eBay to Apply Bain's Net Promoter Score to Seller Feedback
By Ina Steiner
eBay is testing a radical new feedback system that relies on the Bain & Co. Net Promoter Score (NPS) to measure customer satisfaction. Brian Burke, Director of Seller Standards & Feedback, spoke about the testing in an interview in May on eBay's blog, calling it part of the evolution of enhancing the feedback system. It's possible eBay sellers may become well versed in Net Promoter - in September, eBay expanded the feedback testing, which is set to run through next month.
eBay sellers live or die by feedback. Not only do eBay shoppers review ratings before bidding or buying items on the site, eBay has tied feedback directly to exposure in search results and to fee discounts. In addition, eBay now uses DSR data to determine which sellers it allows into its brand-new Top Rated Seller program launched last week.
eBay's new testing changes DSRs from a scale of 1 - 5 to yes-or-no questions and adds a fifth question that asks buyers how likely they would be to recommend the seller on a scale of 1 to 10. It's that last question that ties into Net Promoter Score.
What is the Net Promoter Score (NPS)?
If you thought NPS sounds like something a management consultant firm would come up with, you'd be right. Bain & Company's Fred Reichheld developed NPS and shares the trademark with Bain and Satmetrix.
eBay CEO John Donahoe spent over 20 years at Bain & Co., where he worked for former eBay CEO Meg Whitman and eBay Director Thomas Tierney, as well as with the inventor of NPS, Fred Reichheld.
eBay values the NPS philosophy so much that it has tied executive compensation to Net Promoter loyalty criteria. It has also tested and/or launched loyalty programs for eBay and PayPal, including the eBay Bucks program.
According to the Satmetrix website The Net Promoter score allows you to categorize customers into three groups based on their willingness to recommend your company or product to a friend or colleague:
- Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.
- Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
- Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.
How to Calculate Your Net Promoter Score
Satmetrix surveys customers to find out the NPS of major corporations. Let's say 83 percent of respondents would recommend your brand to a friend versus 6 percent who would not. The score is calculated by subtracting the latter from the former and is based on a scale of one to 10 - so you would have a Net Promoter score of 77 percent. (The remaining 11 percent are "passives" and don't count in the score.)
According to Satmetrix' report, based on interviews with 23,000 consumers in December 2008, Amazon was number one in the online-shopping category with a score of 74 percent.
How might this work with eBay feedback? First, take a look at the screenshot of one of the tests eBay ran on feedback.
Next, look at a slide from the 2008 eBay Developer's conference to see how the company views "promoters" and "detractors" as it relates to Net Promoter. You can see how the last question in the eBay feedback test, which asks buyers to indicate whether they would recommend the seller on a scale of 1 to 10, could translate into a Net Promoter score.
eBay Top Rated Seller Program
Presuming that eBay does change the feedback system, NPS scores might be qualifying factor for the Top Rated Seller program, as could the yes/no DSR scores. Note that eBay also solicits comments from buyers, which could be helpful to sellers - if the feedback is not kept anonymous as it is currently.
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About the author:
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to firstname.lastname@example.org.
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