Use the Net Promoter Score to Increase the Value of Your Business
We’ve seen the question posed so often after completing a transaction that we know the words by heart: “How likely is it that you would recommend this company to a friend or colleague?” Unless you had a strongly positive or strongly negative experience, you’ll usually just click past this online or walk past the various happy to sad faces waiting for your judgment at airport security or in bathrooms.
Everywhere, it seems, there’s an opportunity for us to give feedback. But why does this matter for selling a business? Because you’ll be able to give a seller real data, not projections.
Origin of the Question
This question has its origin in Fred Reichheld and his book The Ultimate Question.
Fred is a loyalty expert who found the answer to this question of recommendation provided important insights on the customer experience and ultimately, loyalty. The number, which Reichheld eventually called “Net Promoter Score,” often accurately predicts how often a customer will purchase and repurchase from you and refer other clients to you.
A score of 9 or 10 means that customer is a promoter.
They love what you do and tell others about it. Now, just because someone is a 9 or a 10 doesn’t mean that they will take the time to answer in an online survey. That’s why you have to ask the question in multiple channels until you obtain an answer that can go into your CRM and/or database. When you do, you no longer have projections but hard data.
A score of 7 or 8 means a customer is “passively satisfied” or neutral.
While you might think a 7 or 8 out of 10 isn’t bad (and in other circumstances, it might be not so bad) in the Net Promoter Universe, this is a person who can either take or leave your services. It doesn’t mean that every 7 or 8 can be moved to 9 or 10, but if you aren’t even asking the question, you don’t even have the opportunity to move them up.
A score of 6 and below means that the customer is a detractor of yours.
Worse that the “passive satisfaction” of a 7 or 8, this customer tells others that he/she wasn’t happy with your work and attempts to steer others away from you.
Questions like the one at the heart of Net Promoter Score are treasures in that they give you an opportunity to have a deeper conversation with your customers. Those who are neutral or detractors are actually giving you opportunities to learn. Because you’re asking them indirectly about their experience — not “how was your experience” but rather “would you recommend us” — you are giving them permission to share what they think can be improved.
This essentially free information (free because how much does it cost you to ask a single question of a customer who has already bought from you?) can lead to great changes in your business and possibly an increase in the 9s and 10s in your customer base.
Not only has your business become more valuable with this information in the short and medium term, but in the long term a buyer can see that you’ve been actively soliciting customers for feedback and have built a culture that isn’t afraid to ask customers directly how to improve.
