You have probably heard of the consumer satisfaction technique that measures a person’s willingness to refer a business to others. What you might not have heard is that Data Based Marketing conducts these studies across the country. And we also dig deeper, to get the answers you really need.

Fred Reicheld developed the technique in 2003, calling it the "Ultimate Question." But while it provides a valuable metric, Fred’s bold position has raised the eyebrows of a lot of market researchers. (see wikipedia & (NPS) Criticisms and Best Practices.)

Here’s what Data Based Marketing typically finds when conducting this type of study.

A person’s willingness to refer a business to a family member or friend is definitely a measure of performance, which can translate into overall success. But intertwined into the referral are the aspects of commitment, connection and risk. Not all of these issues are necessarily controllable by the business, however. How committed is the consumer to the business? How much of a connection is there to the person they will refer? And how much risk do they perceive in making the referral? These issues ultimately drive the promoter score.

A lower commitment to the business and a lower level of connection to the referred person can translate into lower perceived risk of making a referral. This can inflate the score. Telling friends or acquaintances about movies or restaurants is this kind of scenario. If it doesn’t meet the expectations of the referred person, there is little chance of any meaningful repercussion.

But as the level of connection to a person increases and the perceived risk of making the referral increases, so must the level of commitment to the business increase. For credit unions, we have found that the incidence of actually making a referral is three times greater among those who rank a “10” than those who rank a “9.” This infers a very high level of commitment to the business. Why is this?

Just because a person is satisfied with financial service does not mean they feel qualified to refer it to others. We hear this in focus groups throughout the nation. The potential for loss increases dramatically with financial service. Everyone’s financial position and resulting needs differ. This can and does inhibit the promoter score.

But this is more of an observation than a criticism. Our ultimate goal as a marketing agency is for the success of our clients. We do whatever it takes and use whatever resources needed to accomplish this. Promoter score research is part of this effort.