Guest Post by: Ronald de Jong
The Net Promoter Score* (NPS) is used by multinationals like Apple, PPG, eBay, Vopak, GE, American Express, Harley Davidson and many others. Small businesses (SME) and individual entrepreneurs seem to be reluctant and stay behind in using this methodology. But experience shows that the SMEs who have implemented this methodology find it to be a great investment driving business growth and profit. What are the reasons for this reluctance?
As a reminder: The NPS is % Promoters – % Detractors (where a higher score predicts for better top-line growth). Promoters are customers who are highly likely to recommend you and Detractors are those who are disinclined or indifferent. The score can predict whether customer loyalty will encourage your business to grow or not. It is giving companies greater insight into their customer relationship.
Still, SME’s hesitate to use it. I have summed up some excuses and keys to convince companies otherwise:
Hesitation 1: Customer Base
It is important to measure the NPS periodically – approx. every 3 months – and the scores carefully monitored to be able to judge the success of loyalty program efforts and make necessary course corrections. To obtain a viable NPS you need to collect enough data – ideally 33% – of a representative customer base. This gives a risk of over-researching and creating irritation.
Key: SME can decide to focus the survey on specific parts of the customer base – like recent customers or a certain segment – or adjust the frequency and use this as their tracking metric.
Hesitation 2: Commitment
The success of the NPS methodology depends on a long-term commitment of management and employees. Measurable benefits will only be visible after a year or two; companies need to be ready to make a long-term engagement.
Key: Actively involve your complete team from the start of the project. Make certain the goal and benefits are clear to all employees as this will speed up the buy-in.
Hesitation 3: Costs involved
The NPS methodology can be done by yourselves or you can bring in help from an outside consultant. Qualified help from the beginning with someone that has experience in developing and implementing the NPS and a track record of delivering results will give more certainty about the success of the implementation. On the other hand, doing it yourself will decrease your investment.
Key: Both options can work and the choice usually depends on company’s specific circumstances and resources. Stay vigilant for the quality-costs balance.
Hesitation 4: Swift Management support
To convert a detractor to a loyal promoter demands a prompt and organization-wide action after asking feedback. It also requires a constant open dialog with the dedicated and competent staff that is available to handle the feedback in a proper and timely way. These customer facing-employees need to be well trained on their role in improving customer loyalty. This training is usually situation specific, involves often changes in behavior and therefore requires more 1:1 management time.
Key: Agility of smaller companies allows them to address issues and capitalize on opportunities very quickly. Their hierarchy is limited, the management is working closer with the employees which implies short and efficient communication lines.
The NPS methodology may not be appropriate for every small business, for example if you have only a handful of customers and know them well, there’s no need to set up a new project. But for business owners who want to keep in closer touch with their customers, this methodology can provide valuable feedback that can be used to turn an unhappy client into one who will sing your praises.
As to my opinion, the success of the methodology will ultimately rest with the customer facing-employees. The employees’ behavior and attitude will have a huge impact on the NPS. To obtain more insight on these aspects of these employees I preach for an additional question for your customers: “If you have or would have your own company would you hire the person you have been in contact with?” This will give you feedback on which persons in your company are making the difference and can deliver the experience on the moments of truth.
Ronald de Jong, Ripples Business Development, The Netherlands
*Net Promoter and NPS Net Promoter Score are registered trademarks of Satmetrix Systems Inc., Bain & Company and Fred Reic