A number of our larger clients have recently introduced a Net Promoter Score (NPS) program to help quantitatively benchmark their customers’ experience. The challenge for these organisations is that their senior management don’t necessarily thoroughly understand the program, or how to use it effectively to improve their business operations.
NPS is based on the premise that each of your customers is either a detractor, passive, or a promoter. Your NPS score is calculated by subtracting your detractors from your promoters. To put it another way, love minus hate or indifference is what matters.
When customers are asked ‘on a scale of 1 to 10, how likely is it that you would recommend (this company) to a friend or colleague?’ those who answer 0 to 6 are considered detractors, 7 to 8 are considered passives, and 9 to 10 promoters.
Awareness of the power of recommendations is not new news. We know that word of mouth is seven times more effective than newspaper advertising, five times stronger than a personal sales pitch and twice as effective as radio advertising. The average lifetime value of a customer in the ‘promoter’ category is significantly higher than average: promoters spend more, negotiate less, stay longer, are easier to service, upgrade more quickly, refer others and even increase staff morale.
The challenge our clients are facing is two-fold: what does my Net Promoter Score mean; and how can I improve it?
Broadly speaking, the average company has an NPS of around five to 10. Apple has an NPS of around 70 to 80. But turning a customer into a promoter is about more than just ‘satisfaction’. If your customer receives service in line with their initial expectations, it is likely that that customer will fall into the ‘passive’ category. In order for a customer to become a promoter, they need to receive over-delivery: service that is out of the ordinary or a product that exceeds their expectations. And according to Bain and Company, while 80 per cent of CEOs believe their brand provides a superior customer experience, only eight per cent of their customers agree.
To follow are five key factors to keep in mind to help improve your NPS:
1) Take it seriously: If you are going to invest in conducting NPS research you need to commit to taking the results seriously. Don’t look for excuses to discount the findings. Respect your customers enough to accept their feedback.
2) Communicate internally: No one can work to improve scores unless they understand the objectives of the initiative. Launch an internal communications program to ensure that all employees know you are undertaking the program; inform every one of the findings; and help them to understand that each and every employee can contribute daily to improving the company’s NPS score in the next round.
3) Understand your impact: NPS scores are impacted by every aspect of your business. Just because you are not in a customer-facing role, doesn’t mean you won’t impact the end product or service the customer receives. If the PA to the IT Manager fails to pass on a phone message about a broken link on the company website, the IT Manager won’t arrange for the link to be fixed. The end result is that customers are impacted by the broken link, and their customer experience suffers. Each division within the organisation needs to be offered simple, achievable ways to improve the company’s NPS in a way that is relevant to their business function. One way to kick-start this process is with an audit of every division, every channel and every touch point.
4) Focus on more than just the customer: In a B2B environment, partners and resellers are just as important as end customers. If your partners and resellers aren’t satisfied, they won’t recommend your products and won’t speak highly of your organisation to their customers. Improving relationships with your B2B partners will have the added benefit of simultaneously improving the end customer experience.
5) Give your promoters tools and permission to promote: NPS research asks your clients if they are likely to recommend your business. For promoters, the answer is ‘yes’. However, how many of those promoters actually go on to recommend your company? If you want promoters to talk about you, you need to give them the tools. Give them a story. Give them tools. And often, just ask them.
To instigate change within your organisation and drive up your NPS consider forming a working group, appointing internal champions and building NPS improvements or benchmarks into management KPIs. By focusing on improving your NPS you will improve your customer experience and drive faster revenue growth across your organisation.