Will the 'WoM Index' be the new NPS?

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By: Wise Marketer Staff |

Posted on May 24, 2013

While the Net Promoter Score (NPS) was designed to provide a single metric to measure customer loyalty, this kind of measurement of consumers' intentions makes a number of assumptions that aren't always accurate, according to customer experience analytics firm ForeSee, which has launched its new Word-of-Mouth Index (WoMI).

The company's new WoMI measurement therefore measures both the customer's likelihood to recommend and their likelihood to detract from a specific brand. This effectively allows marketers to take positive actions to foster more positive word-of-mouth and decrease negative word-of-mouth by increasing customer satisfaction and improving the overall customer experience.

ForeSee spent 18 months testing the WoMI methodology with nearly 300 companies, and its own research suggests that NPS was overstating detractors by 270% on average, simply because it did not distinguish between positive and negative word-of-mouth.

"More than a decade ago, NPS was introduced as a metric that has been used to focus organisations around the customer and help executives track customer loyalty with a single number. Yet it doesn't accurately represent negative word-of-mouth," said Larry Freed, chief executive officer for ForeSee. "As customer metrics have evolved along with social media and other methods for spreading word-of-mouth, WoMI represents the logical evolution of NPS, offering a precise analytic measure to address the sophistication of today's customers."

ForeSee's research also found that NPS did not distinguish between passive and active word-of-mouth, and that demonstrating satisfaction with a brand and actively promoting it are often two different things entirely. There are brands that customers love and will recommend to a friend, but there are certain products and services that do not inspire enthusiastic and proactive word-of-mouth recommendations, and there are people with certain personality types who never recommend anything.

According to Kevin Ertell, vice president of e-commerce for Sur La Table, "I like that WoMI actually asks customers if they're detracting, so we can get an accurate read on promoters and detractors. For us, this metric is still only one part of a more comprehensive VoC (voice of the customer) measurement system that helps us understand our customers' wants and needs."

WoMI builds on what many companies are already doing with NPS to measure word-of-mouth recommendations, but has been designed to address today's more complex WoM measurement challenges, aiming to help marketers better understand what consumers want, and to allocate the right resources using a simple yet still thorough metric.

A whitepaper showing various organisations' satisfaction, NPS and WoMI scores has been made available for request via the WoMI web site - click here.

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