Organizations face many operating perils some manageable while others are not. When faced with an unforeseen or unavoidable event many organizations often feel overwhelmed. During the initial impact period of an unexpected event organizations direct significant effort and focus on developing a business recovery plan relying on traditional KPIs such as market share, sales and profits as the proxy for measuring business recovery. While such metrics explain the results of the business recovery plan they often provide little insight into the trajectory path the organization’s recovery path is tracking towards. In past, answering the question of how customers are feeling about the organization, its products and the likelihood of future purchases was a daunting and costly challenge especially in the pre-social media era where customer listening tools were not as prevalent.
One tool available for today’s social media minded organizations seeking to understanding customer sentiment is Satmetrix’s industry-leading Net Promoter® methodology.
The Net Promoter Score, or NPS®, is based on the fundamental perspective that every company’s customers can be divided into three categories: Promoters, Passives, and Detractors.
By asking one simple question; How likely is it that you would recommend a target company to a friend or colleague? The Net Promoter Score can get a clear measure of your company’s performance through your customers’ eyes. Customers respond on a 0-to-10 point rating scale and are categorized as follows:
Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.
Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.
To calculate your company’s NPS, take the percentage of customers who are Promoters and subtract the percentage who are Detractors.
Lessons for Companies Seeking to use NPS
As with any KPIs responsible marketing intelligence firms such as Satmetrix stress the importance of using NPS s the centrepiece of a broader operational approach to drive improvements in customer loyalty and enable profitable growth.
Companies must have leadership commitment, and the right software and business processes in place to deliver real-time information to employees, so they can act on customer feedback and achieve results. The ultimate test for any customer-relationship metric is whether it helps the organization tune its growth engine to operate at peak efficiency. Does it help employees clarify and simplify the job of delighting customers? Does it help them identify and engage their best customers? Does it allow them to compare their performance to the best from week to week and month to month? The notion of Promoters, Passives, and Detractors does all this, and helps companies turn into Net Promoter stars
Submitted by: Mark Baboolal – SMBP Student University of Waterloo
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