Whether you are aware of it or not, consumers form relationships with your brand. This happens because as human beings we form relationships while simply living our lives. We need other people for everything we do or experience – in cooperation with other people we create, we enjoy the results together or other people are the reason for our activity. To such extent relationships are part of how we exist that we transfer that mechanism to unanimated objects such as brands.

If forming relationship with your brand underlies the process of its usage, it is quite important to understand what these relationships entail, what are their characteristics, e.g.: Is there emotion or they are based on simple exchange of benefits? Have consumers initiated them on their own or brand usage was somehow imposed? Are the interactions friendly or hostile? Do consumers consider them to be long-term or short-lived? Is there commitment on the part of the consumer? Who has the upper hand in the relations? Etc.

A brand forms different types of relationships with its consumers. Which types predominate? Ideally it is preferable that friendly, deep and emotional relationships predominate, in which consumer are committed to the brand and depend on it. These types of relations are difficult to end. But there are also relationships in the grey zone of indifference, in which brands are easily replaceable. They are the ones that usually predominate in a category. In our research of 5120 consumer-brand relationships 29% are emotional and friendly, 5% are hostile and 66% are functional with little emotion, some friendlier than others, all easy for the consumer to end.

The effective brand strategy depends on the type of relationship consumers have with the brand. In a long-term committed relationship e.g. consumers need surprises and variety and expect their loyalty to be rewarded. In a friendly and less emotionally vested relationship, with less commitment to the brand, the consumer uses other brands as well – the brand should be reliable and predictable, when the consumer returns to it. For consumers in a distanced, unemotional relationship with the brand you need to establish relevance and personal connection, to augment the brand experience with associations and images that link the brand to important life themes and objectives. In cases of hostility you need to offer immediate compensation and start to rebuild trust.

Understanding the type of interactions consumers have with your brand gives you the leverage to connect in the most effective and lasting manner.

Sylvia has not considered what attracted her to the restaurant on the corner. She would drop by when she felt heavy hearted or when she wanted to celebrate a small victory. She would go to take a quick bite or meet with friends. It was not just the comfort and the food. Nor the polite service. With its inexplicable attraction the restaurant on the corner withstood the changes and constant appearance of new places in the area.

It was not a matter of habit either. Sylvia loved the variety and was not so loyal to other places she visited. There was something in this restaurant which made it fit, as if it were saying to her “you are where you need to be”.

When you sense an impulse in the surrounding world, similar to the inner forces that, consciously or not, define your thoughts, feelings and actions, the attraction is instantaneous. The brand that carries the impulse enters your most inner space. What is expressed by it merges with your self. You find your own longing.

Somehow the brand has become an expression of an archetype – one of the primary principles, proto-images, through which people express themselves and give meaning to their lives.

Any brand, no matter small or large, local or global, can become a bearer of archetypal images and aspirations. In some brands this is the result of purposeful work, in others it can be a side effect.

In any case, it is worth checking how your brand is perceived, whether consumers associate it with an archetypal image and with which one, at least because at the archetype level the strongest connections are created.

How does the use of archetypes in brand development goes beyond just working with values or personas? The point is which attitudes and personas you choose to use. Do they express something so essential that when you recognise it in a brand, something clicks? Or it turns out that the persona you have chosen does not arouse such primary reactions. Archetypes are a good system of reference for the expected potency of the image you are building.

How you can use archetypes in brand management

For already established brands, the goal is to determine what archetype your brand expresses through its communication.

Even if archetypal images were not consciously embedded in the brand, what the brand has communicated since its creation, the stories it was telling, the characters who represented them, may have evoked in the minds of the consumer associations with deeply rooted longings and fundamental life principles.

What can you do:
- Review of communication and ongoing advertising campaigns – with which archetype can you connect them, were there any changes, what does the brand express today.

- Explore consumer perceptions – what is left in the consumer mind from earlier messages and images, how are people touched by the stories and characters, are there associations with archetypal layers.

- Comparison of what you have learned with the values, purpose, principles that guide you in brand management. Are you moving in the right direction?

If you are preparing to introduce a new brand, you have the chance to integrate the appropriate archetype from the very beginning of brand development. What fundamental principle does your brand represent? To be of help, to discover new horizons, to enable people to enjoy the small things in life or maybe to make the world better?

There is no good or bad archetype, just as every human image has its light and dark side. Good implementation of the strategy will emphasize the positive in the image and will not leave any opportunity for associations with undesirable characteristics. For example, the victorious hero may be heartless in his desire to succeed, the leader may become a tyrant, and the explorer may get lost in the search of his uniqueness.

Three steps for successful use of archetypes in branding:

1. Choosing the right archetype
2. Careful building of the image
3. Consistency in communication

What to consider when choosing an archetype:

There are two starting points – to what extent this archetype reflects the values of the brand and to what extent it corresponds to the prevailing attitudes of consumers.

It is also good to study the main competitors in the category – to what extent are these brands associated with archetypal images and with which ones? How much more appealing will be the story you will tell?

In building the image, beware of possible associations with the negative traits that each archetype also carries. Tune in to consumer perceptions.

You may be tempted to mix elements from several archetypes in the image of your brand. If you think of yourself, of the values you are guided by, you will most likely find at least a few active archetypes for you at the moment. Maybe at different stages of your life, a different archetype has prevailed, but all along in your life choices you can find the influence of other archetypes too. For a brand, unlike humans, it is better to focus on one archetypal image in order to send out homogeneous and consistent messages. In any case, we have seen that even a unified and consistently built brand around one archetype triggers associations with various meanings as consumers perceive brand communication through the lenses of their own life experience.

Consistency in communication

Consumer perceptions are long-lasting, some brands stay with us for much of our lives and the memories we have of them intertwine with the present. A change of the archetype of a successful brand can be confusing to consumers and harmful. When the choice of archetype is right and the execution is good so far, the brand can be reinvented and renewed while remaining true to its archetype.

To change the brand archetype is meaningful and justified in case of significant transformations in the market and consumer expectations and can be quite useful in rebranding and repositioning.

The conscious mind and its capacity to perceive is intrinsically connected with the research in the humanities. As marketing researchers we inherit the tradition of the great philosophers in asking themselves how the mind perceives the world.

Indeed our focus of investigation is the world of products, not the totality of the human existence. The question though is essentially the same: how the (consumer) mind perceives the world (including brands and products).

I was reminded of this recently while listening to consumers rationalising their behavior.

Do consumers have the answers why they purchase one brand or another? In recent years behavioral economics postulates are taken to extremes, affirming that what drives behaviour is not accessible to conscious introspection at all. It is in fashion to talk about System 1 vs. System 2. From Systems 1’s perspective consumer behaviour depends on the context, emotions and senses dominate, memories change when recalled under different circumstances. Positivism and its underlying belief that consumers have the answers that explain their behavior is disputed.

As marketing researchers we look for answers – we observe and immerse in consumers lives, do ethnography, shop along, design introspective games and constantly look for new or forgotten methods.

In this respect it is refreshing to revisit one philosophical school that may hold the key to balance the approaches and to find that “deeper” place in the consumer everyone is seeking.

In the tradition of phenomenology of Husserl the researcher studies the things, phenomena, as they are directly perceived by consciousness and describes the sheer experience.

The method describes (vs. explains) subjective experiences (vs. behavior).

All existing ideas are put aside, they are bracketed, as the researcher tries to describe the essence of things.

Husserl’s slogan was: return to the directly perceived things themselves.

The phenomenological approach implies that conscious experience is accessible to investigation and the access is direct. Meanings arise as pure presentations to the mind.

To be able to describe subjective experiences the research needs one instrument – a trained mind. We need to train our minds to overcome the confusion of constantly changing surroundings, the surge of emotions, confinement of beliefs, to keep an attitude that is fresh and clean from previous experience.

The mind becomes a passionless observer and at the same time participant in a co-experience with the observed consumer, enters a state of direct knowledge.

It is well accepted that through brands consumers express themselves.When using a brand, the qualities and image, associated with it, attach to the consumer, augmenting his or hers perception of themselves. Using a brand expresses who you are or who you want to be.

Consumers often prefer brands that project images similar to their own self-image. Additionally, individuals have the tendency to enhance their image in the perception of other people. Products and brands are used as instruments of symbolic communication in social interactions to project the desired image.

In theory, consumer-brand identification is an underlying factor of a strong relationship with the brand and loyalty to that brand. In our research we wanted to confirm whether the consumer-brand identification plays a role in building the relationship with the brand, in establishing loyalty and willingness to pay a higher price.

Also, we wanted to understand whether the consumer-brand identification is an equally important driver across different product categories.

The research covered 10 industries/categories: Airlines, Automotive, Cosmetics, Financial Services, Food, Retailers, Soft Drinks, Alcoholic beverages, Technologies and Telecommunications

We studied different levels at which brands may connect with consumers:

• Consumer-Brand Identification:Self-Identity, Group Identity, Common values, Aspirations
• Experiences and emotions
• Utility: Product quality, Instrumental to achieve objectives

Our test model of Consumer-Brand Identification includes four expressions – the first is self-identity, when the consumer finds similarities between himself or herself and the image of the brand. We also tested group identification – whether using the brand creates the feeling that you belong to a particular group. The values the consumer shares with the brand is another variant we tested. And the fourth expression of Consumer–Brand Identification is on aspirational level – whether the brand expresses the lifestyle one aspires to.

Not all four were equally important in determining the relationship with the brand: self-identity, followed by common values with the brand played a role in more categories. Also, there were differences across categories: self-identity determines the relationship with the brand in telecommunications and retail, food and soft drinks, while group identity has shown importance in telecommunication and alcoholic beverages only. The common values of the brand and the consumer are a driver for consumer-brand relationship in automotive, financial services and alcoholic beverages. And finally, the aspirational level of the consumer-brand identification works in cosmetics and retail.

Overall the consumer-brand identification is a stronger driver than experience and utilitarian factors (quality mostly) for building a relationship with the brand for airlines, alcoholic beverages, automotive and retail.

When it comes to paying a higher price, group identity and aspirations are active across more categories. Group identity determines the willingness to pay a higher price for airlines, financial services, retail and soft drinks. The aspiration towards a certain lifestyle determines the willingness to pay more in automotive, food, cosmetics and technology. Common values with the brand are important in financial services, telecommunications and alcoholic beverages. Self-identity is a driver in only cosmetics and telecommunications.

It is very interesting to see that Consumer-Brand Identification determines overall the willingness to pay a higher price more than experience & emotions and utilitarian factors in all of the tested industries except fmcg.

Loyalty (measured as purchase intention) seems less influenced by the Consumer-Brand Identification. Utilitarian factors and quality in particular are a stronger driver for building loyalty among the tested factors.

All experiences in human life happen in a rhythm. Our life itself unfolds cyclically.

The rhythm of nature is a good example of cycles and their balancing and regulating effect. Days of labour are followed by days of rest, sowing the seeds by harvest, sun by rain. For rural people the sunny days are for haying, the rainy days – for resting. Once the majority of lives were part of the cycles of nature and life was passing in an innate harmony.

Life in the city does not possess that even pace of the natural cycles and is subject to other conventions. Here the individual has the role to set the rules and establish order.

Contemporary life is a sequence of constant movement and change. The periods of transition create tension and insecurity one has to endure and to come out reborn and transformed. He and she find on their own the mechanisms to help them in the passage and to focus the experience.

Rituals are such a mechanism that serves the role to focus the experience and support the transformation of the participant.

While performing a ritual, in that short and sought-after interval, the person enters a secure space.

To open the webpage of an online newspaper takes one back to the Sunday morning, after the visit to the market, when everybody is sitting around the kitchen table or the sofa in the dining room, drinking coffee and reading the news. Going back to the already felt happiness gives hope for a happy future. A usual activity, such as reading the online news in the morning, gets loaded with a deeper meaning and special importance. One of its functions is to give the participant a sense of peace and security.

In previous times and epochs rituals were practiced collectively, the individual participated together with other people in the ritual activity, be it a sacred, experienced through religion ceremonial act or an everyday ritual around the major transitions such as birth or death, and the less dramatic as graduation, marriage, retirement. To the current day they continue to be performed following a commonly accepted ways and ceremony and jointly experienced by a group of people.

The everyday life is though filled with numerous small transitions from one condition to another, which follow at sometimes unbearable speed. In one day between the transition from sleep to work and from work to home, millions of surprises can happen. Good and bad, they contain an enormous potential for the individual to create his own rituals that will help him withstand the winds of change, ease the feeling of the unknown and different and facilitate the passage.

In other occasions one is looking to perform actions to make a positive change to a new, improved condition and create his desired small world.

In these smaller transitions the individual has the most power to create his own rituals and to find his own mechanisms to handle the experience. What is new in our time is the fact that people individually create and practice repeated, filled with symbolic meaning and powerful experience sequence of acts. They are often a modified form of something practiced by other people, learned, read or intuitively attained.

In another type of ritual, successor of the sacred rituals of the past, and as we found practiced today often privately, in one’s own way and form, the participant is looking to connect with the universal force, as he understand it. In that moment the past and the future overflow the present and the man comes out of the confines of the experience here and now. This brief moment works with a sobering force. By connecting to his deepest essence, the individual finds support and becomes aware of the impermanence of his current worries.

A few days ago one of my contacts in a professional network, in a marketing function for many years, posted: The cheaper always turns out to be more expensive for the consumer. Several days later I noticed someone has liked the photo above.

It strikes me how much we rely on conventional wisdom. There is not shortage of it when it comes to price. Even though conventional wisdom is very culture specific, in many cultures you find reference to the positive relation of price and quality.

We rely on the shortcuts of the mind to simplify our life and take fast decisions. We don’t have the time to linger in front of every product and deliberate on every purchase. The heuristics that slip in our minds today can be tracked way back in the past. Many have most likely expressed the norm of perception at the time but even more likely, they have expressed a general expectation, as they do today. For example the expectation that if you pay more you will get more.

But do consumers relate quality to price only in one direction?

Actually no. In the consumer mind today high price does not necessarily mean high quality. Consumers are in fact aware that they may pay more and get less.

Price is not the strongest cue for product quality. There are several sets of other factors that signal quality more clearly. Such are the internal product cues, e.g. the ingredients or taste of a food product, the material or style of furniture, the durability of a car etc. For some product categories specific information is developed to indicate quality, take for example the hotel stars rankings. Customers may not always know what the exact difference between 4 or 5 stars, but use them as guidance in their perception of quality. The brand and advertising often have a stronger influence than price as a sign of high quality. The store or distribution channels are also factors that speak of the product quality.

It can be said with certainty that price serves as the reference for product quality in the absence of other information. Total lack of information is rare, but what’s available to it may be inconclusive for the consumer. The brand may be unfamiliar, the package – lacking the relevant information or the product category – unknown. Some situations are especially conductive to rely on price – e.g. when there is a significant variance in price in the category, the mind would readily assume a similar variance in the product. There are also products that are complicated or difficult to evaluate, so it is more natural to take a shortcut in determining their quality.

When you speak with consumers you also find that some make immediate connection from price to quality, while others use more information and reasoning, and also that their attitudes vary across categories. Someone who loves new technology with nearly insider’s knowledge on smartphones and operating systems, maybe clueless when it comes to washing powder or washing machines, for example.

So, some consumers may agree that buying on the cheap will be more expensive in the end, but at the moment of purchase it is not just price they are looking at.

The role of price is even less determining on its own when we turn to value. Firstly, the value of a product has more layers and meanings than quality. What we get when we acquire a product involves experience, emotions, social interaction, may be connection to other things we value. Also, the meaning is personal, what has high value for me may not be something you would value at all. It runs deep within the foundations of one’s life.

Consider for example the package holidays. The complexity of the product – travel, destination attractions, hotel and service, provided entertainment, socialising, the weather, the fantasies beforehand, the pre-purchase process etc. , provides a wide scope to determine the value of the product and makes the relation with price multidirectional. Low price and high value may go hand in hand.

The world of products, designed for consumption, as we make it, does not run on one adage.

I remember once I was buying carpets. A large store, I was regularly passing by, was having a 40% sale on its rather large selection of Persian carpets. After significant rolling, lifting and looking at these beautiful pieces I selected two small ones and was looking at them trying to make a final decision. I was mostly imaging how they would fit. The sales person, maybe misreading my hesitation, took me by surprise. What additional discount would you like, another 30%? I bought the carpets at 70% discount but I never entered that store again unless there were sales. The sheer volume of the discount made me wonder about the profit margins the store operated on and as carpet prices were a rather unknown territory to me I was not sure should I be happy I got a deal or should I be relieved I was not cheated at an earlier occasion.

The price makes a statement about the product (or store). When applying pricing tactics to try to increase sales, attract customers or just clear the warehouse, the price you set speaks about the value of the offer, its credibility, the fairness of the price, the quality of the product etc.

In my story the deep reduction of price has ruined the credibility of the retail brand. But deep promotions do not necessarily have a negative effect on brand trust and reputation. Take the fashion brands. Their seasonal sales can start at 20%, 30% and often exceed 70%. This does not hurt the image and reputation of the brand. They influence directly customer behavior.

Sales sell in the short term. In the long term they have an impact on the future response of customers to price.

The sales of a high priced brand may attract price conscious and sales prone customers who would not have otherwise purchased it. However the regular customers who have not been price sensitive in the past also change their behavior. And this change in attitude and behavior is worth understanding as this is typically the core target. Once exposed to a decrease in price, some enjoy it and become deal hunters. They postpone purchase and wait for the sales or promotions or start buying lower priced brands. We are seeing this effect across industries. A large study followed the behavior of customers for nearly 2 years and showed that once regular customers make a purchase on a deep promotion they start to buy lower priced items. The study was done in 2002 and deep promotion meant 40% at the time.

Apart from the emotional excitement to follow promotions, another reason for customers to change their purchase behavior is the new information they gather about prices that shifts their price reference points. The reference points act as internal compass that gives direction in the complex world of prices. And the pricing policy conditions customers and changes the way they perceive prices.

To trigger a response a price change has to be significant for the mind firstly to notice it. In his research on price, Kent Monroe investigates the price thresholds, the price range above and below which customers would not purchase. These thresholds are first created as perceptions after the mind makes sense of all the price stimuli and information available and then trigger response. Price thresholds have levels and customers respond faster to price increases, while for price decreases more than one perceptual threshold have to be crossed to get a response. As Kent Monroe is saying in his most recent work the question is what price difference will make a difference.

A very small price change may go unnoticed. The price reduction should be significant to have a meaning to customers. The tricky thing is how the price reduction is positioned and communicated so that it does not change the internal reference price.

Once the reference price is decreased in consumer perceptions, next time it will take a deeper cut to make a difference.

What does it take to make a price change noticed? Isn’t there a magical number?

There are in fact some generally applicable proportions, but mostly there are principles and it pays well to establish and track the limits of price perceptions and utilize them in setting the price.

A large segment of consumers find positive thinking and the consequent positive interaction with the world as a necessary condition for a good life. And there is more – it is important for them to share their personal experience and be surrounded by people with the same positive attitude.

In the consumer community bganketa.com members create discussions on topics that are important and exciting for them. The theme on positive thinking is one of the most commented.

Some participants in the discussion say that the positive approach comes naturally to them, for others it requires a conscious effort of the will. For both groups though positive thinking is a way of life. It influences their work, communication and value system. All participants comment that positive thinking makes their lives easier and their relationships – more stable.

The effect on work

People with positive thinking believe it helps them achieve their goals because it gives them faith in their own abilities. As Diana, participant in bganketa, comments: Positive thinking is linked with confidence, with the conviction we are capable of solving our everyday problems in a better way.

The participants in the discussion point out that their attitude motivates them to seek opportunities and benefit from every activity. The positive way of thinking inspires them to take up new challenges. To quote Mariana, another bganketa participant: The positively thinking person has a good image of herself and of others; she is convinced that she will accomplish whatever she sets as a goal; trusts her own powers; values what she does and has no fear of the daily obstacles.

The effect on solving problems

Participants share that positive thinking is especially beneficial when facing problems. The dominant opinion is that their positive attitude makes it easier to accept the inevitable difficulties and overcome all kind of problems, a way to solve complicated issues and find alternatives.

Also, some comment that stress is their daily companion. They believe that staying positive is the cure for the negative effects of difficult and stressful situations.

The effect on communication

In communication the positive attitude is expressed in positive words, intonation, the way you address others. The smile is a must. As Kalin says in the discussion: It is a fact that people always focus on the bad things, even if they are many times less than the good ones. We just have to smile and laugh more, even if there is no obvious reason. The person who smiles is more effective in communication and his thoughts and actions are better accepted. The positive attitude is an energy you spread around yourself. When you are in a positive mind-frame, comments Eva, you emit a positive energy and this is even visible for the eye. And also part of this energy is transferred to the people around you.

A strategy for success

Always communicate with people who think positively, who care, who strive to be useful, to encourage, to inspire, to be compassionate! Veneta, participant in bganketa

The opinion that you have to surround yourself with positively minded people is quite common in the discussion. The people who have made such comments say that this is their personal strategy for success. In their view those who think positively strive to make good and to help others. Thus they influence their environment in a positive way. So, the participants in the discussion say that relating to people who share the value of positive thinking helps them grow and makes their life happier.

Who was saying that the haters dominates our culture? It only looks so in the internet forums.

When we enter a store or website and see the prices, usually we know if a price is good. Whatever you call it, an inner feeling or common sense it is giving us an indication about the price.

What happens in the mind, how we get to this point when we know the price is good or bad, how the perception of the price produces its judgment?

This is a very intriguing question, fundamental to marketing decisions.

When a price gets our attention it enters a complex system of relevant points to which we compare it. In our mind we hold many points of reference – other prices of comparable products, same product in other stores, what we get for the price – product quality, value and experience, the available budget, expectations for future income, memories of prices of past purchases, the vague feeling what the product must cost or “expert” knowledge of the cost etc., etc.

The flow of consciousness

In my mailbox I receive another offer for a vacation, 7 days, package for two. The price though does not seem right. Why isn’t the price good and how I decide this?

How much I paid last year? What other offers I have received? What amount would be my limit, other expenses will fall in that budget for entertainment, drinks, restaurants and god knows what else. Is it better to rent a house, will feel more comfortable. Friends went to Corfu last year, fantastic small hotel and the price was normal…

The flow of thoughts is gaining momentum. You remember how much you need a vacation. Wonderful pictures of previous holidays appear in your mind. However the price in the offer is pretty high. You feel a little crushed. You go on looking at other offers and stumble upon a house, good location, next to the sea shore, looks nice actually. The price? Now we are talking. The feeling of discovery overwhelms you. You look at the pictures, read the description again, you search for the telephone number and make a call.

Let’s look at the moment of perception. Next to the efforts of the mind to compare and assess the price based on the available information, in the process participate emotions. The emotional coloring of price perception can for example lead to a positive price- value or price-experience judgment. Memories, attachments, affections make you feel “the price is worth the money”.

At a later stage emotions can act as a behavior trigger, accelerating the purchase decisions. If the price is high and you are disappointed or even angry, the product is definitely not worth it, the process ends here and you decline the purchase. The trace left in your mind may influence you the next time you consider that type of product and then this brand, store or distributor will be left out of your field of awareness. On the other hand, if you come across something you have liked before that is now offered at a 30% discount, the joy of discovery may push you to an immediate purchase.

Why is it important to be aware of the price reference system – imagine for your customers the price reference point is the bed price in a double room and in your offer you have shown the all-inclusive price. The comparison will not be to your advantage.

It is worth noting that the reference system is dynamic and changes every time new evidence comes along. A discount of 40% on vacations will bring down the perception of a good price. A salary increase or an anniversary for which you want to arrange an unforgettable trip will mean higher budget and will raise the level up. The new information changes the position of the reference points and so it goes until the next time.

The references differ by product category and have different weight for individuals.

Sometimes they are not obvious for the marketer and researcher. Openly people may be reluctant to admit (even to themselves) the actual importance price plays in their decisions and go in detail about their perceptions.

Some research methods work better. While the research approach to get an understanding of the price reference system is always qualitative, depth interviews will give better results than groups in some cases and in other – it will be well worth it to go for ethnography.

Ethnography is very helpful when investigating the signals in the shopping environment that tune consumers’ price expectations. The promo signs, the signs with the sales percentage number, the grouping of premium brands in one section of the store or mall are e.g. such signals.

Many things may go wrong in how price is communicated and consumer expectations tuned. A well calculated price may be perceived the wrong way.

For example when a consumer walks in the section of the store where all price are high and passes by a discounted item, he would presume that this product is also with a high price. Unless you put a huge sign to signal it, the price change will go unnoticed.

If you would like to share cases and observations on consumer perceptions of price, you may do so in the comments below or send us an e-mail.

It sounds seducing to be able to ask only one question and gain the ability to manage customer loyalty and financial growth.

Could a single question be more effective than the complex customer satisfaction and loyalty studies that require clients to have an expertise in statistics so that they can read the findings?

Net Promoters Score was (and still is) heavily marketed and companies were getting curious. When a client of ours asked us to run an experiment and compare NPS with the customer satisfaction and loyalty metrics we set up a study to compare. Our client business is in one of the industries used in the examples for NPS effectiveness, the company is a triple play operator, providing pay TV, Internet and fixed telephone services.

One of the most compelling arguments used to promote NPS are results from a large scale survey demonstrating that the “likelihood to recommend” question proved to be the first or second correlate to the actual customer behavior 80% of the time …if customers reported that they were likely to recommend a particular company to a friend or colleague, then these same customers were likely to actually repurchase from the company, as well as generate new business by referring the company via word-of mouth.

In the quoted results the correlation between loyal behavior and overall satisfaction was found in less than 10% of the cases.

So, basically the argument why NPS is the loyalty measure goes that it is unnecessary to measure satisfaction, since it does not explain loyalty. Instead, recommendation has the highest correlation with loyal behavior.

It is quite logical to expect someone who recommends a product to also be likely to buy it. For us these are two types of loyal behaviour and certainly their correlation is high. NPS is offering a model in which one loyal behaviour is used to measure another, so what? We were ready to test how effective it can be.

We included the “single loyalty question” („Would you recommend company Х to your friends”, followed by a second question to clarify the reasons) in the beginning of the survey and continued with the full scope measurement of satisfaction and loyalty. The interview length was around 15 minutes and varied depending on the service package of the participant.

Our main interest in that comparison was firstly how actionable that methodology is, what can you do with the findings, once you have calculated the score. And secondly, just for the record, to investigate the link between satisfaction and loyal behaviors, recommendation being one of them.

On the first point, had we relied only on the NPS section, we would not be able to run the analysis and recommend an action plan. With the available information gathered with the NPS method it was not possible to get a clear understanding why the index is as it is (low, around 15 points) and to recommend an action plan how to improve. When explaining their intention to recommend (or not) customers raise the hot, most irritating and painful issues. Solving them is obviously a must, but they are only the visible part of the iceberg and the comprehensive picture of customers’ experience was missing.

We had though some interesting findings on the correlation between satisfaction, recommendation and the intention to stay with the company.

It was interesting to notice that satisfaction had higher correlation with the intention to stay with the company compared to the likelihood to recommend it. A significantly higher percentage of the satisfied customers were planning to keep using the services of the company than of those who would recommend it.

Why would customers be loyal in action and reluctant to recommend? The tendency to recommend has its cultural basis, and also is industry specific. There are cultures in which people are less likely to share the good impressions. And some in which the critics and haters are more active. Like ours.

The other factor to keep in mind is the type of industry or category you are investigating. Customers are less passionate to product categories and services which are of lesser importance to them and simply do not care enough to voice their experience.

Our results did not confirm that Net Promoter Score is the single, most effective question for accurately measuring customer loyalty. When it comes to the bottom line, the actual decision to stay or leave, there is a significant group of customers who are not promoters but still keep using the products of the company.

For us the solution to effectively and accurately measure customer loyalty lies in setting a set of measures, including detailed mapping of satisfaction across touch points of customer experience, customer perceptions of the brand and the emotional blueprint in the interaction with the company. The analysis of the findings determines the key drivers of loyalty.

Recommendation is a type of loyal behavior and thus important to measure and understand as it reflects the potential of the brand to create positive word-of-mouth or negative comments.

NPS can contribute in benchmarking of that potential against companies in the same industry and country.