The latest Word of Mouth Index (WoMI) Benchmark from ForeSee, which provides customer loyalty scores for the top 100 US brands, has revealed what the company perceives to be a flaw in the Net Promoter Score (NPS) metric, suggesting that it over-estimates brand detractors. This article is copyright 2013 The Best Customer Guide.

The WoMI study calculated loyalty scores using the company's proprietary WoMI metric based on a survey of 1.5 million consumers, and concluded that NPS overstates detractors by 299% on average for the 100 largest brands in the US., as identified by a 2012 Interbrand study.

With NPS, customers answer a single question: "On a 0-to-10 scale, how likely would you be to recommend this company?" with responses being categorised as follows: brand promoters (9-10), passive (i.e. satisfied but unenthusiastic) customers (7-8), and brand detractors (6 or lower). But ForeSee's data suggests that this method of classifying detractors can both be inaccurate and overstate detractor behaviour, in that many people that NPS labels as detractors are actually neutral toward or even advocates of a brand. If this is true, then allocating additional budget to win them over again represents wasted marketing spend.

The company developed WoMI to augment NPS by adding a second critical question: "How likely are you to discourage others from doing business with this company?" As with NPS, this results in a single metric, but WoMI weighs and incorporates both positive and negative word-of-mouth for a more precise and actionable picture.

In extreme cases, some companies surveyed by ForeSee found that NPS had overstated their brand detractors by 1,000% or more. Average overstatements by industry included:

  • Automotive: 85%, ranging from Hyundai (270%) to Audi (-30%)
  • Business-to-Business: 96%, ranging from 3M (225%) to Caterpillar (-12%)
  • Computers/electronics: 264%, ranging from Samsung (1,050%) to IBM (64%)
  • CPG: 399%, ranging from Heinz (1,700%) to Danone (-8%)
  • Financial services: 527%, ranging from Visa (1,450%) to Goldman Sachs (53%)
  • Retail: 222%, ranging from H&M (533%) to Burberry (-8%)

"This overstatement of detractors is eye-opening, compelling brands to seriously re-evaluate their tactics and spending on converting supposed detractors," said ForeSee's CEO, Larry Freed. "Given today's more empowered consumers - who are able to broadcast their opinions from social media megaphones and switch brands instantly with the click of a mouse or the swipe of a mobile screen - it's vital that companies use a loyalty metric that factors in both positive and negative word-of-mouth."