Fact or Fiction? - April Edition
Each month we’ll be keeping you up to date with some of the hot topics and talking points within the marketing and advertising industries.
This month we’re looking at the faults with the Net Promoter Score, the importance of brands to businesses and the effects of technology removing many of the human elements required for great advertising.
Know the Score
John Dawes from the Ehrenberg-Bass Institute has identified a major fault with a tool many businesses reply upon to assess their customer sentiment - The Net Promoter Score.
Dawes believes, “there are some real flaws to Net Promoter. Specifically, it is misinterpreted by consumers and gives an unrealistic picture of actual recommendation.”
A large part of the Net Promoter Score measurement is based upon the question:
How likely is it that you would recommend our company/product/service to a friend or colleague?
The problem being there’s a big difference between intention and reality. As Dawes notes:
“When people like Sally say they’d be 8 out of 10 likely to recommend, they don’t actually mean they WILL recommend – they’re indicating they were happy with the service experience. Their answers completely disregard whether the topic of insurance, supermarkets, gasoline or home entertainment come up in conversation.
So, the scores from Net Promoter are more like indications of satisfaction. They are misleading to management because they can give the impression there is a lot of positive word of mouth occurring about their brand when there’s not. And worse, they can give a false sense of security that brands don’t need to work hard on advertising because their clients will do it for them! This is a dangerous line of thinking.
In summary, if you want to know if your customers are satisfied, ask them about satisfaction. If you want to know about actual word of mouth recommendation, ask about that. But don’t ask ‘would you recommend’ – for all the reasons outlined above. Rather, ask ‘have your recommended that company to others in the past week or month’. That way you’ll understand how much actual positive word of mouth is occurring for your brand.”
Dawes makes a great point and highlights the other challenge of relying upon word of mouth to grow your business.
Think of all the different things you buy in a week. Now think of how many of those things were recommended by a friend. Yes, whilst word of mouth is valuable when it happens, it just isn’t as prevalent as many would like us to believe.
Read the full article here.
Just how important are brands to businesses?
For many marketers no matter how well their businesses are performing convincing the CEO that brand-building requires continuous investment is an ongoing battle.
Tom Roach believes that a brand is the most valuable business tool ever invented.
“A strong brand is a business’s most valuable commercial asset. It increases the chances of customers choosing your product or service over your competitor’s, attracting more customers, at a lower cost per sale, who are happy to pay a little more, and will buy it a little more often. A strong brand will deliver more revenue, profit and growth, more efficiently, year after year, and so generate more shareholder value. It can help attract, motivate and retain your second most important asset: your people. And can work as a barrier to entry for future competitors, creating a legal ‘monopoly’.”
Roach backs up this claim with a collection of data-supported evidence to help marketers justify to their CEO, why their brands are worth investing in.
Three of the data-points that stood out for us were:
“Brand-building activity drives much stronger sales growth over periods of 6+ months than the temporary uplifts driven from by short-term sales activation. Brand-building activity leads to long-term improvements in base sales that short-term sales activity cannot.”
“Online businesses in the UK now spend more on brand-building advertising than any other industry sector, £700m on TV alone in 2017. When Google, Amazon and Facebook are amongst the biggest spenders on TV, it’s a pretty big clue that they’re deeply aware of the limits of the digital channels and formats in their own armouries to help them build their own brands.”
“The optimum split in investment between brand-building and sales activation is on average 60% brand-building, 40% activation. Invest less than 60% in brand activity and the brand equity required to generate future sales will not accumulate.”
Read the full piece here.
The Effects of Technology Removing the Human Elements from Advertising.
Finishing off with an opinion piece, Dave Trott’s latest article asks the question of whether our obsession in the advertising world with technology has moved us to a place where process is more valued than the people it’s supposed to affect.
“All there is in the physical universe is simple, basic, matter.
For it to have any meaning, any significance, any life, it needs the mind to experience and interpret it.
And yet all the focus in our business seems to be on removing the human element.
On making technology, algorithms, and programmatic responsible for everything.
So, the current goal of advertising is to strip out imagination, charm, fun, beauty, amusement, joy, surprise.
To remove the human element.
To get rid of all secondary qualities and live in a data-only world of primary qualities.
Where the sole job of advertising is simply to bombard people with more and more sales messages as cheaply and efficiently as possible.
Does that sound like progress?”
Read the full piece here.