If you haven’t read it already, I would recommend a look at the Harvard Business Review’s publication of Breakthrough Ideas for 2007. It’s a fascinating array of short essays covering insights and developments in business and science, ranging from unconscious decision making to user-centred innovation.

One of the essays is about the so-called ‘conflicted consumer’, UK consultant Karen Fraser’s description of a segment of people who are “apparently loyal customers who have ethical concerns about your company and are poised to switch as soon as a viable alternative emerges. In other words,” Fraser continues, “they buy your product but they’d rather not.”

The data for this was obtained in a UK survey of 1,300 consumers. According to the research, almost one-quarter of respondents said that they are currently buying goods or services from a company with an ethical reputation that they perceived as poor or very poor.

The implication is that conflicted consumers may abandon a brand as soon as a more ethical alternative becomes available. However, none of the articles I’ve seen on the conflicted consumer has actually mentioned what proportion of consumers say that they would actually do this switch if alternatives were available. As researchers in customer loyalty and disloyalty are well aware, staying or leaving behaviour is the result of many complex factors.

Loyalty despite a belief in a company’s lack of ethics is important if this leads to what is commonly called ‘cognitive dissonance’ (a simple but powerful social psychological concept developed by a man called Leon Festinger in the 1950s). Cognitive dissonance arises when our beliefs (e.g. perception of unethical business) and actual behaviour (e.g. continuing to be a customer) lead to a tension, which can be resolved only by either readjusting one’s beliefs or changing one’s behaviour. If an alternative business comes along that offers the possibility to switch, the conflicted consumer may just do it (Nike suffers from one of the worst ethical reputations, but no pun intended here!)

Unfortunately, the prediction of behaviour from beliefs and attitudes is difficult and has occupied the brains of many social and consumer psychologists over the last few decades. The Theory of Reasoned Behaviour, for example, considers beliefs, along with evaluations of those beliefs and subjective norms, all to be determinants of behavioural intentions, which may then cause actual behaviour. The reason why this is such an important theory is because consumption is perhaps a prime example of the gulf that sometimes lies between what we think we should do and what we actually will do (take healthy eating, for example).

Nonetheless, with rising awareness of ethical issues, and the more social norms and expectations change, the larger the segment of conflicted consumers will grow and the greater the dissonance experienced by existing consumers. It is inevitable that many will soon take advantage of the emerging, more ethical, product landscape.

According to coverage of the ‘conflicted consumer’ in World Business, the 10 companies with the worst ethical ratings include fast food chains (McDonald’s, Burger King), budget airlines (Ryanair, easyJet), financial service providers (Barclays Bank, American Express), along with Nike, Shell, BSkyB and Camelot. I’m sure many of them took Karen Fraser’s research to heart and are now engaged in ethical business research and the development of strategies to avoid the loss of customers.

The top 10 ethical business table is composed mainly of retailers (The Body Shop, M&S, Boots, The Coop, Sainsbury’s, Tesco, Waitrose), along with Kellogg’s, Google and the BBC.

It would be interesting to see the degree to which ethical reputation increasingly affects those companies’ ability to win new customers. As Karen Fraser (quoted in the World Business article) notes: “Mud sticks! It takes time to change a reputation. Companies should also know that throwing money at a campaign can be counterproductive if consumers don’t believe what you’re saying. And in an age of digital communications, companies do face increased scrutiny.” Consumers would rather trust others like themselves and share their feelings widely online.

The Net Promoter Score (NPS) has been gathering promoters and detractors ever since Fred Reichheld created it- but most especially since his paper entitled ‘The one number you need to grow’ appeared in the Harvard Business Review in December 2003. In the last three and a half years, businesses all around the world have been assessing the value of NPS. Some of the largest and most successful have adopted it as not just the key metric for their business but also an enabling technology for business improvement.

Meanwhile some research firms have been working hard to undermine its value – perhaps because they see Reichheld’s ‘Ultimate Question’ as a threat to their income. Despite their efforts, NPS is gathering ground – perhaps because for those that use it, it exceeds their expectations – a key tenet of the metric itself. Whatever the reason, NPS looks here to stay. In fact there is sufficient interest in the metric in this country to support a two day sell out conference this week in London. Does this conference represent a tipping point in its use in the UK – or is it just another business fad reaping the benefits while it is flavour of the month? If the marketing for the conference is anything to go by, its future is assured. It begins…. The culmination of more than 20 years of work, the Net Promoter® measure of customer loyalty is much more than a metric — it is a discipline your company needs to master if you want to make a lasting impact on the bottom line. Discover how companies are boosting customer loyalty and revenue growth using Net Promoter, the most important management discipline since Six Sigma

Its strength is its simplicity – its simplicity could be its undoing
I’ve been working with NPS since 1995 – an early adopter and now a confirmed promoter. I like its simplicity. After all it is a metric that requires just one question to be answered – see the box below. It creates a snapshot of your recommendability – the difference between your positive and negative word of mouth. The better the score, the more likely you are to perform well. Reichheld, and NPS, is criticised for using the metric as a predictor of future growth potential - although work at the London School of Economics has confirmed the link. In my opinion, this ‘predictor’ quality can be a distraction because some organisations may stop at this simplistic level. It is better to use the metric to identify the causes of detraction and promotion and to adjust both your operations and your marketing accordingly. This is the real strength of what Reichheld created. If organisations ask their customers these profound questions on a regular basis and then act on the answers, they can deliver a lasting impact on the bottom line.

So why should PR people be interested?
NPS should be a metric that is embraced by communications professionals of all disciplines because it both connects to what they do and resonates in the boardroom. Few, if any, other measures that PR has mustered to prove its credibility in the past, are as meaningful to the CEO. AVEs, OTSs and even brand affinity simply do not have the same cut through as the answer to question: “Are we creating advocates?”

There are perhaps two powerful reasons why business and communication people alike should sit up and take notice. Firstly, recommendations create recommenders. It is a positive reinforcement loop of huge value to a business. Look at the chart of Simple’s recommendability. A low NPS for non-users is to be expected because they have not yet had the experience. A good NPS for users that shows Simple (the UK’s #1 brand for sensitive skin) is a strong word of mouth brand. But look at the impact of recommendations on the NPS! Users who arrived at the brand via a recommendation have an NPS of 65% - almost three times the standard NPS, with double the level of promoters and almost zero detractors. Setting expectations where they can be exceeded is the key to business and PR success. On the strength of this research we created for Simple a breakthrough recommendation generator www.SimplyCity.me.uk that has already attracted thousands of brand advisers in under three months. Secondly, negative recommendations are almost four times more influential than positive ones – so it pays to identify and remove the sources of detraction. PR people are used to the twin disciplines of protect and promote – so NPS should be manna from heaven in the search for a place at the boardroom table.

There is another reason why NPS can be vital to business today. Personal recommendations appear on the Internet in multiple forms – blogs, forums, social networks to name but three. PR people need to have their finger on the pulse of the Web 2.0 recommendability. That’s why Kaizo created its Advocacy Index – an NPS rating using the power of Google.

So is NPS the most important management discipline since Six Sigma, as Reichheld suggests? I’m not sure. But my work in the last three years proves that it can deliver untold value to organizations that are prepared to embrace it fully.
END-

844 words

Quantum Corporation, one of the world’s leading technology storage providers, has renewed its PR relationship with Kaizo following comprehensive market review. The $1 billion dollar back-up, archive and recovery specialist will work with Kaizo to promote its increased storage product range following the acquisition of competitor ADIC. Quantum’s broad range of products meets the storage needs of organisations of all sizes, from Global 2000 enterprises to small businesses and remote offices.

The company has the most comprehensive portfolio of disk-based backup and de-duplication/replication solutions, is the #1 provider of tape automation, and is a long-standing leader in tape drives and media. In addition, Quantum’s data management software is an industry-leading technology for shared workflow and intelligent archiving in high-performance, long-term storage environments. Joanne Ayres, UK marketing manager at Quantum, said: “Following our acquisition of ADIC and a successful 5 year relationship with Kaizo, it was the right time to review our PR relationship in the UK. We saw five of the top technology agencies and quickly realised that Kaizo were still best positioned to represent us moving forward.” Rhodri Harries, managing director of Kaizo, said: “It is exciting times at Quantum and with a stronger than ever product range to promote, we are delighted to be continuing our long-term partnership. Our technical understanding and media and analyst relationships in this sector are second to none.”

ends

Authors: Matt Kucharski, SVP at Padilla Speer Beardsley in Minneapolis and New York and Crispin Manners, Director of Service Innovation at Kaizo in London are partners in the Worldcom Public Relations Group
Some public relations purists seem to be giving a derisive sniff to all of the attention paid to word-of-mouth and word-of-mouse marketing. They contend, and rightly so, that new innovations have always had vocal early adopters, and publics have long sought out communities of interest to help them make important decisions? The complaints revolve around the fact that other related but sometimes competitive disciplines – advertising, direct marketing, Web marketing, research and even management consulting – are “stealing” the word-of-mouth concept and calling it their own.

Get over it. The time you spend complaining is time you should be spending polishing your word-of-mouth skill set.

Earlier this year, we arranged a meeting with six of our colleagues in the Worldcom Public Relations Group to compare notes on each agency’s word-of-mouth marketing programs. In reviewing each firm’s word-of-mouth formal and informal programs, we found a common thread that runs through all our effective word-of-mouth efforts.

Below are a few of the most prevalent themes:

You Can’t Do It Without Research

Quite possibly the biggest difference between today’s word-of-mouth programs and the ones conducted in the past is the ability to ground the program in research that improves the likelihood of its success.

Bain Consulting Group has pioneered a “Net Promoter Score” that assigns a score to a company’s recommendability based on a single question: “How likely would you be to recommend this company’s product or service to someone else?” Kaizo has created a research methodology that identifies the reasons why an individual would make that recommendation. This same research methodology could be used to understand why employees refer employers, or why investment analysts recommend securities. Getting into the hearts and minds of an organization’s biggest fans and worst detractors is critical to creating your cadre of word-of-mouth advocates. Without research, you’ll be guessing, and you’ll likely be wrong – more importantly you will be missing an essential metric to prove if your efforts are paying off.

Social Media – A Built-In Outlet for Word-Of-Mouth
Don’t get hooked on the fact that WOM stands for word-of-mouth. It might just as well stand for word-of mouse. If you’re a homeowner or do-it-yourself type, you probably have a can of WD-40 on a shelf somewhere in your basement or your garage. The product has been around for many years, and people have been recommending it to friends, neighbours and colleagues for just as long to solve problems ranging from a squeaky door hinge to removing tar and dead bugs from windshields.

By creating an online WD-40 fan club, the company with the help of Nuffer Smith Tucker public relations, was able to give those passionate fans a more efficient way to share their experiences. The power of that fan club became evident when the company polled its members to identify the top uses for the product. The company set a goal of 200 ideas. It got back more than 30,000 and more come in every day.

Word-of-Mouth – It’s More Than Marketing

As ad agencies and direct marketing firms have jumped on the word-of-mouth bandwagon, most of the focus has been on use of the technique for attracting consumers. However, members of the Worldcom Group agreed that companies just getting started on formalizing their word-of-mouth efforts can be equally well-served focusing on more specific publics or audiences.

B2B marketing, for instance, clearly has significant opportunities to become more disciplined at word-of-mouth. A number of studies have shown that the higher the risk associated with the purchase decision, the more likely the customer is to rely on friends, colleagues, and experts for advice rather than impersonal channels like traditional advertising and direct marketing. It stands to reason, then, that B2B products and services, which generally are “make or break” propositions, are more apt to be adopted through word-of-mouth than many consumer products, where the consequence of a bad decision is hardly long-term.
For those of you practicing public relations who believe that word-of-mouth is nothing new, and that there’s little to be learned from today’s successful campaigns, it’s time to think again. We live in the world of Web 2.0. Access to faster, less-expensive research, widespread adoption of social networking tools and the rise of consumer influencers show that it’s time to usher in PR 2.0. A better understanding of the role of personal recommendations on the success of a product or service should compel every practitioner to re-examine their attitudes toward what is arguably the world’s oldest public relations technique: Word of Mouth.

About the Authors:

Matt Kucharski is SVP at Padilla Speer Beardsley public relations, with offices in Minneapolis and New York. He is a key member of the agency’s B2B marketing and crisis practices. He also serves as an adjunct instructor in public relations and advertising at the University of Minnesota.

Crispin Manners is the founder of Kaizo and a former Chairman of the UK’s Public Relations Consultants Association. He is creator of the award winning communications planning regime – ValueFlow- that earned Kaizo the accolade of the UK’s Innovative Company of the Year..

Both agencies are members of the Worldcom Public Relations Group, the world’s largest network of independent public relations firms with offices in more than 100 cities worldwide.

NPS is a metric that requires just one question to be answered – ‘How likely on a scale of 0-10 are you to recommend company/product X to a colleague or a friend?’ The answer to this simple question can be profound. It separates customers of a product or a service into three groups who are divided by one thing – the difference between the expectations they had of the product/service before using it and the experience they had after using it.

When expectations are missed you create a detractor – or someone who will make negative recommendations. When expectations are met you create what Reichheld calls a passive – someone who does not feel strongly enough to recommend either positively or negatively. When expectations are exceeded you create a promoter – or somebody who will make positive recommendations.

The Net Promoter Score is calculated by subtracting the percentage of customers who are detractors from the percentage who are promoters. Passives are ignored because what you are creating is your recommendability Balance Sheet – the bottom line of your ability to create advocates. It’s common sense then to deduce that a company that has significantly more promoters than detractors will perform better than one with the reverse position.

Words 202