Advocacy Drives Growth

Marsden, P., Samson, A., & Upton, N. (2005)

Marsden at the London School of Economics provided the first attempt to independently corroborate Reichheld’s findings.

They analyzed sales growth for retail banks, car manufacturers, mobile phone networks, and supermarkets in the UK. They conducted a telephone survey with 1,256 adult consumers in the UK and asked for likelihood to recommend, determining self-reported recommend rate and the proportion who had said something negative about the company.

They indeed found that the 2005 Net Promoter Scores correlated (r = .48) with sales growth data from 2003 and 2004 across the four industries. Within industries they found strong correlations with retail bank changes in assets and total income (r = .79 and r = .86), car sales volume (r = .56) and supermarket revenue growth (r = .69).

Like Reichheld they also used NPS to correlate to historical growth, which is a common and legitimate criticism that we also raised.

Interestingly they actually found a slightly higher correlation using the negative word-of-mouth question (r = -.52), providing credence to the idea that negative attitudes may have a stronger impact on behavior than positive attitudes (See East et al., 2011).

They reported that a seven-point increase in the NPS correlated with a 1% increase in growth. Conversely, every 2% reduction in negative word of mouth correlated to ~1% growth.

Reference

Marsden, P., Samson, A., & Upton, N. (2005). Advocacy drives growth. Brand Strategy, 198(Dec/Jan), 45–47. External File Link