoMI, including access to all benchmark scores, is available at www.wordofmouthindex.com. The site also contains information about the upcoming book: “Innovating Analytics – WoMI: The Next Generation of Net Promoter” by ForeSee CEO Larry Freed, which will be available this fall from John Wiley & Sons Inc.
“NPS’ overstatement of detractors, as shown by our research, is truly eye-opening – impelling brands to seriously reevaluate their tactics and spending around converting supposed detractors,” Freed said. “With WoMI, we provide an easy way for companies to accurately measure customer word-of-mouth, knowing they’ll be making business decisions based on precise, actionable data. Given today’s more empowered consumers — who are able to broadcast their opinions from social media megaphones and switch brands instantly with the click of a mouse or the swipe of a mobile screen — it’s vital that companies use a loyalty metric that keeps up with the evolving world, by factoring in both positive and negative word-of-mouth.”
Because word-of-mouth represents the outcome — not cause — of customer satisfaction, it’s also important for companies to identify and address satisfaction drivers themselves. ForeSee offers predictive analytics and other technology solutions that enable companies to measure the total customer experience, seeing how various changes can impact satisfaction levels, as well as future business performance. For more information, see www.foresee.com.