Do you really know what your customers say about your business?
When it comes to understanding our customer’s attitudes toward our business, most of us are guessing.
Most managers have no real data and if we have some data, it’s often misleading and collecting it drives everyone nuts!
So my solution is to make it simple and painless and improve the quality of information at the same time . . . ask just 1 question!
Yes, only 1 question for your customers . . .
Recent research gives us an insight into an amazingly simple and effective tool to measure if your customers or employees are really engaged. See NPS web site.
Known as the Net Promoter Score (NPS) here is the question you ask to get a rating.
“When all things are considered, on a scale of 1 to 10, how likely would you recommend our business to others?”
The survey should use a scale of 0 to 10, with zero indicating the respondent is not at all likely to recommend the business while a score of ten indicates extremely likely.
Implementation is easy and is best done using a simple tool like Survey Monkey.
This is why it works . . . Fred Reichheld from leading management consultants Bain & Company is a world authority on the impact customer loyalty has on business growth and profitability. In his book, The Ultimate Question, his hypothesis is if your business strategy and its implementation results in a high proportion of loyal customers who are also strong advocate’s your business is on a success trajectory. Results from his research revealed that a 5% increase in customer advocacy could yield an increase in profits of between 25% – 100% and businesses with the highest levels of advocacy leading to growth in revenue at a rate twice that of their competitors.
The idea behind the NPS defines a company’s customers into three groups:
People who are loyal enthusiasts not only love dealing with the company but will encourage their friends to do business with you and are referred to as Promoters. They will indicate a survey score of 9 or 10 on the scale.
Then you have people who are satisfied but not overly enthusiastic, who display transient loyalty and are quite likely to switch to a competitor. These people score a 7 or 8 and are called Passives.
The final group are called Detractors. These people rate your business between 0 to 6. They are usually unhappy or dissatisfied and the problem is they are very likely to communicate this to others.
The NPS is simply the difference between the percentage of people who score themselves as Promoters (9 and 10) and the percentage who score themselves as Detractors (6 and below.) To calculate your company’s NPS, take the percentage of customers who are Promoters and subtract the percentage who are Detractors.
Some companies (in fact many) find they have a negative score!
That is OK, as it is here that you can work to improve your score. Reichheld’s research showed companies that have achieved most success are those that have not only improved the percentage of their promoter group but have also reduced the size of the detractor group. In other words they concentrate on the ‘net’ promoter score.
The Ultimate Question book contains a number of case studies to support the value of the NPS and how to improve your results. Most examples relate to large corporations e.g. GE, Southwest Airlines etc. the concept is now being used by smaller businesses as more people see it’s potential as a management tool. For case studies and other insights about the value of the NPS metric, I strongly recommend a visit to the NPS web site.
The most appealing features of the NPS is that it is a single, customer-focussed, metric that everyone in your business can focus on and it is reasonably easy to collect and report in comparison with other lengthy customer satisfaction surveys.
So there is no time like the present to ask your customers what they really think!
Sean Martyn
Business Coach
PS – You can also apply the principle internally with staff. Why not ask us how?