Net Promoter Index and Net Advocacy Index

Exhibit 2.7   Net Promoters Index, based on a survey, is the percentage willing to recommend your brand minus those who are not willing to do so.

Propounded by Fred Reichheld, the Net Promoter Index is a straightforward approach to measuring brand equity. Based on a single metric — “willingness to recommend” — the net promoter index, is the percentage of respondents in a survey who are willing to recommend a brand, minus those who are not willing to do so (Exhibit 2.7).

Nowadays, for brands that exhibit high levels of online engagement, a Net Advocacy Index may serve as an indicator of sentiments on the internet. This approach relies on natural language processing (NLP) algorithms to assess the positivity/negativity/neutrality (sentiment analysis) of the multitude of online conversations. NLP is a field of computer science, artificial intelligence and linguistics concerned with the interactions between computers and natural languages.

The net advocacy index is constructed in a manner similar to the net promoter index. Researchers tap into unsolicited consumer generated media, and create the index based on the sentiment of these conversations.

Consumers who are engaged and vocal on the net tend to have strong opinions that may not reflect the viewpoint of other consumers. Because of this, the net advocacy index is heavily biased. One would not recommend it as a measure of brand equity, though it is a useful indicator of how sentiments on the internet are changing.

One limitation of the Net Promoter Index is that it does not reveal the factors influencing or driving brand equity. To be able to act on the data, it is vital for marketers to know how to influence the equity of their brands.