Grow Your Business by Strategically Improving Customer Advocacy
(Part 4 of 4 – Customer Satisfaction Series)
Measuring Promoters (Advocates)
Since being introduced in Frederick Reichheld’s article “The One Number You Need to Grow”, the concept of measuring customer loyalty through a single question survey has become a common practice among many B2B companies. The power of this single metric, “Net-Promoter Score” (NPS), is built on the concept that “word of mouth” is a strong driver of growth. According to Reichheld, “research shows a strong correlation between a company’s growth rate and the percentage of its customers who are “promoters” – that is, those who state they are extremely likely to recommend the company to a friend or colleague. The Net-Promoter Score (Figure 1) is calculated by subtracting the percentage of customers who say they are unlikely to recommend from the percentage who say they are extremely likely to do so.”
The significance of NPS is not only supported by a long history of growth data associated with the measure, but also by the logic that creating a larger percentage of promoters will ultimately lead to the growth of your business. Given the value of NPS, the next logical question that needs to be answered is, “How can I ensure my customers are recommending me over my competitors?” Without this information, it is impossible to develop a meaningful improvement strategy.
Armed with only a Net Promoters Score, it is challenging to develop a strategy designed to improve the percentage of promoters within the customer base. Why?...Because the measure provides no insight as to what differentiates a promoter from a passive or detracting customer. Strategists must rely on anecdotal information, internal data and “gut feel” in creating an NPS improvement strategy, then wait a year or more for the next NPS survey to see if their strategic assumptions were correct. The improvement plan outlined in Figure 2 highlights the goal increasing the NPS to 75, but there are few specific action steps associated with achieving this increase. This is a common when designing an improvement strategy around a “single” NPS score.
Understanding How to Create Advocates
With the ability to measure the percentage of your customer base that has a very high likelihood of recommending your business to others, the next step is to better understand how to create more promoters. Actionable Customer Satisfaction methodology identifies the critical product and service attributes that drive the Net Promoter Score, and if improved, create “promoters” of your business. In addition, our analysis also compares your overall performance on each of these critical NPS attributes to competition…creating an NPS improvement priority map.
In Figure 3, the attributes that drive customer “promoters” are listed on the vertical axis (from high impact to low impact). A competitive performance score is then calculated for each attribute, red bars indicate performance behind competition, while blue bars indicate performance above competition. In this example, the company is behind competition on 3 of the top 4 attributes driving “promoters”. Therefore, to improve overall NPS, it is imperative to improve in the areas of: meeting customer quality needs, product consistency, and understanding customer needs. With this analysis, the data can be used to create a well aligned strategic plan, with a high level of confidence that the desired results will be achieved.
World class customer satisfaction research explores all four of these critical areas: importance, performance, competitive position, and customer advocacy in providing a clear roadmap to increase delivered value, beat competition, and improve top line revenue.