Debunking the Net Promoter Score Myth
Why Net Promoter Score Isn’t the Sales Indicator You Think It Is
A recent article in the Wall Street Journal focused on the increasing role the “Net Promoter Score” has had in corporate earning calls and proxy filings. The article mentions executives from leading brands such as Delta, Best Buy, Target, and United Health Care, referencing their scores and often citing them as proof that consumers preferred that brand over another.
The Journal describes top CEOs as becoming “obsessed” with net promoter scores and using the score for executive compensation, operations initiatives, and product development.
The problem, according to both the Journal and our analysts at Black Box Intelligence (formerly TDn2K), is that net promoter scores don’t correlate to sales performance or revenue. Additionally, they can be significantly skewed by consumers and employees.
Net Promoter Score (NPS) is typically generated through a one-question survey at check-out in the store, or via email or website. “On a scale of 1 to 10, how likely are you to recommend the company’s product or service to a friend?”
Of the 150 NPS mentions the Journal tracked on earnings calls, not one executive ever mentioned their NPS score declining. It always went up. The problem with increasing NPS is that there is no proof of any correlation to growth.
“The science behind NPS is bad,” said Timothy Keiningham, a marketing professor at St. John’s University. “When people change their net promoter score, that has almost no relationship to how they divide their spending.”
The Metrics That Matter
Finding the Right Metric
Hence, if NPS is flawed, what can executives use to measure the guest experience and guest feedback against sales performance? Through Guest Intelligence (formerly Guest Intelligence (formerly White Box Social Intelligence))™, Black Box Intelligence (formerly TDn2K) has developed a robust metric – called Net Sentiment Score – that can be correlated to sales performance and is currently being used by 32 leading restaurant brands (over 5,500 units) to help drive their strategy.
Net Sentiment Score measures a restaurant brand’s social media comments and reviews and classifies them as positive or negative using a proprietary Natural Language Processing, designed by Black Box Intelligence (formerly TDn2K) specifically for the restaurant industry. Unlike traditional surveys and net promoter scores, Net Sentiment is not prompted or incentivized. There’s no sweepstakes entry or free appetizer for participating. We’re listening to what your guests are saying online authentically – their unsolicited feedback of your brand and their experience as they share it with their friends and social circle (read Connecting Social Media Mentions to Business Results).
To calculate the Net Sentiment Score, we subtract the percentage of negative online mentions from the percentage of positive online mentions for a brand. These mentions are pulled from major social media channels and review sites, such as Facebook, Twitter, and TripAdvisor, and can also include feedback gathered from online surveys.
Positive Mentions – Negative Mentions = Net Sentiment Score
40.47% – 10.29% = 30.18%
By pairing this social feedback with robust sales and traffic benchmarking data from Financial Intelligence (formerly Black Box Intelligence), Black Box Intelligence (formerly TDn2K) connects the dots between your guest feedback and your sales and traffic performance.
Truth in Numbers
In 2018, our top-performing brands averaged 3.2 percent sales growth and 0.9 percent traffic growth. Those brands also averaged a Net Sentiment Score of +41 for service and more specifically the term “experience” mentioned by their guests.
On the flip side, our bottom quartile performers averaged -4.0 percent sales growth and -6 percent traffic decline. And only a +25 Net sentiment score for Service and Experience. That’s a 16-point difference in guest sentiment and more importantly, a 7.2 percent difference in comp sales and a 6.9 percent difference in comp traffic.
This gap continues when we look at Net Sentiment for accuracy, appearance, and attentiveness.
Bridge the Gap with Meaningful Metrics
Thankfully, Black Box Intelligence (formerly TDn2K) has a solution to ensure that no restaurant brand ends up referenced in a Wall Street Journal article about meaningless metrics.
With Guest Intelligence (formerly Guest Intelligence (formerly White Box Social Intelligence)), we help you measure your guest feedback and true sentiment about your brand. Then, we show you how to use that data to improve specific areas of your business. Watch your sales follow!