skip to primary navigationskip to content

Cambridge Service Alliance

At the forefront of service transformation in the digital era

Studying at Cambridge

 

Podcast - The Fallacy of the Net Promoter Score

last modified Jul 17, 2017 11:10 AM
In a new podcast from the Cambridge Service Alliance, Dr Mohamed Zaki, talks about his new paper 'The Fallacy of the Net Promoter Score: Customer Loyalty Predictive Model'.

In a new podcast from the Cambridge Service Alliance, Dr Mohamed Zaki, Deputy Director, Cambridge Service Alliance, University of Cambridge, talks about his new paper 'The Fallacy of the Net Promoter Score: Customer Loyalty Predictive Model'. The paper was co-authored with Dalia Kandeil, and Andy Neely, of the CSA, and Visiting Professor, Janet McColl-Kennedy, from the University of Queensland, Brisbane, Australia.

The research is treading new ground in industry by taking on traditionally held measurement scores for customer loyalty and it is remodelling how in reality, customers stay loyal to a company or product.

[alternative platform: University Audio Service]           

 The authors conclude:

The result of the prediction phase is a model that is capable of correctly predicting 98 per cent of customers that are likely to churn, based on the results of the validation data set. This is a remarkably high percentage in terms of accuracy and ensures the validity of the developed model, with the suggested data parameters as predictive variables. On this basis, firms are discouraged from using the NPS as a single metric of loyalty assessment. Importantly, this novel approach offers practitioners a new way to utilize data more effectively and to provide rich insights and specific actions to improve customer experiences."

In the podcast Dr Zaki explains how the new model the researchers have developed compares to the old, and why it is more accurate as a measurement and management tool. He concludes by explaining:

Don’t rely on a simple metric one metric is not enough. You need to combine different metrics to give you the real view of your customer loyalty. The second thing is data analytics is the right way to combine different data sources together because there is a lot of value in combining different data sources. You might need to think about all your data sources from attitudinal and  behaviour factors  to social media, CRM and the full portal of data you have available to you.  You will then need to assess how to use these to market and improve your offer to them and to acquire more customers. The next is a dynamic view, customers are moving from one status to another, the research looked at the customer over time as they moved from one status to another.
You can’t ditch the NPS straight away but over time, using our rigorous research and if you get the practicalities right and if you begin to use our models appropriately over time the NPS will be out of date."
Filed under: , ,

RSS Feed Latest news

Industry Day 2020 | What we learnt

Dec 06, 2020

What is the future of services in the new pandemic-driven era? This was the topic explored at our 2020 Industry Day by senior executives from L'Oréal, Microsoft Research, Manchester United and start-up, Fairjungle.

Understanding business models in the construction sector

Nov 25, 2020

What’s standing in the way of offsite manufacturing? For decades, the construction sector has been hailing it as the next big thing but we have yet to see it really taking off. Why is that, when the technologies and processes already exist? Dr Zakaria Dakhli believes it is due to a fundamental incompatibility between business models and it is only when this has been fully understood that the long-awaited transformation can take place.

A machine learning approach to quality control

Nov 14, 2020

Most of the products we take for granted contain huge numbers of components assembled in multiple stages by different manufacturers. Quality control is vital throughout the assembly process with rigorous testing required at every step.

Digital twins: driving business model innovation

Nov 06, 2020

For B2B firms struggling to reap the rewards of digitalisation, could digital twins be the way forward? In this article, CSA's Dr Erika Pärn and colleagues from the Fraunhofer Institute and Technische Universität in Dortmund, explore the relationship between this emerging technology and business model innovation.

Making business model innovation happen: the Business Model Cohesiveness Scorecard

Oct 30, 2020

Digital transformation is failing to live up to its hype, at least as far as productivity gains are concerned. If, as research suggests, a lack of business model innovation is the main culprit, we need a way of making it happen. Dr Chander Velu thinks a balanced scorecard approach could be the answer.

View all news