Do Your Customers Promote You?

Few would argue that satisfying customers is a “must” if a company hopes to grow and prosper. Most companies even have some established means for measuring how satisfied customers are with their products and/or services, and they take these measures seriously. Too often, however, these internally developed measures do not provide a true picture of how satisfied customers really are. In fact, I would argue that many of the measures used by companies tend to skew results to be artificially favorable. This can lead to customer service complacency based on a mentality of “we haven’t heard otherwise, so things must be OK.”

In his best-selling books “The Ultimate Question: Driving Good Profits and True Growth” (Harvard Business School Press 2006) and “The Ultimate Question 2.0” (revised and expanded in 2011), Fred Reichheld argues that customer satisfaction is best measured by one simple question, the ultimate question for any business: “Would you recommend this business to a friend?” Mr. Reichheld then uses responses to this question to introduce the concept of the Net Promoter Score, which he believes to be the only important measure of customer experience with a company. This rather strict interpretation of customer satisfaction uses a scale of zero to 10, with a score of “0” representing someone extremely unlikely to recommend a business, brand, product or service, and a score of “10” representing someone extremely likely to offer a recommendation. Respondents to this Ultimate Question fall into three categories:

• Promoters (score of 9-10) are loyal enthusiasts who will keep buying and refer others.

• Passives (score of 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.

• Detractors (score of 0-6) are unhappy customers who can damage a company through negative comments to other potential customers.

Subtracting the percentage of Detractors from the percentage of Promoters generates the Net Promoter Score, which can range from a low of -100 (if every customer is a Detractor) to a high of 100 (if every customer is a Promoter). In a more likely scenario, if 60 percent of your customers are Promoters and 10 percent are Detractors, your Net Promoter Score is 50, which is not high enough for your company to be considered truly customer-focused. It also indicates that 30 percent of your customers are conflicted (passive), or possibly even uncaring, about your business.

What makes this measure interesting is its rather harsh categorization of respondents. Many companies might think that a response to the Ultimate Question of “8,” and possibly even “7,” is pretty good, but Mr. Reichheld views those scores as simply neutral. Likewise, 64 percent of the possible responses (0 through 6) are categorized as unhappy customers who can do serious damage to your business without you even realizing it. This can be a wake-up call to many who have traditionally viewed middle-of-the-road responses such as 4, 5 and 6 as neutral and nothing to be too concerned about. 

They say the first step to bringing about change is recognizing the need for it. If we continue to believe our customers’ satisfaction with our business is better than it really is, we will not do the things that are needed to raise that level of customer satisfaction. Whether you use Mr. Reichheld’s Ultimate Question and Net Promoter Score approach, or find something comparably “tough” to gage customer perceptions of your business, it is important to be open-minded when reviewing the results. If you can keep an open mind, perhaps you will find that your 95 percent on-time delivery performance, of which you are so proud, is viewed as “just OK” by your customers. You may also find that your two- to three-week lead time, which seems to be the norm for your industry, is preventing you from getting any business from prospective customers or more business from your existing customers. Furthermore, you may learn that shipping the wrong products (or the right products in the wrong quantities) to your customers has a greater impact on future buying decisions than you ever thought possible. In short, if you pay attention to what your customers are saying, you may find that your perception of what constitutes good customer service is out of line with your customers’ expectations. The sooner you understand this, the sooner you can do what is necessary to minimize these differences.

If knowledge is power, then gaining the right knowledge about your customer service performance is the first step toward making the improvements needed to encourage your customers to promote you.