How to Use Net Promoter Score to Grow Your Small Business

Having an optimal net promoter score (NPS) is great for gauging how your small business is going to grow in the coming months and years. Knowing your NPS score is also essential when it comes time to consider securing funding from banks and other investors to grow your business. After all, if the overall consensus is that your business is highly recommended by past and current customers, it’s definitely poised for growth on some level.

Net Promoter Score

How NPS Works

This is likely going to be one of the easiest business principles you’ll ever learn. NPS is nothing more than the results of a very pointed question given to your customers: “On a scale of 0 – 10, how likely are you to recommend ‘ABC Inc’ to others?” The results give a pretty clear picture of how the business is treating its customers, and how well you’re meeting key metrics such as the business’ customer lifetime value (CLV).

The results of a customer satisfaction ranking poll tells a business where their average customer falls into one of three categories:

  1. Promoters (9 or 10): Promoters are your most satisfied customers and are highly likely to recommend your company or product.
  2. Passives (7 or 8): Passives are at least somewhat satisfied, yet likely unenthusiastic customers, probably looking for better price or value.
  3. Detractors (0 to 6): These people are the least likely to recommend your company and its products, and they aren’t shy about telling you why if you’ll listen.

NPS is ranked from -100 to 100. An average recommendation rating of 6 or lower would put your business into the -100 range, whereas an average of 9 or 10 would give the optimal NPS of around 100. The number of passives definitely needs to be accounted for, but the average of promoters versus detractors are what can really hurt your score.

The law of averages working as it does, even several promoters and a few detractors will set your NPS lower than it could/should be. Those detractors, and to a lesser degree, passives, point to holes in your customer service: the loyalty your product or service instills, and the overall value customers feel they’re getting when purchasing from you.

The Cost of a Poor NPS

Promoters are kept happy in large part by you keeping your product or service consistent and offering loyalty incentives now and again. They’re also up to 6 times more likely to forgive the occasional blunder on your part. Not to mention they’re a virtual cash machine for the business as they offer free marketing via referrals.

Passives can usually be swayed by discounts, freebies and other value-added incentives. Price is most often the determining factor if they can be swayed, and they’ll deal with minor adversity if the price is right.

Detractors cost your business the most money because:

A. You’ve already spent marketing dollars to gain their business,

B. It will cost you more money to get that business back – very likely much more than they cost you in the first place,

C. They’ve jumped ship already for a reason and will be the biggest source of negative marketing for your brand.

Net Promoter Score (NPS)

How to Use NPS to Grow Your Small Business

The game plan is simple on paper and likely much harder to implement than it sounds, if you don’t already have a solid system in place for obtaining and acting upon feedback to maximize the quality of your service:

1. Gather as much feedback as possible

First and foremost, NPS needs to be constantly gathered from customers. Whether brick-and-mortar or online, you need to be reaching out to customers and welcoming their feedback. Offer a small discount on their next purchase, or a contest entry with a prize attached in exchange for a minute or two of their time.

2. Everyone in the company has to be on board

Everyone, including upper management, needs to be fully supportive of taking whatever actions are necessary to keep promoters happy, fix the holes passives are finding, and doing whatever it takes to at least make detractors feel like you did everything you could to resolve their problem and gain back their loyalty (not all detractors can be turned around, no matter the effort you put out.)

3. Support staff need to be empowered, not stifled

With company-wide support, employees at all service levels need to be empowered to make real-time decisions that can sway a customer’s loyalty back to your company (ie., not having to send requests up the chain of command to issue refunds, replacements, re-dos, etc.)

While they are a large corporation, just take a look at Walmart’s return policies or feedback channels. Customers rarely have to worry about having a bad experience when they’re unhappy with a purchase or want to voice their opinion. Small business often forget how hard their corporate competitors work to instill loyalty in their customers, feeling they’re “different” because of budget or the niche markets they service.

4. NPS must be analyzed, repaired, and replicated to maximize growth

Last, data needs to be analyzed to be of any use to you and your staff. Follow up your request for a 0 – 10 score with a comment box where customers can voice their concerns and explain their happiness or dismay – don’t limit the characters available! If they want to write you a novel, that only increases your chance of turning negatives into positives, and by learning how exactly to offer more positive experiences in the future.

  • Promoters can tell you what they like about you compared to the competition – they can even tell you how they turned from a detractor or passive into one of your most loyal customers.
  • Passives will tell you how you can push them over the edge to gain both their and their network’s undying loyalty.
  • Detractors will usually offer the most constructive feedback if you’re willing to listen and act on their feedback. Focus on identifying the “why” behind each customer’s feedback and act accordingly to maintain or improve on the data given.

Customer loyalty

Takeaway

By actively seeking feedback and knowing where you are in terms of customer loyalty, virtually all barriers to small business expansion can be eliminated. Never forget that your customers are your business. Without them, keeping the doors open is next to impossible – forget about growth!

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