Transform An Unhappy Customer Into Your Strongest Promoter: Why NPS Works
Every organization has customers that are unhappy. This is the first blog in a series of two in which I am going to explain how to transform them into brand loyalists. Efficiently and effectively!
Fred Reichheld, through his concept of NPS® (Net Promoter Score), calls them Detractors. Net Promoter, Net Promoter System, NPS, and Net Promoter Score are trademarks and registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.
Every CEO gets letters, phone calls, and emails from detractors, some with horrific stories about what has made them so upset with the company. Every CEO cares about their customers and, after reading the comments, feels obliged to do something about it. No CEO can afford not knowing how many detractors with similar complaints are out there. Detractors bad mouth your company and go out of their way to tell everybody not to do business with you.
So how do you distinguish one complaint that reflects a serious deficiency in your process from another complaint that happens only sporadically, when you have no way of measuring or quantifying the difference? Although you should respond to every complaint with an apology and sincere service recovery attempt, you can’t afford to turn every complaint into a process improvement initiative. You need some way to distinguish the vital few process problems from the insignificant many when it comes to building a process improvement strategy.
For that you need to approach customer complaints strategically and the NPS concept is by far the best approach I have experienced to date. At my previous company Sleep Number, the company that makes the Sleep Number bed, we transformed unhappy customers into evangelists of the brand and we did it by using NPS.
The power of NPS comes from its simplicity and the ability to very quickly determine an initial process improvement strategy. Basically you can get started with two questions and a statistically relevant sample size of customers to survey.
The first question is “On a scale from 0-10, where 0 means very unlikely and 10 means very likely, how likely is it that you would recommend our company to a friend or colleague?” Respondents are categorized as “Detractors” (scale 0-6); “Passives” (scale 7-8) and “Promoters” (scale 9-10).
The Net Promoter Score is calculated as follows: NPS = [% Promoters] – [% Detractors]. The single most important reason why NPS is so powerful in transforming unhappy customers into promoters is because detractors are deducted in the score. If all your customers are detractors the score would be -100, and if all customers are promoters the score would be +100. In order to improve the score you need to figure out what process problems are causing detractors and fix them.
The goal isn’t merely to improve your NPS score. This is where the second question comes into play. By asking “What is the primary reason for your score,” you will collect much needed “verbatim” of why customers are detractors. Instead of improving the score for the score’s sake, reading the verbatim will make you realize you are making process improvements for the greater benefit of your customers and your bottom line.
Next week I will share an example of how we applied this approach successfully at Sleep Number and with what result.
The Rendement Group is available to ensure your NPS efforts are successful. Contact us for an initial, free-of-charge consultation.Get a Free Consultation