This guest blog post was written by Carl Maerz, Co-Founder and COO of Rocket Referrals. Rocket Referrals automates referrals and retention for insurance agencies with intelligent and personalized touch points leveraging the best handwriting technology on the market.
Using the Net Promoter Score to Grow Your Business
It was a 2003 article in the Harvard Business Review entitled "The One Number you Need to Grow" that changed forever how we define client loyalty. Business strategist and author, Fred Reichheld, set the framework for the Net Promoter Score (NPS) which is used by many of the world's most successful companies.
So what's so good about this score, anyway? As Fred would say, it's a no-frills solution to identifying client behavior that is predictive of future growth. Unlike the typical drawnout customer satisfaction surveys in times past, the NPS is laser focused on what really matters: would your clients recommend you to others?
Your clients could be satisfied with your service all day, but dog gommit, if they don't like you, they won't refer you. Indeed, research shows that there is not a solid link between client satisfaction and their actual behavior. Yet there is demonstrable evidence that links a high NPS directly to growth. Loyal clients don't only stay with you, but also include their friends and family in on the fun.
According to Reichheld, the most basic surveys (employing the right questions) allows companies to report timely data that are easy to act on. I couldn't agree more. At Rocket Referrals we have collected thousands of NPS from clients while averaging a 40-50% response rate across all companies.
As great as the NPS is about identifying "promoters" and "detractors," it doesn't make a difference if you don't actually do something with the data, right? Well, kind of. Reichheld indicates that "the path to profitable growth may lie in a company's ability to get its loyal customer to become, in effect, its marketing department."
Reichheld points out that it is important to identify who your promoters are and to take action to make them more bountiful. In my opinion, that is in line with common sense: of course we want to increase the number of clients that love us. But, how?
The answer lies in using the NPS as a vehicle to drive additional data and action from your clients. Remember that 50% response rate I mentioned before? Directly following the NPS a fair number of the respondents are primed to keep feeding you. All you need to do is ask!
The key is in the process. Have you ever been faced with a big stack of papers on your desk? Sure you have. The hesitation to begin is because you can see the long dreadful task ahead of you. Traditional satisfaction surveys with all their boring questions is kind of like this. But, if you step them along one question (one sheet) at a time, they are much more likely to continue.
How to Use the NPS
Ask your clients for one minute of their time with the NPS. Next, ask them to tell you why they answered how they did. Frame the question dynamically based on how they scored. For example, ask a detractor for specific ways you could improve. A promoter on the other hand, ask what you did right and then see if you can share their response with others.
The NPS will provide you will useful information itself, but it is when it is used as a stepping stone to immediate action from your clients that it becomes very powerful. At Rocket Referrals we are able to gather hundreds of testimonials for our clients using this method. We also collect useful feedback from detractors which provides actionable feedback to drive client retention.
But it doesn't stop here. Assuming your clients rate you highly on the NPS and provide you with a positive testimonial, the door is wide open to ask for just a little bit more. Immediately following the testimonial is your chance to ask for recommendations on social media. I call this the "put your money where your mouth is" stage.
Finally, for those of your clients that have given you raving testimonials, you know who to ask down the road for reviews on thirdparty websites. As you can see, the NPS is like the first date in a long relationship with your clients. Ask the right question and take the right followup steps, and start to realize that growth Reichheld keeps raving about.
The NPS Process: NPS > Followup Question > Social Media Recommendation > Reviews
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