November 01, 2015

Net Promoter Scoring: A New Gauge on Company Performance

Kay Cruse
Vice President of Customer Experience
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Is Net Promoter Scoring (NPS) the latest fad in capturing the attention of executives and business owners? Or, is it a transparent barometer of a customer’s overall experience with your company?

Done correctly, NPS is a true gauge for experience and performance, but importantly, it’s also a position from which to judge the success of commercial, marketing, and operational initiatives.

Here’s what we’ve observed in more than 10 years of NPS tracking in the business-to-business world. These elements apply universally to private companies, equity portfolio companies, and publically traded brands:

  1. Companies with high NPS tend to be the fastest growing in their industry—and usually among the most profitable.
  2. Organizations with high NPS tend to be premium-priced leaders in their industry—providing greater “price/value” vs. the lowest-priced player.
  3. Businesses with low NPS tend to display serious failings in the perception of their customer—sometimes even to the point of arrogance.
  4. Companies with underperforming NPS compared to others in their industry often suffer business “churn”—a virtual revolving door of multiple lost accounts, poor employee engagement, and turnover.
  5. Businesses that connect company-wide performance with scores see the greatest and fastest increase in their NPS ratings—in some cases as much as a 20- to 30-point improvement in 18 months or less. Key account wins are stronger, and large customers gain even more momentum. A rising NPS creates solid market growth and share of wallet advances.

Exceptional NPS consulting calculates more than a score: it identifies areas where improvements can be made to elevate results.

If companies tell us they are underwhelmed by NPS, it’s generally because they have received just a score—not a solution. Scores alone create a vacuum. No one knows exactly what the result means, except that the number “goes up or down.”

The true value of an NPS exercise is in discovering the “why”—why did you give Company X that particular score? Then, supplement that insight with a range of additional deep dives to deliver more than a score: collectively, your customers identify a prescriptive approach of how to improve the business in general.

Nothing substitutes a solid action plan.

Even if the score is a dismal negative value, the positive is that you have established a starting point.

  1. Share the results with your employees, and let them know there will be teams formed to address both the good and the not-so-good news received from customers.
  2. Target an improved score that’s both a challenge and a commitment to change.
  3. Share key results with customers, and emphasize that you will take action to become a more valuable partner in the future. If key accounts are in question, build an individual action plan for each customer account.
  4. Structure a plan for action and accountability—prioritize the most valuable recommendations that will have the greatest impact in strengthening your customer relationships.
  5. Identify the short-term quick fixes so that everyone can begin to see improvements. Determine the longer-term issues that will require additional personnel resources and financial commitment and decide how quickly the return on investment can be. How will you know? Your customers have communicated what will have the most influence on their purchasing power. Use that knowledge to calculate a timeline.
  6. Measure again, but take your time. Don’t rush results. If you’ve calibrated steps 1 through 4 properly, you’ll see a change in both internal culture and customer perception in a 10- to 14-month time frame.

Last, but not least: celebrate. When the score begins to rise toward achieving your target goal, celebrate with all your stakeholders. Elevating an NPS requires concentration, effort, and commitment. Celebrate a job well done.

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