Measurement

Net Promoter: Buckshot Marketing?

Net Promoter

I’ve been meaning to write about net promoter score for a while but it’s one of those big topics that probably needs to be tackled in sections. As I’ve mentioned before, simplicity can often be the key to widespread adoption of a new metric and you can certainly see why NPS appeals to marketers on that level. The only problem is that I really don’t think that every WOM program boils down to “Would you recommend our product/service to a friend?” since WOM interactions are slightly more complex than simple recommendations.

First of all, from a purely statistical standpoint, I highly recommend reading the FREEDyourMind piece on NPS. Among the very valid points that Larry Freed makes are that the margin of error is far too high (he claims an NPS of 24 could be anywhere between 14-34), the scale isn’t clearly defined (he claims 6′s are rarely actual detractors) and that there is no connection between NPS and growth. For even more detail along these lines, I also recommend checking out Bob Thompson’s very detailed piece at Customer Think.

While I am tempted to give Bob and Larry the benefit of the doubt on the statistical relevance, the point I’m most interested in exploring is the connection between NPS and growth. There are certain categories, like automotive and travel/hospitality, that are driven by moving consumers from “passive” to “promoter.” I believe that it’s less a measure of success to get that snapshot of NPS in a random sampling of the target demographic than it is to measure a specific set over time.

It can probably be done in similar manner to brand awareness. Since we basically share a floor with Dynamic Logic, who I consider to be the hands-down best at measuring brand awareness online, I often debate the methodology for this kind of measurement with my friends over there. From a marketing perspective, I would only be interested in seeing an increase in NPS in the same set of surveyed individuals over the period of a marketing interaction. For banner impressions, I believe that the Dynamic Logic method of measuring people who have seen an ad against those who have not makes plenty of sense but I don’t think the same is true for someone who has submitted a video for Doritos Super Bowl promotion and waited around for a month to see who won or someone who has visited H&R Block’s tax advice outpost in Second Life and been incentivized to walk into a retail outlet.

I also think that the question doesn’t speak to the true value of WOM. I’m less interested in if the surveyed body would recommend the product than how they would recommend it. Sure it’s great if a large percentage of people will recommend that you buy a SlingBox but if these people can’t explain to you the key benefits of placeshifting then they’re not making valuable recommendations for Sling Media. I’d much rather ask a follow-up question that offers the product’s key messages with a couple of common “dummy” messages to see if the promoters will actually drive growth of the product or service.

Not only would this help connect NPS with growth but it would also help measure message adoption over the course of an engagement, which possibly also helps to answer the “how do we measure engagement?” question.

Unfortunately, I’m going to miss Walter Carl’s session on this at the WOMMA Word of Mouth Research Symposium tomorrow, which I’m sure will be very interesting (and hopefully well documented on someone’s blog). I’m offering a free drink to anyone who sends me a rundown, and I hear free drinks are very hard to come by in Las Vegas.

ROI and Social Media: Here We Go Again

Ruler

Measurement has always been a thorn in the side of any emerging media category. In the early days of banner advertising, it took a while before there was anything resembling a consensus on CPM, even though banner advertising ultimately isn’t very different from any form of visual advertising. Then anyone who took the time to understand CPM immediately wanted to apply it to every form of interactive marketing, regardless of whether or not it ultimately made any sense. Luckily, or not for some marketers, search came around and all of a sudden ROI became easy to measure (and impress your boss with) so all of a sudden every interactive marketing manager wanted to know what his ROI would be on every program.

Valeria Maltoni on Conversation Agent examined the the topic of measuring social media a little more deeply this week, saying “It is essential to show tangible value beyond the creation of community and internal engagement.” She talks about how it’s less important what the “I” in ROI is, whether it’s investment, influence or involvement, but more a matter of finding out how to measure what that return actually is.

I would argue that the “I” is always, ultimately, “investment” since the real challenge for selling social media initiatives is to show the value over other forms of interactive marketing that are competing for the same budgets (my perspective is obviously skewed to the agency side). However, I feel the the model itself can be much simpler than most of the alternatives I’ve seen.

First off, you’re hopefully building your social media programs based on some key data that speaks to your key objectives. For example, a pre-launch consumer technology product may be engaging in social media to identify and build relationships with influencers and potential product evangelists that they eventually want to invite into a beta testing program. Mayeb you know from previous experience that an $80,000 online ad buy only really acquired 120 of the target consumers they were looking for. Essentially, their cost per acquisition was around $650 and they’d like to at least cut that in half. So once you know the value of this kind of interaction, say $300 per acquisition, you know that the ROI on your program that pulled in 200 of the target influencers is worth at least $60k.

You don’t need to stop there though. You can use CPM to your advantage without being deceptive. If the CPM for this desirable niche was $30 than what is the value per thousand for people that take a poll? Would your marketing team agree that this interaction is four times more valuable than a banner impression in your target’s periphery? Considering what they probably pay for a click, I would guess that you will reach that consensus easily.

This kind of formula can grow more and more complicated (can you put a $ value on each percentage increase in a brand awareness survey?) but you’ll probably find that you don’t need to pull too many metrics before you find that you’re generating a compelling ROI model that directly speaks to your objectives. In fact, the fewer metrics it takes for you to get there, the simpler and easier it will be to translate to everyone who you will need to convince.

Of course this is just one method, of many, that can speak to ROI, which in and of itself is a flawed justification for engaging in social media. Hopefully, after getting past the ROI hurdle, you will have an easier time convincing detractors that social media is important because you need to be wherever your stakeholders are in order to communicate with them organically, whether it’s at the grocery store, on their mobile device or on this strange directory where they spend over two hours per visit.

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