March 19, 2015
Our Net Promoter Score is 67, Amazon’s is 64, and Apple’s is 72. The Net Promoter Score (or NPS) is a customer service metric derived from asking customers a very simple question: How likely are you to recommend us to someone? A score of -100 would mean everyone hates what you’re doing, and a score of +100 means everyone loves what you’re doing (and wouldn’t that be nice?). In reality, a score of 50 or higher is considered excellent, which is why I tout my company’s as a badge of pride. We’re all into big data these days, but here’s a deceptively small piece of information that will give you big bang for your buck. Read on for the insights I glean from it…
Ask your customers, on a scale of 1 – 10, how likely they are to recommend you to others. If a customer gives you a 9 or a 10, that makes them a promoter, a loyal enthusiast. Scores of 0 – 6 are detractors – these are your unhappy customers, whether they outwardly tell you they are unhappy or not. As for the people in the middle, your 7s and 8s, they are considered passives. They don’t count here in the formula, though they certainly count for what you can learn from them. From surveying your customers on this one seemingly simple question, you can derive the NPS score – subtract your percent of detractors from your percent of promoters and there you have it.
Ok, so these are the guys that make it all look easy. In your customer base, these are the people who give you referrals repeatedly, tell colleagues and friends about you, and make you feel like you’re doing everything right. And maybe you didn’t even know this about them. You still have a lot to learn from the guys who score you 9s and 10s. Perhaps the high score is a surprise – they don’t seem as engaged as you’d figure an enthusiast would be, or you weren’t pulling out all the stops for these customers. That’s definitely something to look at. When you follow up with them (and it’s best practice in my experience to do so), you’ll be able to find out what exactly you’re doing that makes them so likely to tell others about your business, because if they were a surprise promoter, you’re likely placing value in the wrong things. And what of the promoters you were already counting on? Regularly seeing these loyal cheerleaders in the promoter rank gives you an idea of your true core base – are there trends into the types of customer they are (volume, vertical, demographic, etc.), what they value in your offering, who they interact with day-to-day? These are important insights upon which you can continue to build your success and customer retention.
This is an interesting set of the customer base. You might think a score of a 7 or an 8 is pretty good, and it’s not “bad”, that’s true. But it doesn’t boost your NPS score, and for good reason. They’re not enthusiastic, and they’re not unhappy, but this set is the one you have to work to nudge in your favor. What more could you be doing to increase their commitment to you and their feelings about you? Because clearly whatever you are currently doing is not resonating loudly enough with them.Again, who do they interact with most regularly, are there other similarities, do they receive the same attention and level of service as your promoters? Do they share any similar backgrounds? When you speak to your passives, work to uncover what is keeping them from giving you that 9 or 10 – this is where the real gold lies.
This is a scary bunch. If a customer has rated you anywhere from 0 – 6, they are not thrilled with you. Maybe a 5 or 6 sounds fair to you – but from doing this many, many, times I can tell you the exercise does not lie. These guys will all give you the greatest churn rate, and they will often be a surprise. You might think “wow – I thought things were going well with this customer. They seemed happy, or at least never expressed dissatisfaction.” Or, “huh – I’m surprised by how many detractors I have when I’ve just launched this great new line of inventory.” What does this tell you? If you’re surprised by who your detractors are or how many detractors you have (which does pull the NPS score down), you are turning people off in a big way. Learning what is repelling that customer base will not only tell you where your true weaknesses lie (known or otherwise), but it will also force you to look at the hard questions. Perhaps you’re uncomfortably outside your area of expertise with this base, or there’s a department or function within your organization not operating as it should. And what if you get the same detractors over and over? You’re not doing enough to address the dissatisfaction and they will eventually leave. Work to uncover these answers and you could reduce churn, increase stability, and save yourself a lot of headache. Uncovering the source of this segment’s dissatisfaction could give you the wake up call that saves your business.
Your Overall Score
When you put this all together, what does it mean? Looking at the NPS score over time, you can trend your score against major milestones (and issues) in your organization’s history. We at Schaaf-PartnerCentric regularly measure our NPS and whether it’s improved, declined, or remained stagnant. Why do we do this? We want a snapshot of ourselves in time, to compare to the other snapshots we’ve taken, allowing us to look back at this album to see how we’ve grown, how we’ve changed, and how we’ve gotten better or worse in our customers’ eyes. It tells us whether our customers as a whole are becoming more or less committed to us, and more or less satisfied with our service. You gain clarity on a list of questions to ask yourself about your business: what might have affected my score, what were the positive indicators, the negatives? Perhaps most importantly, is their confidence in our direction increasing, enough to risk their own reputation by telling others to do business with us? Are you on the right path or do you need a course correction? The customer is always right, and they will tell you. You just have to ask the right question.
This article first appeared in LinkedIn on March 10, 2015.