As I sit with leaders from Dell, Best Buy, McDonald’s, Xerox, and others this week at the Satmetrix Net Promoter Certification and Conference, one thing is certain- customer loyalty and retention are critical to a successful business, no matter what industry. A customer loyalty strategy (if you don’t already have one) should be at the top of your to-do list for 2014. I’ll walk you through some starting points if you’re overwhelmed on where to begin.

There are two dimensions of loyalty: head and heart. If you think about an exceptional experience you’ve had as a consumer recently, odds are the business connected with your head and heart. Customers become “promoters” when you’ve keyed in on what’s important to them. More than likely, the experience you had was a result of a great product or service (head) AND the way they made you feel (heart).

In order to determine how our customers feel about us, we must first ask.

Step #1: Put a process in place to survey your clients if you’re not already doing so. These surveys can be “relationship” surveys or “transactional” surveys. Generally, a relationship survey is meant to collect data regarding your relationship with the client (how they feel about you overall). Transactional surveys are triggered on a touch point. These touch points could include the sale or closing a customer service ticket. For this article’s purpose, I’ll focus on the relationship survey. Start with the basics; put a relationship survey in place if you haven’t already.

In a relationship survey, we not only want to understand their overall satisfaction but also measure their loyalty. Research has shown that up to 80% of customers that leave have previously stated they were “satisfied” in a customer survey. This is where the Net Promoter® Score (NPS) comes into play. The Net Promoter ® Score Methodology (as defined by Satmetrix) is an established methodology used globally by a wide range of users and organizations. It suggests that we must ask our customers “How likely are you to recommend ‘Company X’ to a friend, peer, or colleague?” An 11-point scale (0-10) should be utilized for responses. As a rule, surveys should be short and sweet. Studies differ, but it is common to see recommendations of 7 questions or less. Even if you’re only going to ask 1 question, make sure it is the “likely to recommend” (LTR) question.

As a final recommendation for “Step 1”, do not ask any questions that you do not plan to do anything about. Consider that the golden rule for surveys.

Step #2: Gather the results. Group your customer responses in three categories. Category 1: Customers that selected 9 or 10 on the LTR question. Category 2: Customers that rated 7 or 8. Category 3: Customers that rated 6 or below. In the NPS methodology, Category 1 represents your “Promoters”, Category 2 your “Passives”, and Category 3 your “Detractors”.

Step #3: Calculate your NPS. To establish your Net Promoter Score, total your number of Promoters and divide that number by total number of survey responses to the LTR question. Next, total your number of Detractors and divide that number by total number of survey responses to the LTR question. Your percentage of promoters minus your percentage of detractors is NPS.

Step #4: Determine steps to take to improve NPS. An increase in promoters means positive “word of mouth”, leading to referrals and increased sales (leaving detractors to do the opposite). I’ll talk more about improving NPS, establishing customer loyalty, and more in upcoming blogs.

If you’d like to learn more about NPS and how to calculate, MPAY’s Marketing Team can help. Contact us today to learn more at marketing@mpay.com. Subscribe to our blog to stay in the know as we dive deeper into how the NPS Methodology can increase revenue and profits.

Amy Robertson

From her office in Roanoke, VA, Amy manages “all things marketing” for MPAY. Despite her childhood dream of becoming a teacher, she found herself in payroll software after college. Over 10 years later, she still enjoys the challenge of ever-changing technology and the occasional opportunity to draw on the whiteboard.