|Mon Oct 5 2009 00:46:29|
Pain from Bain? eBay Introduces Net Promoter Score
By: Ina Steiner
| eBay revealed in May that it was testing a new feedback system based on Bain & Company's Net Promoter Score (NPS). That might explain why eBay recently changed the way it looks at DSRs. eBay's system had sellers focusing on getting 4.9s and 5.0s on their Detailed Seller Rating criteria, which are ratings on scale of 1 - 5 left by buyers to indicate their satisfaction with transactions. High scores meant discounts on fees and greater exposure in search results. |
With last week's rollout of the Fall Release, it's no longer necessary for sellers to focus on getting high scores - instead, they must avoid getting ratings of 1s and 2s in order to qualify for eBay's new Top Rated Seller program. eBay's current thinking on customer satisfaction may be why.
First, some new vocabulary: Net Promoter Score, Detractors, Passives and Promoters.
eBay CEO John Donahoe's former colleague at Bain & Company, Fred Reichheld, developed something called the Net Promoter Score to measure buyer satisfaction and predict buying behavior. The higher the score, the better. Customers who say they would recommend a company by rating them 9 or 10 on a 10 point scale are "Promoters." Those who give a score of 7 or 8 are "Passives," and those who give a score of 0 to 6 are "Detractors."
The Net Promoter Score is calculated by subtracting Detractors from Promoters.
Here's what eBay had to say about Promoters and Detractors, from NetPromoter's blog summarizing eBay's presentation at its conference:
Using predictive modeling - these analytics let you predict the score someone would give you based on others like them. They look at core data like dollars spent each month, churn rate, etc. in each case Promoters had better numbers. In some cases while you may not see spend increase with top promoters, you may see churn reduce. The largest lifts come from moving Detractors towards Promoters, for eBay it means moving Detractors to Passive will bring the greatest results. The critical thing is to look at customers that are detracting and really focus on why
Thus, eBay seems to be saying that avoiding low scores is more beneficial than trying to garner high scores.
The DSR's current 1 to 5 rating system does not translate exactly into NPS, but eBay has been testing a new feedback system that asks buyers if they would recommend a seller using a scale of 1 - 10. Monday's Newsflash newsletter has more information about the Net Promoter Score and eBay's testing of feedback.
Comments (80) | Permalink