While Net Promoter Score may constitute a business breakthrough in the area of customer loyalty metrics, the program ignores a key social aspect that undermines an even more important business metric.
The Ultimate Assumption
In his book The Ultimate Question, Fred Reichheld suggests reducing all customer loyalty surveys down to one question: "On a scale of 1 to 10, how likely is it that you would recommend us to your friends or colleagues?" The Net Promoter Score¹ results from a formula that contrasts the Promoters (9's and 10's) against the Detractors (0's through 6's).
Customers who answer with a 9 or 10 -- the Promoters -- are likely to remain a customer and continue buying products and services. NPS excites its advocates because initiatives that increase the ratio of Promoters to Detractors results in a higher NPS and, consequently, higher revenues. While companies such as General Electric, American Express, and Honeywell have embraced Net Promoter Score and its link to customer revenue growth, these companies are leaving millions of dollars on the table.
The problem with NPS rests in the assumption inherent with the core question itself. The question asks, "Would you recommend us?" not, "Will you recommend us?" While we would like to believe that we will find our Promoters standing on street corners singing our praises and spending all their free time in online chat rooms talking us up, the reality is they don't. Today's social conditions prevent it.
Today's global economy may give companies access to larger markets, and the Internet may make it easier for potential customers to find our companies, but these conditions do nothing to help potential customers connect with current customers. We don't live in small towns anymore, and it's unlikely that your Promoters will be raving about you to their friends at the bowling alley or the beauty salon. The only people who know that these customers gave you a score of 9 or 10 are you and them. These happy people are not talking about you, and that's costing you money.
Net Promoter Score is a loyalty solution - not a customer acquisition solution. The customer feedback acquired through NPS surveys is incredibly valuable for improving operations, for focusing R&D efforts, and for boosting sales to existing customers. When we direct company resources toward creating legions of Promoters, we are inoculating the current customer base from infection by alternative offers so these customers are less likely to defect to the competition. We increase customer loyalty, but this passive marketing does nothing to attract new customers.
If all you want to do is keep your current customers and continue to sell to them, NPS may be enough. If you want to gain new customers faster, you need something more.
Nothing Passive About Acquisition
Capturing customers from the competition requires more aggressive sales and marketing approaches. When prospective customers are content with their current supplier, they ignore passive marketing messages. These prospects require more than your claims to induce them to consider switching to your company. They want proof that you will outperform their current supplier in a meaningful and significant way. Net Promoter Score can point you to the sources of the very proof you need.
To foster new customer acquisition and grow your company, you'll need a system to proactively help the 9's and 10's spread the good news to the prospective customers who need and want to hear about it. You'll want to reach beyond the Net Promoter Score program to make your Promoters part of your sales team.
Building Upon NPS
Organizations I work with begin by re-evaluating their new customer acquisition systems to determine where prospect touch-points can be positively impacted by raving referrals. We design sales and marketing campaigns that include using Promoters to help us "wow" prospective customers.
In his book, Influence, the Power of Persuasion, Robert Cialdini documents the "wow" power of what he calls "social proof". We know that testimonials from credible sources -- like current customers -- can make it so much easier for reluctant buyers to make a purchase decision.
Next, we go to work to harvest the goodwill of NPS Promoters by capturing their positive experiences in a tangible form called proof sources. Proof sources include letters of recommendation, quotations, audio and video clips, case studies, and more. My company, Shortcuts to Results, contacts our clients' customers to request and collect these in order to have all we need to extend the Net Promoter Score program and accelerate new customer acquisition.
Now we're ready to build proof sources into the customer touch-points used in sales and marketing. Akzo Nobel, the world's largest paint company uses this approach in conquest sales that capture business from the competition, as well as to accelerate new product launches. Bill Orr, Manager, Market Communications, states "It gives us critical credibility. It helps to minimize our prospects' fear of change. It enables prospects to come to a switching decision." (Would you like to see proof? Ask me, and I'll show you the Akzo Nobel testimonial letter. It's really good.) Using Shortcuts to Results' program to augment Net Promoter Score makes it easy for the customers who would recommend you to actually do it.
The net result is accelerated sales growth and easier, less-expensive new customer acquisition than you've ever had before.
Only One Chance for a 9 or 10
The biggest mistake companies make in executing these programs is attempting to harvest proof sources using internal resources. Your organization has worked hard to cultivate those 9 and 10 Promoter customers, and you only have one chance to extract a quality testimonial from each. You want to harvest the very best testimonials you can -- a 9 or a 10 -- because you'll need the very best to impress and capture skeptical prospects.
While customer testimonials are nothing new, most are just gushy fluff that does little to support sales. Quotations that are pointed and focused and contain the six key elements that convince new customers to do business with you are rare. Although my book, Let Your Customer Sell You: 120 Tips for Getting and Using Testimonial Letters to Win More Business is a helpful primer for collecting proof sources, many organizations prefer to bring in our expertise to manage and execute the harvesting process. We do all the heavy lifting and make harvesting pleasant and simple for you and your customers.
The results we deliver include more focused and effective proof sources, better customer relations, and more effective use of your company's resources. Your customers will actually think even better about your company when we get done harvesting letters and other proof sources from them!
The Ultimate Answer
Adopting Net Promoter Score as the basis for your customer loyalty metrics can simplify your customer retention efforts and boost sales to these existing customers. If you're asking for a better way to develop important new business, the answer is to recruit your Promoters for your sales team by integrating proof sources into the touch-points of your marketing and sales systems. Should you decide to make that happen, remember that NPS leaves out one important fact:
Just because customers would recommend you doesn't mean they do.
Build upon your Net Promoter Score program to accelerate your new customer acquisition rate and add millions to your top-line revenue. We'll be happy to show you how.
Contact Paul Johnson for more information in Atlanta at 770-271-7719, or contact me here.
© 2007 Paul Johnson. All rights reserved. This article is not available for reprint without written permission specific to this article.
¹ "Net Promoter" is a registered trademark of Satmetix Systems, Inc., Bain & Company, and Fred Reichheld.
You can learn more about NPS by participating in the forum at the Net Promoter Community.