How to Predict Brand Success

There are two disparate sources of management insight that a marketer can turn to for advice.

The first is the proven, academic corpus of business writing that uses rigour and science to guide management thinking. Journals such as the Harvard Business Review and The McKinsey Quarterly, for example, are the sources from which executives learn their trade.

Then there are the bestselling books that claim to offer fool-proof systems and strategies for marketing success. We business academics often refer to this arena as the 'Heathrow School of Management' because inevitably the books that comprise it usually depend on catchy titles to grab the fleeting attention of a marketer rushing for a plane. It is only on-board and on page five that the marketer in question realizes that the book is a total waste of tree.

With practice it becomes quite easy to spot these titles, even when they are selling in more innocuous retail locations. Beware any management book that uses numbers in its title. Whether the book claims to offer you the 'seven secrets of direct mail' or 'the three-step guerrilla guide to ambient viral marketing', you can be sure that they are equally pointless.

The other titular clue that a business book will disappoint is when it sounds as if it would make a good Tom Cruise movie. Watch out for any title that claims to offer you 'Power Differentiation' or instructions in 'Fighting for Value!' - especially when it comes with an exclamation mark.

It is with some embarrassment, therefore, that I have to admit that I have recently purchased a book from the aforementioned Heathrow School of Management. The title of the book is, long sigh, The Ultimate Question and, despite being marvellously simple and very persuasive, it is also about to change the way we practise and measure marketing.

The author, Fred Reichheld, was a partner at Bain & Co in the US. He has always focused on loyalty and the power of customer retention but, in recent years, had grown increasingly skeptical of the customer measures being used by large companies.

For more than a decade he has sought the answer to the ultimate question - what single measure will best predict a company's future performance?

The answer, he posits, is the net promoter score. Ask a representative sample of your customer base how likely they are to recommend your product or service to a friend and measure the results on a 10-point scale ranging from one (extremely unlikely) through to 10 (extremely likely). Customers that reply either nine or 10 are 'promoters', those who give either seven or eight points are classed as 'passives' and those who give a mark of one to six are 'detractors'.

Calculate the number of customers who are promoters and then subtract the number of detractors. The percentage remaining after you perform this calculation is your net promoter score and a growing number of leading US companies, from General Electric to Amazon, are using it to measure their current performance and predict future success.

It has a number of key advantages over other marketing measures. First, it is simple. A single question added to an existing questionnaire is all you need. Second, it is comparable. Bain & Co has been compiling lists of net promoter scores and you can quickly compare your own performance against a host of other companies and competitors. Third, it is a predictor of general business success and is not just limited to marketing; this is a measure that unlike many of our more obscure marketing metrics, such as brand awareness or share of voice, will be understood and appreciated by senior managers. Finally, it is proven: according to recent research, the company with the highest net promoter score in a category will outgrow its competitors by an average 2.5 times.

30 SECONDS ON ... NET PROMOTER SCORES

- Bain analysis of 24 industries shows that companies that achieve long-term profitable growth have net promoter scores (NPS) two times higher than the average company.

- According to Reichheld, the average net promoter score of US companies is extremely low - usually less than 10%, yet a Bain survey across 362 companies found that 96% of the senior executives felt they were 'focused' on the customer and 80% said they were delivering a 'superior experience' to their customers.

- Harley-Davidson generated a net promoter score of 81%, Amazon has a score of 73%, eBay achieved 71%, Apple 66%, and American Express and Dell both came out at a very even 50%.

- General Electric tested NPS for six to nine months in its healthcare division, and has since rolled it out across all its 500-plus businesses. It also calculates 20% of its executive bonuses based on the scores.