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Know the Score—and How to Use It

By Elizabeth Rennie |   2013 | 8 | 7

Few things are as important to your business success as the attitudes and viewpoints of your customers. Increasingly, customer experience professionals are advocating the net promoter score (NPS) as an effective measure of these opinions. NPS is based on one very basic question: Would you recommend this company to a friend or colleague?

The response you receive serves as a calculation of customer affinity, categorizing customers as either promoters (very likely to recommend), detractors (very unlikely to recommend), or passives. This fundamental approach makes a lot of sense, and the continued growth of NPS is evidence of the concept’s relevance and potential value. Popular free online survey tools such as SurveyMonkey have even taken notice of this trend and are offering information and tutorials on how to “calculate your NPS in minutes” with their online templates.

In a report called “The Economics of Net Promoter,” customer experience research and consulting firm Temkin Group analyzed NPS and loyalty across 19 industries based on the feedback of 10,000 US consumers. The research revealed that consumers are more likely to repurchase and forgive companies that have earned higher NPS scores.

This is useful information; however, NPS must be taken further to become truly valuable. Bill Lee, president of the Customer Reference Forum and author of The Hidden Wealth of Customers, writes on the Harvard Business Review Blog Network, “I have found in my years of experience working across industries and sectors, that firms … are often leaving tremendous sources of wealth creation on the table. That’s because the focus of NPS is on creating promoters, but stops short of engaging them to actually promote the business through activities like referrals, references, blogging or tweeting, speaking at industry events, or any of the myriad ways that passionate customers can help build businesses.”

He adds that the assumption seems to be that NPS is only about getting people to buy and keep buying, but there are other__perhaps even more lucrative__ways that promoters can create value for your company and grow your business. Following are some strategies for making the most of NPS and your organization’s promoters:

1. Understand the reasons behind the numbers. Getting your score is easy; finding out why customers rate you a certain way is more challenging. Implement a process for getting real feedback that helps you understand why promoters would recommend your business, why detractors won’t, and how to engage passives. This can be part of your voice of the customer (VOC) program__something you likely already have in place. Keep in mind that the goal of NPS is to advance and develop the business. Effective initiatives must involve successful VOC programs that encompass everything from detection of customer feelings and insights to implementation of improvements.

2. Ask for the recommendation. It’s wonderful that your customers say they would be highly likely to recommend you to a friend or colleague; it’s significantly better if they actually do. And sometimes the best way to make sure that happens is simply to ask. Invite promoters to take that extra step. Request that they write testimonials, participate in social networking communities, and even speak at industry events.

3. Aim for sustainable results. As Customer Experience Professionals Association cofounder and chair Bruce Temkin notes, “Companies can make short-term improvements with superficial changes, but long-term success requires institutional capabilities that take many years to acquire.”

Read more about NPS and how best-in-class companies are using it in the July/August 2013 APICS magazine cover story “It’s All About the Customer” by Elizabeth Rennie. Visit apics.org/magazine to access the digital edition.

Elizabeth Rennie is managing editor of APICS magazine. She may be contacted at editorial@apics.org.

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