Staffordshire University is a proud regional university which is important to the local community, contributes to the local economy and society, and cooperates with local businesses. Indeed, we use our expertise to help businesses grow; by using sound research we can support practice by theory to help businesses make well-informed strategic decisions.
We are so committed to create a strong and sustainable relationship between industry and academia that we not only make our undergraduate and taught postgraduate curriculum practice-based, but we even have special doctoral programmes that are designed to contribute to the body of knowledge as well as to practice. Professional doctorates, as they generally referred to, are a great example of the relevance and importance of applied research (i.e. research that seeks to solve a real-life problem).
Andrew Stephenson joined the Doctor of Business Administration programme when he was the Human Resource Director at DFS, a UK leading sofa manufacturer. DFS, like many firms all over the world adopted the Net Promoter System (NPS), a customer loyalty metric which was introduced by Frederick Reichheld in his paper ‘The one number you need to grow’, published in 2003 by the Harvard Business Review. The NPS is determined by asking customers one question, “How likely is it that you would recommend [brand] to a friend or colleague?”. Customers are asked to record their answer on a scale from 0 to 10, with 0 representing ‘not likely at all’ and 10 being ‘extremely likely’. Respondents are categorised in three groups – detractors (0-6), passives (7-8) and promoters (9-10). The Net Promoter Score is then determined by subtracting the proportion of detractors from the proportion of promoters. It is not surprising that NPS quickly gained popularity with management in many industries; the measure is very simple to calculate, it has face validity and intuitive appeal to managers and other stakeholders, and it is a comparable metric that companies seek to include in their reports. DFS was no exception and thus decided to start collecting information from their customers, including the ‘magic’ question.
Both DFS and Staffordshire University soon realised the potential of establishing a collaborative relationship on this project and the benefits such collaboration would bring to both institutions. Staffordshire University would be able to contribute to a success of a business through research; academics working on the project would use it to contribute to the University’s Research Excellence Framework submission; students would benefit from having their learning supported by practice-based cutting edge research. DFS on the other hand, would get answers to the numerous questions that needed answering so that they could drive their company forward. This led to DFS providing Staffordshire University with access to a large data set of responses to customer satisfaction surveys.
We have now cleaned up the data and set it up for econometric analysis which is already yielding some very interesting results that will not only contribute to the existing body of knowledge on NPS but also directly to industry practice. One of the aims of the project was to determine what drives customer propensity to recommend a brand. We used factor analysis to reduce the large number of survey questions to a manageable number of explanatory variables which we then used in a logistic regression model to determine what influences the likelihood of a customer becoming a promoter.
The most important factors have been identified to be satisfaction with product quality and sales experience, and the ability of the company to exceed customers’ expectations. Therefore if businesses get their product right, implement basic sales techniques to deliver great sales experience, and exceed customers’ expectations, customers will reward them with glowing recommendations which in turn will attract more promoters, creating a multiplier effect which will sustain the word-of-mouth advertising, the holy grail of marketing.
I am very excited to be a part of this project where cutting-edge industry practices meet cutting-edge research; where theory meets practice; where outputs of robust econometrical analysis are interpreted in business context and applied to make well-informed strategic decisions; and I very much look forward to discovering the endless possibilities and opportunities this project will bring.
By Dr Jana Fiserova