“I’m mad as hell, and I’m not going to take it anymore.”
– Howard Beale in the movie Network (1976)
Do you ever wonder why customers say they’ll refer a firm to their family or friends? I’m sure the answer differs across industries, but in retail financial services it’s because they believe that the firms they’re willing to refer are doing what’s right for them, and not the firm’s bottom line at their expense.
In other words, customer advocacy isn’t about “customers advocating for the firm” — it’s about the firm advocating for their customers. Unlike the NPS definition, I define customer advocacy as:
The perception on the part of the customer that the firm does what’s right for the customer, and not the firm’s bottom line at the expense of the customer.”
When you realize this — and consider that effective management measurement techniques strive to understand the root cause of desired and undesired effects — then you begin to understand why NPS is a flawed technique.
And that’s why I’m mad as hell. As for not going to take it anymore, that’s where projectADVOCACY comes in.
In my role as a senior analyst Aite Group, I’m teaming up with Neville Billimoria from Mission Federal Credit Union and Paul Schwartz of CONGRUITY to launch a multi-credit union study to measure the degree to which credit union members perceive that their credit union looks out for their best interests.
Why launch this effort to measure member advocacy and compete with NPS? Because our definition of customer (or member) advocacy:
1. Is a better predictor of growth and loyalty. Research that I’ve done in the past (and continued on at Forrester Research) has shown that the strongest predictor of the likelihood of consumers to do more business with their financial providers is the extent to which consumers believe those firms are advocates for the customer or credit union member. Likelihood to refer — while correlated with growth (in at least some studies) — isn’t the root cause of growth and loyalty. Credit union executives owe it to themselves — and their CU’s members — to understand the true drivers of growth and loyalty.
2. Is more actionable. To make NPS actionable, even its most ardent adopters admit you can’t ask just the one “likelihood to refer” question. But what other questions should be asked? No one agrees, and there is no theory or research to support an answer to that. But my research has shown customer advocacy (as I’ve defined it) does have operational, customer support, and marketing underpinnings that guide managers to ask the right questions to understand why a customer believes the firm is a customer advocate. Understanding these operational, support, and marketing dimensions — and which ones are most important to which members — helps execs take the right steps to improving their customers’ advocacy perceptions. That’s something NPS can’t say.
3. Enables a two-way perspective. In addition to surveying credit union members about the extent to which they believe their CUs are member advocates, we’ll be surveying CU executives, as well. We’ll ask them which of the advocacy dimensions they believe are most important to their members, and what they believe their members’ perceptions are of how well the CU delivers on those dimensions. What we”ll help CU executives understand is how well their own management team is aligned with each other and with their members. And again, that’s something NPS can’t do — you can’t ask the management team to simply predict the percentage of promoters or detractors.
4. Is more comparable across firms. Sure, when you ask the NPS question, that score is comparable across firms. But when the other questions asked vary, comparability is lost. Not only will projectADVOCACY compensate for this NPS weakness, but by capturing demographic information from CU members who are surveyed, we’ll be able to provide yet another level of comparability across participating credit unions.
5. Requires less investment. Net Promoter Syndrome Sufferers love to tell me that it doesn’t cost anything to implement the NPS methodology. The consultants and software vendors that have sprung up to support the methodology laugh all the way to the bank (or credit union) when they hear that. Participating in the projectADVOCACY initiative won’t be free — but no CU will be asked to invest more than $900 to participate.
6. Is just as simple. Please don’t tell me that NPS is superior to everything else because it’s so simple. Simple isn’t better. And even if it was, NPS isn’t any simpler than asking CU members if their credit union does what’s right for them or what’s right for the CU’s bottom line at the expense of its members.
A number of smart credit unions have already signed up to participate.
For more information about the study and the benefits or participating either go to the projectADVOCACY web site or email me at rshevlin at aitegroup dot com. Let me know if you want a copy of the study’s premise document or if you’d like to get on the phone to talk about the study.
Technorati Tags: Credit Unions, Customer Advocacy, projectADVOCACY
Ron,
When we debated the merits of NSP last year you touched ever so lightly on this subject of your Customer Advocacy approach. Of course you called it “customer” advocacy because at the time you didn’t care to work with credit unions. So, if I may, let me give you my take of your new adventure:
1. Is a better predictor of growth and loyalty. I need to see the research. Fred Reichheld has been studying loyalty economics for 20 years, has been featured in several Harvard Business Review publications and Forrester Research is on record of supporting NPS. Where is the head-to-head comparative research?
2. Is more actionable. Again, show me where you have taken your research and made operational, member support and marketing changes in a credit union. I can show you mine, with NPS.
3. Enables a two-way perspective. With all due respect. The internal NPS surveys I’ve conducted go well beyond the executive team to the front-line (which is where I started, as a teller – aka the ground truth of the organization). I welcome you as a competitor in this arena.
4. Is more comparable across firms. As I told you at breakfast last month at CUES – the credit union standard is already being developed by the Member Loyalty Group CUSO – founded by six amazing credit unions who have been using NPS longer than you’ve been speaking at credit union conferences.
5. Requires less investment. NPS is open-source. Period. It is not a black-box of secret calculations that you have to buy and then try to explain to your board. Call us simpletons, but we like the freedom to do it ourselves if we so desire.
Is just as simple. Haven’t seen it yet, so I’m not sure…..why don’t you show us your simple questions? Let us do it ourselves? Kick the tires so to speak??
Welcome to my world Ron – bring it!
Denise Wymore
Cooperative Culture Consultant
Certified NPS Associate by Satmetrix
Brilliant start.
I volunteer on a CU board AND work as the product manager of a well-known product for a well-known brand. In the mid-sized CU world I live in, the NPS has not helped us identify anything we need to do, and has evolved into a predictable measure for calculating the annual bonus.
I’ll admit that I was intrigued by the concept when my company embraced it, but the clinch is no longer close enough to indicate a marriage, and even when we rolled it out, we didn’t stop asking the other survey questions (if anything, we ask more now). And if you want to spend money to do something, you need to top two box the appropriate questions and NPS is only a vague add-on with no discernable value in that process.
I believe you have found the root of the issue – NPS ignores human nature (”what’s in it for me?”) and ultimately, anything that ignores human nature fails. I’ll be watching your answer to this problem closely. Frankly, NPS has had it’s 15-minutes of fame and now it would be nice if there were a way to determine what our members really think.
As so often is the case, this blog is dead-on and I’ve ask all my fellow board members to review it and your website.
Dear Lou,
It sounds to me like your credit union missed some of the magic of NPS.
The more questions you ask, the lower your response rate. By adding the ultimate question to your old survey you no doubt experienced survey fatigue. The true value of the simplicity of NPS gets lost.
The simple “On a scale from 0 to 10, WOULD you recommend?” and the magic follow-up question:”WHY?” has yielded tons of ACTIONABLE data with the credit unions I work with, and given us a discipline (like accounting) to measure beyond the annual (do I get my raise) score to a monthly figure – again, like accounting.
You don’t measure ROA yearly – why would you measure your real business, service, yearly (assuming that’s all your credit union did).
By identifying root causes of detractors, we’ve been able to reengineer processes that were losing us business.
NPS is anything but simple when you do it right. Reading all of the written comments is a lot harder than calculating a score. That’s where the heavy lifting come in. Too many dabblers of NPS think it’s just the score. If you’re ready to listen to members, really listen, it can be so much more.
Thank you for your comment – I was surprised no one commented yesterday – only heard crickets…..
Cheers,
Denise
I really dig this initiative. The thing that sways me is that, though ron doesn’t buy NPS by it’s self, he acknowledges the usefulness of its elements in a larger research effort.
Denise, you said it yourself, NPS only works if you find the actual cause of detractors and act on them. I think thats really what this is, except it is an effort to bring many credit unions a consistent measurement that can be compared across the board rather than have everybody develop their own version and be unable to compare apples to apples.
Just to bring up one more of Denise’s points, “Too many dabblers of NPS think it’s just the score. If you’re ready to listen to members, really listen, it can be so much more.”
That right there is the major problem, most people don’t know what to do with the very simple (though open source) formula. They take it as it is, get a score and nothing more.
To be honest I have no idea what it would cost to develop a more robust NPS based system of measurement, but its probably more than ProjectADVOCACY is charging to participate. In my opinion its a great tool that is going to allow many small credit unions to get feedback similar to a highly developed (and complex) NPS measurement. The fact that it also can be compared consistently to other CU’s is just gravy in my opinion (delicious, useful gravy).