147 – How to Thrive in a Customer Driven World

147 - How to Thrive in a Customer Driven World

Last week we touched on how to ensure the strategic planning gets implemented and your company see results.    

 Today is about the importance of your customer and how you can build a great business that is grounded in customer loyalty by creating an intense focus on doing what’s right for your clients and for your people.  I will explain how just thru one ultimate question you can measure success based on a number.  This system is based on the Net Promoter System which was book written by Fred Feichheld and endorsed by Harvard Business Review!

Satisfaction surveys can be misleading and majority of the time not a successful way to  capture data.  A better measure of customer performance is the Net Promoter Score (NPS). It is a measure of the percent of promoters minus the percent of detractors.   Why do you want to know who are Promoters?  Well data shows that promoters:

• Shop more frequently
• Spend more
• Promote where they shop more frequently
• Concentrate more of their wallet share on their preferred brands.

Costco, Harley Davidson, Apple and Nordstrom are a few examples of organizations that value NPS and what it can do to change, grow and improve their customers’ experiences. Think about these four companies and reflect on the experiences you have had with them versus that of shopping or buying from their competitors.”

NPS process is Simple, practical and actionable survey based on one key question.  It is statically sound and repeatable.  NPS reduces marketing expense over time and is a world wide standard. 

Have a quick listen to Satmetrix explain NPS for your business and how it can help your company grow.

Well that was super simple to make it even easier we will provde a free NPS worksheet on our show notes page for you to use. 

Plus a link to the book called The Ultimate Question 2.0 How Net Promoter Companies Thrive in a Customer-Drive World by Fred Reichheld.

iTunes Link CLICK HERE

Lastly, let me explain,  How to measure Net Promoter Score effectively

As mentioned Net Promoter Score places customers into one of three groups: Promoters, Passives and Detractors.

In answering the NPS questions 5 – 7, respondents are given a standard scale that ranges from 0 (not at all likely) to 10 (extremely likely). You can ask the Net Promoter Score question via an online survey after customer service interactions, purchase transactions or as an ongoing customer pulse study. Based on how a customer responds to the question, you classify them into one of three groups:

• Detractors = 0 – 6
• Passives = 7-8
• Promoters = 9-10

Promoters are your customers who are loyal and enthusiastic about your organisation and will continue buying and referring others. Promoter referrals fuel viral growth that helps bring in new customers at a lower acquisition cost. The cutoff score for Promoters is intentionally set high at 9 to ensure that the customer is an exceptionally enthusiastic fan.

Passives are generally satisfied customers but lack the enthusiasm of Promoters. A ranking of 7 or 8 is no doubt impressive, but experience has shown that this group is still vulnerable to competitive offerings and not immune to defection.

Detractors are a potentially dangerous bunch that are often unhappy and can diminish your brand through negative word of mouth. A customer who rates your organisation between 0 and 6 requires outreach to resolve issues before they do any damage. The best organisations work to correct grievances of Detractors and work to convert them to Promoters.

Once you have classified your customers into the respective groups, you can now calculate your company’s Net Promoter Score using the percent of promoters and detractors. Passives are not used to calculate the score. See attached worksheet.

Here’s how to calculate NPS:

Company NPS = (% Promoters – % Detractors) x 100

For example, if you conducted the survey and 70% rated 9 or 10, and 10% rate 1-6, your score would be (70% – 10%) x 100 = 60. An NPS of 60 is a very good score as the majority of your customers are promoters.

How To Determine If A NPS Is Good

Generally, any NPS over 30 is considered good, over 50 is great, and over 70 is world-class. A negative Net Promoter Score is considered bad.

I hope you enjoyed this episode.  If you have any questions on how to NPS please feel free to reach out to me on social media of email Shelley@maxumcorp.com.au

I would like to end with a quote.

Most of your competition spend their days looking forward to those rare moments when everything goes right. Imagine how much leverage you have if you spend your time maximizing those common moments when it doesn’t.

– Seth Godin