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Customer Relations

An easy way to measure if your customers love you in 21 minutes – use the Net Promoter Score (NPS). And it’s FREE.

bill-picThis is a simple and quick tool to gauge whether your customers love you or not.  You get tremendous bang-for-your-buck implementing the NPS (Net Promoter Score) customer loyalty metric. It can be put in place in under an hour and take little time each week or month to compile the results – for tremendous intelligence.

Your most unhappy customers are your greatest source of learning. – Bill Gates

I first read about NPS in the Harvard Business Review article ‘How the Net Promoter Score (NPS) Can Drive Growth: The Economic Advantage of Superior Customer Relationships‘, and then later in the handy book ‘Marketer’s Toolkit: The 10 Strategies You Need To Succeed (Harvard Business Essentials)‘.

NPS was developed by Fred Reichheld and Bain & Company – who has a registered trademark for the NPS.  Some organisations that use NPS include American Express, Intuit (who own Quicken bookkeeping software), eBay, Allianz, General Electric and Proctor & Gamble. But small businesses can use to very effectively too.

This is how it works.

The NPS question

You ask your customer’s one simple question:

How likely are you to recommend us to a friend or colleague, between 0 and 10 – 0 being extremely unlikely and 10 being extremely likely?

Now, it is extremely important it is between 0 and 10, not 1 and 10. We need an 11 point scale to do the next bit.

The NPS metric

If someone rates you between 0 and 6 they are called a Detractor, they are actually working against you in word-of-mouth marketing (they only say bad things about you – the closer to zero, the worse their words!)

A score of 7 or 8 is known as a Passive customer, they are not going to say negative or glowing things about you.

And a 9 or 10 means they are a Promoter – they love your business and sing your praises at any opportunity. Some even stop people in the street to tell others about your business (yes, this has happened to one of my businesses…)

Let’s say we had 17 responses, and they spread like this:

  • 3   Detractors (18%)
  • 2   Passives (12%)
  • 12 Promoters (70%)

To calculate your NPS just subject the Detractor percentage (18%) from the Promoters (70%), so in this example it is +52. You ignore the Passive percentage because they are ambivalent and won’t actively talk about your business in a positive or negative way. Notice the result is not shown as a percentage, but a ‘+’52. This helps us communicate and understand the metric better, because the score isn’t actually a percentage.

Getting the most from your NPS

To rate how well you are doing, use this rule-of-thumb:

  • 0-50 Good
  • 51-75 Great
  • 76+ Excellent

As you can see, attaining above 75 is very very difficult, especially on a consistent basis. If you are getting a negative score (a -100 is possible, it means everyone surveyed gave a score between 0-6!).

This question can be coupled with the usual “How satisfied were you with the job we just completed?”  You may think it’s the same question, but it’s not.  This one is asking for the customers’ opinion on a job, whereas NPS talks about the relationship – how are they feeling about your business overall. They may have had a great experience with the most recent job but if the 7 before that were all poor, their overall satisfaction and therefore loyalty will be low.

If you use either or both questions it is recommend you ask why or for more information if anyone rates your business below Passive, or 7. If the score is 0-4 we escalate the complaint to someone more senior to call the customer back and ask for more information, understand the issue and try and resolve it.

 

What a small business should do with the Net Promoter Score (NPS):

  1. Find where in your customer contact flow is best to ask the one NPS question and have it inserted (add the job satisfaction question too if you feel its relevant)
  2. Track your NPS in a spreadsheet and report on it weekly or monthly (use a neat graph to show the results).  Talk about the recent results and trend
  3. Use the NPS key performance indicator (KPI) as a goal on the job descriptions on the key roles that can influence it (their quarterly bonus will be affected by the NPS)
  4. If you want to design a more extensive customer satisfaction survey, then be sure to read the 2 best books on this we know of:
    1. Customers for Life: How to Turn That One-Time Buyer Into a Lifetime Customer; and
    2. How to Measure Customer Satisfaction

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