Innovating Analytics How the Next Generation of Net Promoter Can Increase Sales and Drive Business Results

How does a CEO, manager, or entrepreneur begin to sort out what defines and drives a good customer experience and how it can be measured and made actionable? If you know how well the customer experience is satisfying your customers and you know how to increase their satisfaction, you can then increase sales, return visits, recommendations, loyalty, and brand engagement across all channels. More reliable and more useful data leads to better decisions and better results. Innovating Analytics is also about the need for a comprehensive measurement ecosystem to accurately assess and improve the other elements of customer experience. This is a time of great change and great opportunity. The companies that use the right tools and make the right assessments of how to satisfy their customers will have the competitive advantage.

Innovating Analytics introduces an index that measures a customer?s likelihood to recommend and the likelihood to detract. The current concept of the Net Promoter Score (NPS) that has been adopted by many companies during the last decade?is no longer accurate, precise or actionable. This new metric called the Word of Mouth Index (WoMI) has been tested on hundreds of companies and with over 1.5 million consumers over the last two years.

Author Larry Freed details the improvement that WoMI provides within what he calls the Measurement Ecosystem. He then goes on to look at three other drivers of customer satisfaction along with word of mouth: customer acquisition, customer loyalty, and customer conversion.

Introduction 1

1 Customer Experience 2.0 5

2 NPS—What It Is and What It Does Well 15

3 NPS—Fundamentally Flawed 21

4 WoMI—The Next Generation of NPS 33

5 The Four Drivers of Business Success 53

6 Why the Customer Experience Matters 73

7 The Customer Experience Measurement Ecosystem 97

8 Best Customer Experience Practices 123

9 Big Data and the Future of Analytics 157

Afterword: Measuring Customer Experience—A Broader Impact and the Start of a Journey 171

Appendix A: Satisfaction, WoMI, Net Promoter, and Overstatement of Detractors for Top Companies 173

Appendix B: Are Those Least Likely to Recommend Actually the Most Likely to Discourage? 201

Appendix C: Eleven Common Measurement Mistakes 207

Appendix D: An Overview of Measurement and Model Analysis Methods 221

Acknowledgments 273

Index 275

LARRY FREED is the President and CEO of ForeSee, a customer experience analytics firm that measures satisfaction and delivers powerful insights on where to prioritize improvements for maximum impact. An expert on customer satisfaction across all touchpoints and at the brand level, Larry speaks extensively on the topic at private and public sector industry events and has been quoted in numerous publications and media, including CNN, the Wall Street Journal, the Washington Post, and Investor’s Business Daily, among many others. Larry is also the author of Managing Forward, published in 2011.