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It’s no longer NPS, now it’s BAI - how word-of-mouse replaced the word-of-mouth

August 2014
Marketers have long been tormented by the answer to the question of how their brand is assessed. Over 10 years ago F. Reichheld of Bain & Co. published an article in the Harvard Business Review which has revolutionized the measurement of consumer satisfaction with the brand (applied mainly to services.) Today, search is on for new solutions to this age-old problem.

Index introduced by Reichheld, called “net promoter score” (NPS) has one major advantage: it can be easily calculated. On the question directed at current customers "how likely would you recommend our brand / company to your friends and family?" they reply indicating the number on a scale from 0 (very low) to 10 (very high). Now You only have to subtract from the summed percentage of indications on the numbers 9 and 10 (the so-called "promoters") the accumulated percentage of indications on numbers from 0 to 6 (the so-called "destructors") to get the NPS value. It is assumed that if the value exceeds 50, then the brand has really satisfied, loyal customers, who become its advocates.

Nowadays we live in a time when consumers turn for advice on "what to buy" not only directly to their friends, but also tend to consult their intentions on Internet forums. A large consumer survey (32,000 respondents in the United States and four European countries: France, Germany, Great Britain and Spain) by Boston Consulting Group completed a year ago shows that before buying, especially expensive and important (for the consumer) product roughly two thirds of respondents turn for advice to family and friends and half consults on internet forums. Worth emphasizing is that the percentage is (depending on country) twice or even ten times greater than the percentage of consumers seeking advice in traditional media!

Enriched with this knowledge BCG consultants therefore propose a new indicator: BAI which stands for “brand advocacy index”. It is based on referrals actually granted to brand and also negative opinions, additionally regardless of whether they come from current or former brand customers (or even those consumers who have had only short experience with the brand or judge it solely on the basis of the attributes of the offer). For the calculation of the BAI You need to subtract from cumulative percentage of positive recommendations for the brand (regardless of whether they were spontaneous or appeared in response to someone's question) the total percentage of critical opinion. And here we encounter a problem. Sometimes we find the opinions that are ambiguous. The consumer indicates both the advantages and disadvantages of the offer, not always giving a clear advice of "buy or not to buy". Nevertheless, BCG analysis (over 300 brands in 12 categories) show a very strong correlation between value of the BAI index and increase of brand’s revenues. For example, the growth rate of sales of smartphones brands with the highest rates of BAI is almost twice as high as those brands with the lowest levels of BAI index. As we can see, the relative level of BAI for a particular brand has a real impact on market success.

Conclusion that comes from this is clear. If you already have created a brand, You should fight for a positive recommendations on the Web. If the brand is in the making, look for the best brands (with the highest rates of BAI) for inspiration and try to understand what is it that attracts their customers mostly. Ear sensitive to the needs of the consumers certainly helps in effectively creating a new brand.


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