Over the past few days we’ve been revisiting the series, Preparation for War: You vs. Recession and specifically, we’ve focused on the customer experience, the employee experience and culture. We know that all three, when in sync creates a solid foundation from which to grow upon. It’s this foundation that will enable a business to not only survive but thrive during periods of economic uncertainty. Key will be monitoring and evaluating data as if it were line items on a profit and loss statement.
To me, the best and most effective way to monitor and evaluate customer experience is to utilize the Net Promoter System. I’m a firm believer in this system. As you work through the system, you’ll quickly realize how it can also be used to monitor and evaluate the employee experience, and ultimately the culture of an organization or brand.
If you’re not aware of this remarkable system, I highly recommend checking it out at NetPromoterSystem.com. From score to system, one simple question can enhance customer loyalty and employee performance. It’s more than a metric — it’s a way of doing business. It’s about creating a culture focused on the customer.
“Few management ideas have spread so far and wide as the Net Promoter System. Since its conception almost two decades ago, by customer loyalty guru Fred Reichheld, thousands of companies around the world have adopted it — from industrial titans such as Mercedes-Benz and Cummins to tech giants like Apple and Amazon to digital innovators such as Warby Parker and Peloton.”
– From the cover jacket of the recently published book, Winning on Purpose: The Unbeatable Strategy of Loving Customers by Fred Reichheld.
The Net Promoter System separates detractors from promoters. A score is determined by subtracting the percentage of customers who are detractors from the percentage who are promoters. What is generated is a score between -100 and 100. This is referred to as the Net Promoter Score (also referred to as NPS).
Net Promoter Score (NPS) is a measure used to gauge customer loyalty, satisfaction, and enthusiasm with a company that’s calculated by asking customers one question: “On a scale from 0 to 10, how likely are you to recommend this product/company to a friend or colleague?” Aggregate NPS scores help businesses improve upon service, customer support, delivery, etc. for increased customer loyalty.
To measure employee experience, or let’s say the franchisee experience in a franchise system, and in any organization for that matter, the same question could be asked. These 20 words are so powerful when posed as a question and speak volumes as to the personal experience with a particular company, brand or organization. It can help businesses become better employers and improve employee retention. For the record, the Employee Net Promoter Score is referred to as eNPS.
The Net Promoter System takes things a step further because the question by itself is not enough to make the entire picture clear. So, the first question is followed up by asking the following question: What could have been done differently to make the experience better? Essentially, this question provides an opportunity for the responder to elaborate about the experience, to share their opinion and also to offer suggestions.
NPS is quite simple.
Detractors fall into the group from 0–6 and considered not likely to recommend the business. The lower the score, the more this group will badmouth the business at every opportunity to do so. A score of 0–4 is alarming while a score from 5–6 could present opportunities to create a more positive opinion and a possible increase in score. I’ve actually had someone say to me, the fact that you’ve called to ask this question moves my experience from a 6 to an 8. As this occurs, at least you know this customer won’t be posting bad reviews. I have actually found customers that move their score up are somewhat likely to return.
A Passive group is next from 7–8 and considered to be ambivalent, meaning they have mixed feelings but not clearly defined one way or the other. Typically, what they really mean is the experience was okay and met their expectations. Most likely this group would not refer the business to others and will not post negative reviews or bash the business. Again, as exemplified above, customers may increase the score just by the fact they received a call. It’s certainly worth the effort, right?
Promoters are the top group. They score the experience at 9 or 10. These customers will be proactive in singing the company’s praises. They are loyal and are great ambassadors. As well, they will also come to the company’s rescue when they see another customer bashing the business. When that happens, it’s a beautiful sight to see, especially on review sites where there’s a piling on effect. Such is the world of what I refer to as, social rubbernecking which is akin to slowing down to look at the carnage from a catastrophic wreck on the other side of the highway.
Calculating the Net Promoter Score is easy as it’s calculated by: Subtracting the percentage of detractors from the percentage of promoters. (The percentage of passives is not used in the formula.) For example, if 10% of respondents are detractors, 20% are passives and 70% are promoters, your NPS score would be 70–10 = 60.
Bain & Company research has established a strong link between organic growth and a company’s Net Promoter Score.
To establish the correlation between relative Net Promoter Scores and growth, Bain teams identified the relevant competitors in a business and measured the Net Promoter Score (NPS) of each competitor using the methodology and sampling approach in NPS Prism. These relative Net Promoter Scores were then correlated with organic growth measures, such as revenue where public data was available.
In most industries, Net Promoter Scores explained roughly 20% to 60% of the variation in organic growth rates among competitors. On average, an industry’s Net Promoter leader outgrew its competitors by a factor greater than two times.
In other words, a company’s NPS is a good indicator of its future growth. But the relationship is stronger in some industries than in others.
According to Survey Sparrow, company culture defines the personality of your brand. A typical company culture includes the work environment, values, goals, and ethics. A strong workforce culture will also support their employees, listen to them, and engage with them. If you want to build a strong culture within your company, you have to ensure your employees work to their maximum potential.
You may be surprised, but 33% of employees don’t believe their personal values align with company values. While 43% of employees are ready to leave their company because of poor culture. That’s why it’s crucial to use an eNPS score to understand what your employees think about your company. With employee net promoter score surveys, you can get a clear idea about your organizational culture.
As per a study, companies that invested in employees, work culture, and customers grew revenue by 682%. Yes, that’s the power of good company culture and an engaged workforce. It’s important to measure your employees’ expectations, gather their feedback to drive culture.
One final thought. Imagine your Net Promoter Score listed on your profit & loss statement right below the bottom line. Would that get stakeholders’ attention? You bet it would!
Can your company win by embracing a higher purpose? Yes, and this book tells you exactly how. And I highly recommend it!
In Winning on Purpose, Reichheld argues that the primary purpose of a business should be to enrich the lives of its customers. NPS does this by putting the Golden Rule — loving customers — at the heart of enduring business success. But winning on purpose isn’t easy. Reichheld explains why most NPS practitioners achieve just a small fraction of the system’s full potential and presents the newest thinking and best practices for doing NPS right. He unveils the Earned Growth Rate (EGR): the first reliable measure of what he calls “good profits.”
Delivering an engaging mix of in-depth business examples and moving personal stories, Reichheld distills and advances the essentials of NPS. Winning on Purpose is the must-listen story of the management phenomenon of our time — and your indispensable guide to making NPS the key to your own company’s success.
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The future may be a bit bumpy for some, more so for others. Knowing who to turn to and when to turn to for guidance and help is important. Having resources at your disposal is also important. So, if you hit a wall, for whatever reason, please feel free to reach out to us for assistance or even if you just need someone to talk to. Please do not hesitate. You can reach me on LinkedIn, by email to Paul@Acceler8Success.com, and by phone or text at (832) 797–9851. Learn more about Acceler8Success Group at Acceler8Success.com and also at Entrepreneurship411.com.
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