“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.