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What do indicators such as NPS or CES have to say?
Numberly is happy to invite you to a 30-minute Marketing Webinar: a Back to Basics to refresh your memory with key marketing concepts.
Join us to explore consumer attitudes through famous indicators sush as NPS and CES.
You can watch the replay of the webinar or read our article below!
The issue of consumer attitudes has always been at the heart of business concerns. Understanding and learning how to measure these attitudes are key elements of the “Marketing Reset” that many companies are seeking to operate in light of the current context.
Understanding the link between a marketing stimulus and its impact on consumer response is indeed not as simple as we think. Moreover, demonstrating the effects (both positive and negative) of advertising has been a key issue for researchers and practitioners for decades.
In 1976, Jean-Jacques Lambin publishes an article questioning this direct relationship between marketing input and output in which he stated that “doubling the advertising budget does not double sales“.
Indeed, some companies might be tempted to double their marketing investment in order to strengthen their customer communication without taking into account the moderating effect that helps to understand how the consumer processes, analyzes and perceives marketing input.
Understanding these moderating effects involves opening the “consumer’s black box”: how does he perceive a marketing stimulus? Does he handle it? Does he judge it?
This black box can be broken down into three blocks. The first corresponds to the filters, i.e. the consumer’s ability to process information in the moment according to their motivations, capacities and the opportunities available to them. The second block suggests that the processing of information generates, over time, attitudes, either favourable or unfavourable towards the brand, product or service. Attitudes include several dimensions of information processing: cognitive, affective and consumer experience. They thus make it possible to explain consumer behaviour – which constitutes the third block – such as, for example, repurchase and word-of-mouth behaviour. Nevertheless, consumer behaviour also helps to explain consumer attitudes. Indeed, a consumer who is misaligned between his attitudes and behaviours is in cognitive dissonance: he does not act according to his instinct, emotions or experience.
The link between marketing inputs and results: the “black box” of moderating effects
To define attitude is to suggest that it is first and foremost a psychological tendency that is expressed through the evaluation of a brand, product or service that leads to a certain level of favour or disfavour. Rensis Likert, an American psychologist and pioneer in this field, developed one of the first scales for measuring attitudes. The Likert scales thus make it possible to know a consumer’s attitude by allowing him to agree or disagree with several statements about the same brand, product or service. Depending on the level of precision sought in the evaluation, the Likert scales can have 5, 7 or 11 response points. Research identifies two essential attitudes in relationship marketing that have a causal link: satisfaction and loyalty. Assessing the causal link between satisfaction and loyalty therefore seems necessary to understand the effects of relationship marketing on consumers.
The 5-point Likert scale
In the mid-1990s, the link between satisfaction and loyalty was much studied. Scientific research initially demonstrated an expository correlation between these two attitudes, suggesting that a large investment in satisfaction serves the competitiveness of the brand. But reproducing this analysis in different sectors leads to a more moderate finding. Indeed, two factors, the intensity of competition and the cost of change, play a non-negligible role in customer satisfaction and loyalty. Scientific research also shows that measuring customer satisfaction is not as simple as one might think. The question “are you satisfied?” elicits responses that generate a poor predictive capacity of actual behaviour, as the attitude is often unconscious in the consumer. Thus, traditional satisfaction questionnaires composed of direct questions, sometimes with low response rates, are challenged by two attitudinal metrics: the Net Promoter Score and the Customer Effort Score.
The American consultant Reichheld, considered a loyalty “guru”, spent two years devising a simple and effective measure of the satisfaction-loyalty link. His work, published in the Harvard Business Review in 2003, had a very important echo since it led to the design of a single question being, in the vast majority of cases studied, the ones that best predicted the effective loyalty behaviours of re-purchasing were, word-of-mouth and recommendations. This question, formulated as “Would you recommend [the brand] to a friend” appeared more appropriate in psychometric terms than a formulation directly addressing satisfaction, such as “Are you satisfied with […]”. The first characteristic of the NPS is therefore that it is based on a formulation that does not directly address the theme of customer satisfaction. The second innovation of the NPS is its scale. Based on a symmetrical Likert scale, the NPS is calculated with very restrictive criteria: only 9 and 10 are promoters. Scores less than or equal to 6 are considered as detractors. The calculation of the NPS is therefore done as follows: NPS = Promoters – Critics. The NPS is an index, not a percentage, it can be negative. The measure is widely used today, all sectors combined. For example, Tesla is frequently cited among the brands with a higher NPS, i.e. with a higher intention of recommendation.
Thus, the NPS leaves out neutral votes. It therefore allows us to focus on the clear-cut opinions of consumers. Therefore, it should not be used to compare entities or countries, which are sensitive to cultural bias. The analysis of the NPS should be done mainly as a relativity tool: in comparison with competitors, previous NPS already carried out, and with the specificities of the brand, product or service.
The Net Promoter Score
In 2010, again in the Harvard Business Review, a new idea, arising from the work of Dixon, Freeman and Toman, is propelled to the forefront with the CES, whose objective is to measure customer effort. The underlying idea is that the company must do everything possible to reduce the effort made by the customer: the new paradigm is therefore to simplify the service rather than to please the customer by limiting the customer’s “work” in the execution of the service as much as possible.
This indicator, initially put forward as more relevant than the NPS by its authors, was then deployed to measure the quality of customer service. Thus, measures of satisfaction and loyalty are not limited to asking standard questions such as: “Are you satisfied” or “Do you intend to be loyal? Rather, it is more a matter of measuring the consumer’s propensity to recommend a brand and studying the level of customer effort to predict the strength of this link between satisfaction and loyalty.
To maintain the reliability of the predictive power of attitudes, it is important to take into account two typical measurement biases.
First, it may be easy to forget that a service has multiple components and that not all contribute to customer satisfaction in the same way. In her work, Sylvie Llosa puts forward a Tetra-Class model that distinguishes four dimensions of a service: Key, Basic, Plus and Secondary. The model suggests that certain dimensions contribute little to both satisfaction and dissatisfaction. On the contrary, other dimensions are salient. For example, a dirty cup of coffee is likely to generate high dissatisfaction (= basic). The presence of the signature of a great designer on the spoon, on the other hand, will not necessarily lead to greater satisfaction (= secondary). The analogy of coffee in a bar sums up the philosophy of the model and invites you to consider all the facets of satisfaction in order to focus on the most impactful ones. In 2012, a contribution by researchers from the Nordic School on the NPS and CES, published in the Harvard Business Review, highlights a second bias: the NPS is not dead, it measures more an overall intention of loyalty while CES, measured mostly on small samples, rather evaluates the quality of service.
Sylvie Llosa’s Tetraclass model
Measuring consumer propensity to recommend a brand and studying customer effort are therefore two complementary approaches that are sensitive to two types of bias: believing that the dimensions of a service contribute to satisfaction in the same way, and not wondering what satisfaction is being measured against. Failure to take these two biases into account risks misunderstanding consumer attitudes. However, understanding attitudes helps to build close ties with customers, as loyalty goes beyond repeat purchases by also including recommendation, word-of-mouth and brand image (Reichheld, 2003). On the other hand, when combined with behavioural measures, attitudinal measures help identify growth factors. Finally, attitudes make it possible to enrich behavioural segmentations by combining them with attitudinal data (commitment, trust, effort, etc.). Consequently, understanding attitudes seems all the more essential in the current context: by giving visibility to consumers, attitudes enable companies to find the tone to adopt in their customer communications.
