A Tool You Can Use Today: Net Promoter® Score

Last October, I worked with a client who shared the goal of regaining the top position in terms of market share among his competitors. Like most companies in the present economy, his marketing and advertising budgets had been trimmed and discounting—while improving revenues and market share in the short term—was not seen as a desirable or sustainable option.

So he did what few companies chose to do in the fourth quarter of 2008: invest in customer service training for his employees. He recognized that before the goal of leading his competitors in market share could be met, he and his staff would have to practice the memorable service behaviors presented during the training class, provide ongoing feedback to one another on performance, and—in the process—reinforce the type of service culture that would create a legion of customers who are promoters of the company.

Bain and Company, a global consulting firm, identified promoters as being customers who are the least price-sensitive, have the highest repurchase rates, and are responsible for between 80 and 90 percent of positive referrals to a company or brand. In addition to promoters, they also identified two other categories of customers: passives and detractors. All three categories emerged from ratings customers gave to companies in response to the question, “How likely is it that you would recommend this company to a friend or colleague?”

Customers who responded “Extremely likely” (i.e., nine or ten on a zero-to-ten scale) were labeled promoters—loyal enthusiasts who keep buying from a company and urge their friends to do the same. Those who responded with a rating of seven or eight were labeled passives—satisfied but unenthusiastic customers who can be easily wooed by the competition. And those who offered ratings closer to “Not at all likely” (i.e., six or below on the scale) were labeled detractors—unhappy customers that are responsible for between 80 and 90 percent of negative word of mouth.

Bain and Company was then able to determine a Net Promoter® Score (NPS) for a business by subtracting the percentage of customers who identified themselves as detractors from those who identified themselves as promoters. The percentage of passive customers does not enter the equation. For example, if 50 percent of a company’s customers responded to the survey question with a nine or ten (promoters), 20 percent responded with a seven or eight (passives), and 30 percent responded with a six or below (detractors), then the formula would look like this:

50 (P) – 30 (D) = 20 (NPS)

Their research over a ten-year period confirms that, in most industries, companies with the highest ratio of promoters to detractors in their sector typically enjoy both strong profits and healthy growth.

So the question becomes, how does a company increase its Net Promoter® Score?

For more on this, please follow the link to the article titled Service That Sticks!™ How Memorable Service Creates Promoters. In this short article, two variables are cited that are each capable of improving customer service and increasing the number of promoters who will sing the praises of your company or brand: company processes and employee personalities.

The article includes an illustration of one company that is creating promoters daily by actively practicing memorable service behaviors with its customers. You will read how the use of a single memorable service behavior, provide pleasant surprises, can transform the way guests view customer service at a quick service restaurant. You will also read how this company has benefited by consistently providing superior customer service to its guests in comparison to its competitors.

Steve Curtin is a customer service, training, and public speaking enthusiast based in Denver, CO.

www.stevecurtin.com

While most companies seek to lead their competitors in market share, only a handful will realize this position. Assuming it does not have a monopoly or dominate the distribution channel, it will be difficult for any company to consistently lead its competitors in market share without also leading in Net Promoter® Score.

Copyright © 2008 Steve Curtin, LLC