Net Promoter Scoring
Net Promoter Score is a one measure that may be applied by a company to its customers, alongside such measures as "overall satisfaction" or likelihood to purchase again. The net promoter score is a customer loyalty metric (measurement tool) originally conceived by Frederick Reichfeld, Bain and Company and Satmetrix. It is a popular tool used by companies to measure or qualify the loyalty the company may enjoy from its client and customer relationships. It is a good alternative to other more traditional customer satisfaction research, like "customer satisfaction" etc.
Many experts in the field argue that Net Promoter Score is popular because it is a concept readily understood by employees. It is not shrouded in complexity and subtle measurements often attributed to alternative customer loyalty measurement tools. It is actually a very simple metric based on a single question on a zero to ten rating scale.
"How likely is it that you would recommend our company to a friend or colleague?"
The most typical ranking for possible answers are as follows;
- Promoters (9 or 10 rating)
- Passives (7 or 8 rating)
- Detractors (0 to 6 rating)
The Detractors figure is the one which most often surprises companies in their first attempts to measure their net promoter score. It is widely assumed that 4 or less is bad, 5 to 6 is good, and anything above 7 is excellent! However, this is not true! A customer needs to be absolutely and fantastically impressed by the company before that customer will recommend the experience to a friend or colleague proactively. Anything under absolute excellence is simply regarded as being "expected". Anything under a score even as high as 8 on the scale means that the customer is NOT going to recommend your product or service to a friend or colleague, and may even only do so if specifically asked a direct question about your product and service when their actual level of satisfaction was actually quite high! Making an endorsement for your company, its products or its services carries an element of 'obligation' on behalf of the party making the recommendation, so the public is shy of making recommendations that may tarnish or dimish their status based on any subsequent bad or negative experience that may occur. Therefore, your clients are much less likely to even mention your company or services unless they feel absolutely confident that the experience they enjoyed is definitely going to be enjoyed by those that the tip is shared with.
Let's think about this the other way around! Put yourself in the client position for a moment and remember a recent transaction with a local company. Were you so blown away by the incredible service, great price, brilliant professional attitude, quick, prompt efficient and polite service that you immediately told your friends and colleagues about it? No, I doubt it very much. There may be only 1 or 2 occasions every 5 years where you are so impressed that you actively tell those people around you about your experience. Anything less than absolute excellence results in your mindset being "that is what I expected". This is your passive state. You were neither impressed, nor disappointed. You leave the transaction and forget the experience, or lack-thereof very quickly. You are now totally passive. Any score under a 6, which some may argue is a good score, as its above the 'middle' of the range is actually a complete failure. Scoring 6 even is a measure of poor performance, and you are actually a detractor. You may feel extremely reluctant to mention this company even if a colleague or friend is actively looking for a similar product or service and asks you directly about it!
The rules of thumb presented in this article appear to be supported too by academic research done by the London School of Economics, and others like the Melbourne Business School where it was proven that there is indeed a positive correlation between net-promoter-score and the growth of a company. Several industry giants like GE (General Electric), Procter and Gamble use net promoter score to measure the health of their brands. Others include American Express, BearingPoint, Intuit, Verizon Wireless and hundreds of others. No, you do not have to be a Fortune 500 giant to use net promoter score!
Of course you should regularly engage in a dialogue with your customers on how the feel about your product and service. It does not have to be a formal "questionaire" or "survey" but a simple question asked at the point of sale. It is not a difficult question to ask, and often the responses you receive will shock you. A company must learn to step away from its own internal 'image' and worry more about how that image, or brand is actually presenting itself externally. Wearing a smile, and engaging in polite 'banter' with clients is not great customer service! It is merely being polite, and can even detract from the customer experience if done flippantly or if any part of the interaction feels 'scripted'. We are all very used to this sentiment when dealing with Telephone based Call-Centers, where the agents/specialists are often working against such closed scripting that the consumer phoning in actually feels like they themselves are running on the same treadmill as the specialists themselves!
CRM is one tool, one piece of the puzzle in tracking, recording, and measuring various indicators of your companies performance. But, in order for the tools or measurement to be of any value they must be applied all the time, not just haphazardly, or when opportunity arises. Every interaction with each client should be recorded, and don't forget to ask the client about their Net Promoter Score! You will be surprised what you actually learn!