Ann Arbor Firm Finds Inaccuracies in Popular Survey Method

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The Net Promoter Score, traditionally used by businesses to measure customer loyalty, may not always be accurate, and in some cases may misrepresent customer satisfaction, says Ann Arbor-based ForeSee.  In response, the customer analytics firm created the Word of Mouth Index earlier this year and released its second WoMI report Tuesday.

“Measuring customer experience is more important than it has ever been.” Says Larry Freed, president and CEO of ForeSee. “Businesses cannot stand still in the field of customer experience analytics. That is why WoMI is a great next step for companies across all industries.”

Freed says the Word of Mouth Index was created to more accurately measure customers’ likelihood to recommend and/or detract from a brand, in order to provide a more precise and actionable measure.

For example, Freed says the Net Promoter Score asks customers, “How likely are you to recommend this company?” and assumes disinterested responders are active detractors. On the other hand, he says, the Word of Mouth Index adds a second, and important question: “How likely are you to discourage others from doing business with this company?”

For instance, take Ford Motor Co. Based on the NPS, 19 percent of the automaker’s customers were detractors in the third quarter of 2013. In contrast, only 4 percent were considered detractors based on the company’s WoMI. Likewise, the NPS for Battle Creek-based Kellogg determined that 19 percent of customers were detractors in the third quarter; but according to the WoMI, there were none.

As the Freed explains, overstating detractor behavior can result in “companies spending millions of dollars chasing after supposed ‘detractors,’ who are often neutral toward a brand or even active advocates of the brand.”

Companies with the highest word-of-mouth scores included Amazon (67), Apple (65), Harley-Davidson (64), Walt Disney (62), eBay (61), and Avon (61). The financial services industry scored the lowest average scores in the report with an average WoMI score of 32. Ford and Kellogg scored 44 and 48, respectively.

Surveys for the World of Mouth Index, which compared scores for Interbrand’s Top 100 Brands in the World, were conducted in August 2013 from more than 21,000 panel-collected consumer surveys. 

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