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Solving the Mystery of Consistent Negative/Low Net Promoter Score (NPS) in Cross-Cultural Marketing Research

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Abstract

This paper has identified some theoretical reasons and empirical evidence for negative scores that occur in Japan and Korea or unstable NPS scores that can be experienced. A psychological analysis of NPS results sheds light on the validity of the negative NPS scores that are often found in Japan and Korea. Usually customer experience surveys utilize a “single stimulus” such as the “company” or the “company’s products / services.” However, in the case of the “recommendation to friend” question of the NPS system there are two stimuli namely the “company product/service” and the influence of “friends.” Hence, the survey outcomes from this question can be very different when compared with other single stimulus questions such as “overall satisfaction” or “repurchase.” Japanese and Korean people may have a positive attitude towards the company but they will provide low NPS scores because they are reflecting that they would not run the risk of ruining their relationships with their friends by making a recommendation. As a result, in the NPS system these people will be labeled as “detractors” when in fact they are “ambivalent customers.” Using several Japanese and Korean based marketing research industry examples and case studies, different strategies are proposed to address the issue of negative scores in the NPS system in Japan and Korea. The Customers Psyche appears to be the key determinant factors for both types of behavioural items (items with a single stimulus as well as items with two stimuli).
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http://dx.doi.org/10.15830/amj.2016.17.4.43
  
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      
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   
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

Q2. How likely is it that you would recommend “company” to a “friend or colleague”?
Q1. How satisfied were you with your Customer Support experience of “company”?
2 Stimuli
Responses Responses
+ve +ve-ve -ve
Company Friends
2 Stimuli
Responses Responses
+ve +ve-ve-ve -ve-ve
CompanyCompany FriendsFriends
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... Approximately two-thirds of Fortune 1000 companies currently use this index due to its overwhelming simplicity (Reichheld et al. 2021). However, scholars have criticized NPS for being inferior to other loyalty indices (Baehre et al. 2022a;Bendle et al. 2019;Keiningham et al. 2007;Kristensen and Eskildsen 2014;Mecredy et al. 2018;Seth et al. 2016;Van Doorn et al. 2013). ...
... A typical example is the central tendency bias, which avoids response scale endpoints and prefers responses close to the midpoint (Douven 2018). These cultural characteristics, which are, for example, prevalent in Asians (Harzing et al. 2012) and especially Japanese people (Iwata et al. 1989), cause the NPS method to reflect a negative score (Seth et al. 2016). In this survey of Tesla users, while most Americans selected 4 and 5 on a 5-point Likert scale, 3 emerged as the most popular among Japanese (Kato 2023). ...
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Despite the extensive research on loyalty, academic discussions on simple and effective loyalty indices are surprisingly scarce. One of the few suggestions for loyalty indices is the net promoter score (NPS). Approximately two-thirds of Fortune 1000 companies currently use this index due to its overwhelming simplicity. However, scholars have criticized NPS for being inferior to other loyalty indices. Accordingly, scholars have mainly used Likert scales that cannot compare products/ services using a single question and are subject to a response bias due to cultural differences. To fill this gap, we address the following four main criticisms of NPS: First, its advantages over the Likert scale of preferences and recommendation and purchase intentions are unproven; second, it cannot compare a competing product or service using a single question; third, its threshold setting is subjective; and fourth, it suffers from a cultural response bias tendency. This study asks the following research question: "Is brand selection superior to Likert scales in explaining sales performance?" To form a generalized conclusion, we examine 100 brands selected from 20 industries in the US market. The results of randomized controlled trials prove the superiority of selection over scale. Thus, brand selection should be emphasized to measure brand loyalty.
... In building brand health NPS, managers need to recognize that scores may only be comparable within one country, and targets may need to be set per country to overcome potential cultural differences in response behavior (Seth et al., 2016). Further academic research is essential in identifying and quantifying these disparities. ...
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Despite its widespread adoption by industry, the academic literature is quite skeptical about the Net Promoter Score (NPS). Given the persistent use of NPS by managers, this research note provides a deeper understanding of its practical implementation while exploring the potential benefits NPS offers to managers, focusing on the distinction between transactional and brand health NPS. Furthermore, this research note also introduces five essential managerial considerations for using NPS, further extending the scope for managerial-relevant future research.
... This index is calculated by subtracting the percentage of detractors (respondents 0-6) from the percentage of promoters (respondents 9-10) based on an 11-point scale (0-10) of recommendation intention (Reichheld 2003). Japanese individuals who dislike both ends have an extremely low percentage of promoters, negative NPS scores, and poor function (Seth et al. 2016). ...
Chapter
In marketing surveys, the question order bias and response order bias are known from the viewpoint of order, while the response scale bias and central tendency bias are known from the viewpoint of the Likert scale, and a large amount of literature exists to support this. However, there is no evidence of bias due to the ascending or descending order of the Likert scale. This study filled this gap. An online survey of loyalty at Japanese universities was collected from 338 individuals. The result showed that since respondents prefer the first option, the descending order with the highest score on the upper side obtained a higher score. When determining the loyalty indices on the Likert scale in measuring marketing effectiveness, the true effectiveness cannot be known unless the order of options is consistent. In addition, since less serious respondents prefer higher options, the ascending order should be adopted to improve the quality of answers with good scores. This makes it possible to improve the accuracy of identifying customers with high loyalty. Thus, ascending options in the loyalty index question eliminate spurious loyalty due to insincere answers. Research design that understands the mechanisms of bias and limits uncertainty is essential in both business and academic research. This study provides useful suggestions for effect measurement, which is indispensable in digital marketing.KeywordsLikert scaleQuestion order biasResponse order biasResponse scale biasCentral tendency bias
... A typical example is the intermediate response tendency, which avoids response scale endpoints and prefers responses close to the midpoint (Douven 2018). These cultural characteristics, which are prevalent among Asian cultures, for example (Harzing et al. 2012), and especially among the Japanese (Iwata et al. 1989(Iwata et al. , 1994 cause the NPS method to reflect a negative score (Seth et al. 2016). Likert scales cannot escape this bias (MacKinnon et al. 2021); accordingly, a universally applicable perspective is essential. ...
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As a loyalty index, the net promoter score (NPS) has attracted much attention. The simplicity of this index has been overwhelmingly well received by industry, and many organizations have adopted it. However, studies using NPS are less frequent and, often, they reach a negative conclusion about the effectiveness of the index. This outcome is mainly because NPS does not have a particularly good explanatory power for business performance, compared with satisfaction and other loyalty indices. Despite academic criticism, industry still relies on NPS because no other simple and robust index has been proposed. Therefore, this study proposes a new index, the next purchase intention brand (NPI), as an alternative loyalty index. Unlike existing indices, NPI identifies the one brand that the customer would most likely continue purchasing using a single answer. Only brands with high loyalty receive scores; the survey results are unaffected in markets targeting countries with intermediate response tendencies. For six consumer goods categories (beer, deodorant, green tea, instant noodles, nutrition drink, and shampoo) in Japan, the NPI index has a higher explanatory power for market share than general loyalty indices. The study recommends that corporate practitioners re-examine the items that demand extensive marketing research.
... Following the arguments put forward by Dolnicar and Grün (2007), Seth et al. (2006) argue that there are issues related to the use of NPS in cross-cultural research, and the results of their study suggest that cultural differences are likely to have an impact on the NPS scores. Therefore, when analysing the results of this study, which indicated that there are differences in customer satisfaction and the customers' willingness to recommend Company X to family or friends, the impact of culture on the NPS scores needs to be considered. ...
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Customer satisfaction is a primary focus for an increasing number of companies, as customers who are highly satisfied with a product or a service provide positive word-of-mouth to others. Therefore, many companies are tracking both customer satisfaction and dissatisfaction in order to ensure high levels of customer satisfaction, and thus, increase the number of customer referrals. As many companies today are operating in a cultural environment that affects their business on many different levels, it is highly important to acknowledge the cultural aspects in international business. Previous studies show that people from different cultures are likely to judge the same service differently based on differences in the perceived quality, and therefore, companies ought to take cultural differences into consideration when comparing customer feedback between different markets. This study examines the influence of culture on customer satisfaction and the customers’ willingness to recommend a company to others, by analysing customer feedback on the Swedish, Finnish, Norwegian and Danish markets, collected by Company X. The main objective of the study is to provide a deeper understanding of how cultural differences between Sweden, Finland, Norway and Denmark influence customer satisfaction, and thus, the potential customer referrals. This study applies both quantitative and qualitative analysis techniques and the empirical findings are analysed with the support of Hofstede’s framework of culture. The results of the quantitative analysis showed that there were differences in customer satisfaction and the customers’ willingness to recommend the company to others, between the markets. The Finnish customers were the most likely to recommend Company X to family or friends, whereas the customer on the Danish market were the most satisfied with the overall experience. On the Swedish, Norwegian and Danish markets, lack of responsiveness was the main reason for the dissatisfaction, whereas the main reason for dissatisfaction among the Finnish customers was Company X’s inability to provoke trust and confidence. Additionally, empathy in service was the main reason for satisfaction among the customers in Sweden, Norway, and Denmark, whereas the main reasons for satisfaction among the Finnish customers were responsiveness and reliability in service. Thus, the findings suggest that customers in the Finnish market judge the quality of a service differently than the customers on the Swedish, Norwegian and Danish markets
... However, NPSs in Japan are reported to be lower than those in other areas because Asian people tend to prefer intermediate scores (e.g. four to six in 10-Likert scale) which are regarded as 'Detractors' when calculating an NPS (Seth et al. 2016). In Japan, even for a service with top customer satisfaction in each industry, its NPS can often be below zero. ...
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Internet-delivered intervention may be an acceptable alternative for the more than 90% of problem gamblers who are reluctant to seek face-to-face support. Thus, we aimed to (1) develop a low-dropout unguided intervention named GAMBOT integrated with a messaging app; and (2) investigate its effect. The present study was a randomised, quadruple-blind, controlled trial. We set pre-to-post change in the Problem Gambling Severity Index (PGSI) as the primary outcome and pre-to-post change in the Gambling Symptom Assessment Scale (G-SAS) as a secondary outcome. Daily monitoring, personalised feedback, and private messages based on cognitive behavioural theory were offered to participants in the intervention group through a messaging app for 28 days (GAMBOT). Participants in the control group received biweekly messages only for assessments for 28 days (assessments only). A total of 197 problem gamblers were included in the primary analysis. We failed to demonstrate a significant between-group difference in the primary outcome (PGSI − 1.14, 95% CI − 2.75 to 0.47, p = 0.162) but in the secondary outcome (G-SAS − 3.14, 95% CI − 0.24 to − 6.04, p = 0.03). Only 6.7% of the participants dropped out during follow-up and 77% of the GAMBOT group participants (74/96) continued to participate in the intervention throughout the 28-day period. Integrating intervention into a chatbot feature on a frequently used messaging app shows promise in helping to overcome the high dropout rate of unguided internet-delivered interventions. More effective and sophisticated contents delivered by a chatbot should be sought to engage over 90% of problem gamblers who are reluctant to seek face-to-face support.
... The findings illustrate the variance both within and across nations. Consider the case of Japan, a nation whose citizens typically provide low NPS scores because they do not want to run the risk of ruining their relationships with their friends by making a recommendation (Seth et al. 2016). Indeed, this tendency is certainly the case among Inactives, Network Updaters, and Blogging Reporters. ...
Article
Given Millennials’ early digital life experiences, the adoption of social media tends to be greater among members of this generation compared to older ones. However, studies that report such age-based generalizations tend to neglect the phenomenon of intragenerational variability in social media use, providing an oversimplified picture of how people behave. Moreover, studies that compare social media use across nations are lacking, and are also needed to establish the generality of this phenomenon. This paper investigates intragenerational variability in social media sharing among Millennial travelers in six nations (Canada, France, India, Japan, Mexico, and USA) using Destination Canada’s Global Tourism Watch database. A latent class segmentation model is used to identify groups of travelers with different ways of using social media to share trip experiences. Results supported five unique classes of social media sharing, ranging from nonuse to highly integrated sharing across many platforms. Additionally, class membership is predicted by covariates (nationality, travel experience, and social media use and goals) and is predictive of destination advocacy (offering recommendations). The identification of different classes of social media sharing advances theory on intragenerational and cross-national variability, and informs the development of international strategies that target Millennial travelers based on their tendency to share and advocate.
Article
Net Promoter Score (NPS) is one of the most popular customer feedback metrics (CFMs) with benefits and limitations. One limitation is that prior research has shown that NPS is not better in explaining outcome variables such as sales growth or churn than other CFMs. Most prior research, however, has not considered combinations of CFMs, CFMs related to the antecedents of customer satisfaction, and CFMs with affective components. Therefore, we argue that NPS should be supplemented with other CFMs, e.g., emotions. In an empirical investigation in the mobile phone industry, we choose Net Emotional Value (NEV) to measure of emotions. We show that a combination of NPS and NEV leads to a better explanation of two out of three outcome variables compared to using NPS only or NEV only. We also illustrate how emotional profiles and driver analyses can be used to identify the most relevant emotions of Detractors, Passives, and Promoters and conclude with limitations and potential for further research.
Article
The Net Promoter Score (NPS) is a popular management tool that is used in a variety of ways by firms, not-for-profits, and government. This study firstly provides an overview of the various ways in which the NPS is used. It then canvasses four concerns raised by researchers, authors and commentators about the NPS. These relate to (1) its presumed link to business growth, (2) the assumption that low NPS scores indicate negative word of mouth, (3) the weak association between stated likelihood to recommend and actual recommending, and (4) the claim that NPS is a superior metric to customer satisfaction. The evidence pertaining to those concerns is examined. The study then discusses another problem with the NPS that many practitioners are aware of, but has not been studied. The problem is that the counting method used to calculate the NPS introduces additional variation in scores compared to mean average likelihood-to-recommend scores. This additional variation occurs both across brands in a study, as well as for the same brand over survey waves. This variation is likely to be difficult for market research providers, or those who commission NPS work, to explain. The study concludes with alternative courses of action for NPS users.
Chapter
This study explores key determinants of airline recommendations by integrating ratings and text comments scraped from online source. Numerical review scores are used to characterize features on how passengers decide to recommend others. Text analysis technique provides information of service attributes that differentiate positive and negative comments. Using generated frequent words visualization of Word Cloud, the results suggested that positive recommenders are satisfied with human dimensions such as personality and friendly services, while negative comments suggested frequent complaints on poor operational dimensions such as on-time performance and seat comfort.
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