Brand Equity Net Promoter Scores Versus Mean Scores. Which Presents a Clearer Picture For Action? A Non-Elite Branded University Example.

Transcription

1 Brand Equity Net Promoter Score Veru Mean Score. Which Preent a Clearer Picture For Action? A Non-Elite Branded Univerity Example Ann Miti, Swinburne Univerity of Technology Patrick Foley, Victoria Univerity Abtract Reichheld (2003; 2006) argue that every organiation cutomer can be grouped a promoter, detractor or paive. Thi paper preent an exploratory comparion of a nonelite branded univerity brand equity (quality, value for cot and loyalty) mean and net promoter core. Thi invetigation identified that mean core may miinform and that net promoter core eem to provide better decription of cutomer atifaction than mean core a they incorporate variance information. Reichheld (2003; 2006) approach eem better at identifying both the level of urgency and creating cot effective intervention to enhance a univerity brand than the more conventional mean baed core method. Introduction If growth i what you re after, you won t learn much from complex meaurement of cutomer atifaction or retention. You imply need to know what your cutomer tell their friend about you (Reichheld, 2003, p.46). Do they tell their friend that what you did i good quality, good value for money (Netemeyer, Krihnan, Pullig, Wang, Yagci, Dean, Rick and Wirth 2004) and do they recommend it to other (Yoo and Donthu 2001)? Are they loyal promoter of the coure or are they embittered detractor? Reichheld (2003; 2006) ha argued that every organiation cutomer can be categoried a either promoter, paive or detractor. Promoter have been identified by Reichheld (2006) a loyal, enthuiatic cutomer who keep buying from the organiation and urge their friend to do the ame, paive are atified but unenthuiatic cutomer who are eaily wayed by competitor and detractor are unhappy cutomer that are trapped in a bad relationhip. Reichheld (2006) add that cutomer can be categoried according to their repone. If you ued an 11 point cale, a nine or a ten (that i a repone value of greater than 80% on the cale) equate to promoter, a value of zero through to ix (that i a repone value of le than or equal to 60%) equate to detractor and the value even and eight are paive. Thi i an extremely demanding meaure of cutomer atifaction ince it i deigned to meaure how many net promoter the organiation actually ha. Reichheld (2006) tate that the average organiation produce a net promoter core efficiency of only 5 to 10%, and that ome entire indutrie have negative net promoter core. Thee organiation with negative net promoter core are actually creating more detractor than promoter on a daily bai. It i not known whether within the univerity ector net promoter core are within Reichheld (2006) reported norm of 5 to 10% or whether they are negative. Alo it i not clear whether mean core or net promoter core provide better decription of cutomer atifaction to inform action. The conventional method in contrat to Reichheld (2006) net promoter core method, which ha been ued to create atifaction core can be called the mean core method. The mean 1

2 core method imply ue the mean to ummarie information in a large et of data. Aaker, Kumar, Day, Lawley and Stewart (2007, p.338) tate that: Decriptive tatitic can provide accurate, imple and meaningful figure by ummariing information in a large et of data. However at time variance may be more meaningful than the mean and the mean core value may not accurately ummarie the data being invetigated. The mean core method ha been applied a a meaure of cutomer atifaction acro a wide range of buine ervice globally. Indutrie range from tourim to financial ervice (ee: McNeilly and Barr 2006; Rittichainuwat, Qu and Mongknonvanit 2002; Shaw, Lewi and Khorey 1991; Tang and Qu 2000). Shaw et al. (1991) reearch formed their concluion by uing the mean core of cutomer atifaction level with hotel convention ervice. Rittichainuwat et al. (2002) reearch alo ued the mean core method to gauge conumer atifaction level of tourit viiting Thailand, and McNeilly and Barr (2006) reearch on cutomer atifaction with accounting ervice i another of the many example of cutomer atifaction reearch uing the mean core method. The Study Thi tudy preent an initial exploratory invetigation into whether brand equity mean core provide clearer direction for brand equity management or whether Reichheld (2003; 2006) net promoter core approach doe. A large non-elite branded univerity baed in metropolitan Melbourne wa elected, and the potgraduate buine tudent population targeted. The ample compried of 255 participant, with 116 female and 139 male. Sixty two percent of thee participant were from Aia and 30% from Autralaia. Thi potgraduate buine tudent conumer group were aked to rate their repone on a even point cale, where 1 = trongly diagree and 7 = trongly agree, on three brand equity meaure: Netemeyer et al. (2004) quality and value for cot dimenion; and Yoo and Donthu (2001) overall brand equity (OBE) dimenion which i relabelled loyalty. Cronbach alpha for the three cale were 0.911, and repectively; mean core were 3.9, 4.3 and 4.3 repectively, and the net promoter core were -58%, -35% and -43% repectively. The net promoter core for each of the brand equity dimenion are calculated according to Reichheld (2006) net promoter core approach uing a 7 point cale. On the even point cale ued to collect the data: promoter equate to repone value of ixe and even ( 80%), detractor are thoe who core between one and four ( 60%) and the paive are thoe who core a five. In order to calculate the net promoter core the percentage of cutomer who are promoter (P) and detractor (D) need to be calculated. The net promoter core for each brand equity dimenion i then calculated by ubtracting the percentage of detractor from the promoter percentage, ee Table 1 below. Table 1: Net Promoter Score Scale Rating Repone in % Net Promoter Dimenion % of Promoter % of Detractor Score Quality % Value for Cot % Loyalty % The Quality Dimenion of Brand Equity On examining the decriptive tatitic of the quality dimenion of brand equity, the prognoi appear to be poor but not urgent. Thi dimenion had a mean value of 3.9 on a 7 point cale. 2

3 Thi would often be repreented a a 56 % atifaction rating of the quality of their coure. The quality net promoter core however, preent a more urgent ituation, with a value of -58%, ee Table 1 and Figure 1. Thi reult clearly ugget that detractor wamp promoter (Reichheld, 2003, 2006). In other word mot conumer are unhappy with the quality of their coure. Though thi i not how the mean would commonly be interpreted. The net promoter core eem to more clearly indicate the negative word of mouth behaviour about the quality of thi univerity coure by thi conumer group than the mean core. There are two type of intervention to change thi core, one i aimed to hift the extreme detractor the trongly diagree and diagree and the econd to hift the borderline, the neither agree nor diagree or the omewhat agree. Changing 50% of the trongly diagree repone to diagree and 50% of the diagree repone to omewhat diagree, produce a change in mean core from 3.9 to 4.1 (a change of 0.2), a 58% atifaction rating of the quality of their coure, but ha reulted in no change to the net promoter core. If the focu i on hifting the borderline, that i hifting 50% of it paive into promoter and 50% of it neither agree nor diagree detractor into paive, it will provide a ubtantial improvement in the quality net promoter core from -58% to -27%. Thi intervention however only produce a modet change in mean core of 0.4 from 3.9 to 4.3. Thi further ugget that a modet change in mean core caued by a borderline intervention repreent a ubtantial change in the quality net promoter core. Therefore an extreme intervention ha no impact on the net promoter core wherea a borderline intervention doe. The trategy uggeted for thi non-elite branded univerity i to focu their initiative on the borderline egment. Figure 1: Quality Net Promoter Ditribution 68% 10% NPS = -58% The Value for Cot Dimenion of Brand Equity The mean of the value for cot dimenion of brand equity, appear to be non-urgent at 4.3, which i commonly interpreted a a 61% atifaction rating for good value for money coure. On further examination the value for cot net promoter core revealed a reult of -35%, ee Table 1 and Figure 2. Though thi i almot half of the quality net promoter core of -58%, it till indicate an urgent need for action ince detractor wamp promoter. The implication of thi i that the majority of conumer are diatified with the univerity value for cot, and indicate negative word of mouth behaviour from thi conumer group. If thi non-elite branded univerity adopted a borderline intervention which focue on hifting 50% of it paive into promoter and 50% of it the neither agree nor diagree detractor into paive, 3

4 it will provide a ubtantial improvement in the value for cot net promoter core from -35% to -5%. Thi however i only reflected in a modet change in mean core of 0.3 that i from 4.3 to 4.6. Figure 2: Value for Cot Net Promoter Ditribution No. Of Student Detractor 51% P a i v e Promoter 16% NPS = -35% trongly diagree diagree omewhat diagree neither omewhat agree agree trongly agree The Loyalty Dimenion of Brand Equity With a mean core of 4.3, it i commonly interpreted a 61% atifaction with the univerity reulting in recommendation behaviour. Thi alo doe not eem to be an urgent area for action. However, the loyalty net promoter core i -43%, ee Table 1 and Figure 3, and indicate that the majority of thi conumer group are detractor and are not willing to recommend thi univerity and it coure to other. A borderline intervention will provide a large and meaningful improvement in the loyalty net promoter core from -43% to -10%. Thi again only repreent a modet change in mean core of 0.3 but a ubtantial improvement in the loyalty net promoter core from -43% to -10%, imilar in magnitude to that of the quality and value for cot net promoter core. An extreme intervention for loyalty would change the mean by 0.1 but due to the nature of extreme intervention it would not alter the net promoter core. Figure 3: Loyalty Net Promoter Ditribution N o. O f S tu d e n t Detractor % P a i v e 6 5 Promoter 16% NPS = -43% 0 tro n g l y d i a g re e d i a g re e o m e w h a t d i a g re e n e i th e r o m e w h a t a g re e a g re e tro n g l y a g re e 4

5 Dicuion The net promoter core for thi univerity ugget urgent action but it alo provide an inight for action. A reaonably large proportion of tudent are itting at the borderline of the detractor and paive categorie; and that there are an equally large number of tudent who are in the paive category. If thi non-elite branded univerity focue on a borderline intervention by hifting 50% of it paive into promoter and 50% of it neither agree nor diagree detractor into paive, it will provide a ignificant improvement in net promoter core reulting in low to very low negative net promoter core. Uing mean core doe not preent the ame clear picture for action. Preently thi non-elite branded univerity i minimiing it capacity to create brand equity from it potgraduate buine tudent conumer group. The trategy uggeted for thi univerity and other non-elite branded univeritie generally, i the adoption of what Treacy and Wierema (1993; 1995; 1997) identify a a cutomer intimacy approach ince they may not have the current or legacy reource to engage in academic product leaderhip, though cutomer-centric product innovation i poible. A cutomer intimacy approach i where organiation purue long term relationhip with their conumer and pecialie in atifying unique need. Thee need are often only identified a a reult of the cloe relationhip forged with their conumer. Therefore thi non-elite branded univerity and other non-elite branded univeritie may be in a better poition to compete in thi globally competitive higher education ector if they chooe to differentiate on cutomer intimacy. If thi i the trategy of choice for non-elite branded univeritie, then it i imperative to have a detailed undertanding of borderline need. Intervention need to be targeted to meet thee need in order to maximie their brand equity net promoter core and alo ue their limited reource wiely. The net promoter core eem to provide better decription of cutomer atifaction than mean core and are better at identifying cot effective borderline intervention. Concluion Thi paper preented the reult of an exploratory invetigation into the comparion between brand equity mean core and net promoter core. The finding ugget that dimenion mean core can be deceiving, and that net promoter core provide greater inight into conumer behaviour. A trategy to improve brand equity net promoter core pecifically for the nonelite branded univerity invetigated, and other non-elite branded univeritie generally wa alo preented. Reference Aaker, D.A, Kumar, V., Day, G.S., Lawley, M. & Stewart, D. (2007). Marketing reearch, 2 nd edition, Milton: John Wiley & Son. McNeilly, K.M & Barr, T.F. (2006). I love my accountant they re wonderful: undertanding cutomer delight in the profeional ervice arena. Journal of Service Marketing, 20/3,

6 Netemeyer, R. G., Krihnan, B., Pullig, C., Wang, G., Yagci, M., Dean, D., et al. (2004). Developing and validating meaure of facet of cutomer-baed brand equity. Journal of Buine Reearch, 57, Reichheld, F. (2003). The one number you need. Harvard Buine Review, December, Reichheld, F. (2006). The ultimate quetion: Driving good profit and true growth. Boton: Harvard Buine School Pre. Rittichainuwat, B.N., Qu, H. & Mongknonvanit, C. (2002). A tudy of the impact of travel atifaction on the likelihood of traveler to reviit Thailand. Journal of Travel and Tourim Marketing, 12 (2/3), Shaw, M., Lewi, R.C. & Khorey, A. (1991). Meauring meeting planner atifaction with hotel convention ervice: A multi-variate approach. International Journal of Hopitality Management, 10/2, Treacy, M., & Wierema, F. (1993). Cutomer intimacy and other value dicipline. Harvard Buine Review, January-February, Treacy, M., & Wierema, F. (1995). How market leader keep their edge. Fortune, February, Treacy, M., & Wierema, F. (1997). The dicipline of market leader: Chooe your cutomer, narrow your focu, dominate your market. New York: HarperCollin Publiher. Tang, N. & Qu, H. (2000). Service quality in China' hotel indutry: A perpective from tourit and hotel manager. International Journal of Contemporary Hopitality Management, 12/5, Yoo, B., & Donthu, N. (2001). Developing and validating a multidimenional conumerbaed brand equity cale. Journal of Buine Reearch, 52,