Have you every been asked that single question, “How likely are you to recommend us to a friend or colleague?” For almost all of us the answer is yes. You answer by choosing 1 for “not likely at all” or 10 for “very likely,” or some number in between if you aren’t that polarized by your experience. Well what do they do with that number? What system is it that asks this question? It’s the NPS system. And I’ll tell you exactly what’s done with that number.
The Net Promoter Score (NPS) system is a way to find out how many more of your clients are spreading good cheer about you than those that are spreading bad news about you. Of course you would hope that you have a higher percentage of people that like you and would recommend you than the percentage of people that tell others to avoid you like the plague. The NPS system categorizes each person that answers that question into one of three groups: detractors, passives, and promoters. As you might have guessed, a low score (typically 0-6) means you are a detractor. A middle score (typically 7-8) means you are a passive. Finally, a high score (typically 9-10) means you are a promoter. I don’t want to go too far down the NPS rabbit-hole, but after running a simple math equation the NPS system spits out a score, like a 20, for example. A score of 20 means that you have 20% more promoters than detractors. So a score above zero is of course desirable, but a high score is even better.
It is nice to know the percentage of net promoters you have, but what’s next? The NPS system doesn’t just stop there. Next you begin the never-ending quest to turn all of your detractors and yes, even your passives, into promoters as well. Why turn everyone into a promoter? It’s simple. It’ll be the best way to grow your revenue and grow your company. Here is why:
Higher Retention Rates – Detractors generally defect at higher rates than promoters. This means if you can turn a client into a promoter, they’ll stick around longer.
Higher Margins – Promoters are usually less price-sensitive than detractors because they believe they are getting good value overall from your company. Think about your average Apple fan: Do they care how much more money a MacBook costs than a Windows Laptop? No. They’ll gladly pay the high price.
Higher Annual Spend – Promoters buy more, and more often than detractors do. Your same Apple fan doesn’t just own a MacBook, but has an iPhone, an iPad, and if it was possible they would have an iVacuum as well.
Greater Cost Efficiencies – Detractors complain more frequently and consume more service resources from your company. Promoters reduce customer acquisition cost by staying on longer and helping to generate other possible referrals.
Greater Word of Mouth – 80 to 90% of your referrals will come from your promoters. They are the cheapest marketing and sales teams because they are not on payroll, and they are the most effective. But you have to earn them.
The most compelling result is that in a given industry, the company that has the highest percentage of promoters will outgrow the other companies in the industry at least two times as fast. It is paramount to know your detractors and your passives, and to know why they aren’t promoters, and to do what needs to be done to convert them. It just so happens as well that they usually know a lot about what your company can and should do anyway to be better.
If you don’t have a system to track and understand your detractors and passives, check out the NPS system here. Ask your clients that simple question and close loop with them to find out why they scored you the way they did and then act on their feedback. This is the way to promote the detractors.