In any business everyone is looking for loyal customers. However 63% of marketers consider customer acquisition to be the most important advertising goal. Successful companies know that engaging their loyal customers is critical to their bottom line, the 20% drives 80% of the total revenue. Statistics have shown the following*:

• Over a loyal customer lifetime, they SPEND 10X MORE
• New customers are more price conscious, the probability of getting a sale from a brand new customer is 5-20%
• Loyalty program customers are 70% more likely to spread the word about your business
• Loyal customers have a greater lifetime value: they spend more over time and generate more revenue

 *That doesn’t mean you should not focus on acquiring new customers * Source figures: www.velti.com

“Focus on your loyal customers to make sure you aren’t leaving extra revenue on the table”

According to customer intelligence consulting firm Walker; By 2020, customer experience will overtake price and product as the key brand differentiator. The customer of 2020 will be more informed and in charge of the experience they receive. They will expect companies to know their individual needs and personalize the experience. Every business should evaluate its customer experience and aim to improve.

How can you evaluate the customer experience?

A management tool – survey to your customers/clients – that can be used to gauge the loyalty of a company’s customer relationship is the: Net Promoter or Net Promoter Score (NPS). NPS is a highly valuable piece of information as it allows a company to understand what respondents think about an entire value proposition, not just their relationship with one particular business. Understanding a customer’s experience and relationship means you know what is needed for continuous improvement, whereas competitive benchmark scores will help inform different types of business decisions.

Customer Experience: What We Know

• Revealing statistics show that improving customer experience is worth the investment. In 2013, 62% of global consumers switched service providers due to poor customer service experiences, up 4% from the previous year (Accenture).
• Global management consulting firm McKinsey reports 70% of buying experiences are based on how the customer feels they are being treated.
• In support of positive customer experience, Murphy & Murphy, in their book Leading on the Edge of Chaos, report that reducing your customer defection rate by 5% can increase your profitability by 25 to 125%. Understanding that negative customer experience causes loss and positive customer experience produces gain is fundamental.
• In enterprises of all sizes, Walker points out “…companies must view the customer experience as a strategic, C-level initiative. And, in the future, the responsibility of a ‘chief customer champion’ will become more common, serving one purpose – to create an unrelenting focus on the customer throughout the enterprise.”

“Customer experience is a priority. “If there are no customers, there is no company.”

What is a good Net Promoter Score:

A high Net Promoter Score indicates that a company has more promoters than detractors. A Net Promoter Score can range from:

• -100 where everyone is a detractor to
• +100 where everyone is a promoter

The most important, main question regarding the NPS is:

‘How likely would you recommend [the company/website] to a friend or colleague?’

In addition, for a more detailed analysis you may also ask ‘How likely are you to buy again from [the company/website]?’.

A customer/client is also able to leave comments in the surveys sent to them. This is what allows a company to use the VOC (Voice of Customer) to ensure that company is meeting the expectations. After analyzing the answers from your surveys, you will identify three types of groups: Promoters, Passives, Detractors.

Promotors: (Score: 9-10) are happy customers, loyal enthusiasts who will keep buying and refer others. It’s a known fact there are less costs involved in managing a long term relationship with loyal customers than in the process of acquiring new customers.

Passives: (Score: 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings. Neutral. Transform passives into promoters for a better NPS. Passives can also become detractors if not treated properly.

Detractors: (Score: 0-6) are unhappy customers who can damage your brand through negative word of mouth. The best way to go with detractors is to investigate why they had an unpleased experience and why they will not recommend you.

NPS score= % of Promotors – % of Detractors

Please keep in mind that there needs to be a representative ad random selection in place, where besides the NPS score, the response rate an important value is.

Example: Survey have been sent to 1,500 customers/clients and 1,000 filled in the survey. The Response Rate is in this case 66,66% (and that’s possible, when I worked at Dell I have reached even higher figures:)) In below example the NPS Score is 50!

Many companies, some entire industries, in fact, have negative Net Promoter Scores. This means that they are creating more detractors than promoter’s day in and day out. In general you can say, if you have an NPS score of over 30 you’re doing fine, an NPS of +50 is excellent:)

CONCLUSION:

NPS is a nice tool to measure the Net Promoter Score, but still it’s an instrument. In some countries it’s not likely to give a 10 nor 9. In The Netherlands for example an 8 means very well done but within NPS it means you are a passive respondent, but it actually could mean they are a promotor. Education is key! Customers need to understand correctly what the numbers exactly mean. Besides measuring as a business, you need to keep a good look on your front office and client issues. You can and must always improve and develop. Listen to complaints is something you should embrace and the best thing you as a company can achieve is turning a detractor into a promotor and keeping your promotors, by listing to them, show your emotions, fix it and keep your promises. As easy as that.

That’s why the most efficient way to grow and get more revenue for your business is to implement modern digital loyalty programs. I guess you can understand now, why I love my job:)

Love, Marietta