By Wendy Eichenbaum
According to Gartner, 80% of a company’s future revenue will come from 20% of its existing customers. Who in your customer base is part of that 20%? The answer in part comes from asking your customers one key question: On a scale of 0-10, how likely are they to recommend your product?
Your future customers will answer with a 9 or 10. These are your Promoters. They repeatedly use your product, and enthusiastically recommend your product to others. Their word of mouth fuels your growth.
Passive customers are the people who answer 7-8. They are satisfied, but have little loyalty, and won’t take the time to recommend you. They’ll be swayed toward your competitors by a new feature or price.
There is a chasm between Passive and Promoter customers. Both groups are likely to answer that they’d use your product again. But when you ask them, “Would you recommend us?,” you’re changing the stakes. Now you’re asking your customers to put their own reputations on the line with their friends and colleagues. You’ll see a big gap between 8 & 9.
At the bottom are the Detractors, your customers who answer from 0-6. They are unhappy, and can damage your brand through negative word of mouth. In fact, they may look for opportunities to make disparaging statements about your product or company. According to Corlea Group’s Jack Kelly, it takes 9 positive comments to overcome 1 negative comment.
As with any rating question, it’s important to follow up with “why.” If you don’t understand why your customers gave you their scores, you cannot replicate the good experiences or improve the poor experiences. This is especially important with Detractors, where the number range is wide. There is a big difference between a 0 and a 6.
You can take these individual ratings a step farther by calculating your overall Net Promoter Score, or NPS. The NPS is a customer loyalty metric that measures how likely your customers will recommend your product. To calculate the score, subtract the % of Detractors from the % of Promoters. This score can range from a low of
-100 (if every customer is a Detractor) to a high of +100 (if every customer is a Promoter).
Net Promoter Score = % of Promoters – % of Detractors
Any score of +50 is considered excellent. Companies with high scores include CX leaders such as Costco (79), Apple (89), USAA Auto Insurance (76), Amazon (61), and the Ritz Carlton Hotel (78). Whereas companies with a poor reputation for CX have low scores, including Comcast (-9), Citibank (-8), Dell (24), and Sears (21). According to a Temkin Group report on NPS, CX leaders tend to have NPS scores that are 18 points higher than CX laggards.
Apple has a very high NPS of 89. One of the reasons is their follow up with Detractors. Apple emails its customers immediately after they make a purchase. The email asks customers to rate their satisfaction level and likelihood to recommend the brand. If a customer gives a low rating, Apple follows up within 24 hours. Apple also uses the feedback to improve its CX.
CX leaders understand the importance of NPS. Bill Macaitis, CMO of Slack, said, “NPS is a leading indicator of future growth. The larger the number of advocates for the product, the lower the customer acquisition costs for the company, and the more effective customer success team will be.”
The key to improving your NPS and your CX is to reach out to all of your customers through surveys, focus groups, and contextual inquiries . Detractors can offer great ideas on how you can meet their needs. And in making those changes, you can turn them into Promoters.
Don’t rest on your laurels with your Promoters. You want to understand why they are so passionate about you. This way you can replicate, and even improve upon, what you’re doing well.
But remember that context is important. Make sure you ask the question at the same time in the buying cycle, whether that’s immediately after the sale or a week or month later. Customers will have different experiences and memories as time passes. If you are curious about several moments during the buying cycle, then survey your customers at each of those moments.
Finally, one number isn’t enough. You still need to understand your customer’s entire journey through your company and its products, and tune each step. But NPS is a great way to measure overall CX performance and predict future business results.
About the Author
Wendy Eichenbaum has been a UX professional since the early-1990’s. She began her career as a technical writer. She then earned a Master of Arts in Professional Writing at Carnegie Mellon University, studying both writing and UI design. Over the years, she has worked across verticals, from start-ups to multi-national firms, in many areas of UX including research & strategy, Information Architecture, usability testing, and focus groups. She started her own UX consulting firm in 2008, Ucentric Design. And she is an adjunct professor at Cal State University, Fullerton. There she teaches a class that she created, User-Centered Design for Web and Mobile Interfaces.
Read previous columns in ‘The Fleet CX Toolkit’ archives.