Satisfied customers may not be enough

Many business leaders have the misperception that “if we satisfy our customers, the business will take care of itself.” They believe that a satisfied customer will tell their family and friends.

Wrong. Merely meeting customer expectations won’t translate into viral nirvana.

It’s not as black and white as “satisfied” or “unsatisfied.” The conventional thinking is, meet the customer’s expectations and they will deem their experience as positive.

They usually don’t; after all, it is “expected.” Consequently, their impression is just neutral, and won’t amount to appreciable referrals.

Of course, if you under deliver and don’t meet a customer’s expectations, their experience will definitely be perceived as negative. It depends on which research statistics you believe, but our online director preaches, “A happy customer will tell three people, an unhappy customer will tell Google.”

If you want your customer to have a positive impression, their experience needs to far exceed their expectations. When that happens, they will become a “brand advocate.”

So, how do you know if you are creating brand advocates or brand busters?

A popular research tool for measuring customer loyalty, and whether your customers have a positive, neutral or negative feeling about your brand, is the net promoter score.

Developed by Fred Reichheld in 2003, the net promoter score is based on the theory that every company’s customers can be segmented into three classifications: promoters, passives, and detractors.

By asking customers the specific question “How likely is it that you would recommend [company name] to a friend or colleague?” a company will have a much better understanding of how they are perceived.

Customers respond on a zero to 10 rating scale (10 being high); based on their rating they are classified into one of three categories:

Promoters (who rate a 9 or 10) are loyal, will keep patronizing the company and refer others, which should lead to growth.

Passives (who rate a 7 or 8) are basically satisfied but won’t sing the company’s praises and are vulnerable to switching to brands.

Detractors (who rate between zero and 6) are unhappy and may share with the world about their “perceived” negative experience.

The net promoter score calculation involves taking the percentage of customers who are promoters and subtract the percentage who are detractors (the passives have no bearing on the calculation). The difference is your net promoter score presented as a number not a percentage. Example: promoters 75% – detractors 25% = net promoter score of 50.

So what is a good net promoter score? Scores can range from +100 to -100. What qualifies as a good score varies by industry; but the rule of thumb is that a score above +50 is very good and an indication of future growth.

However, your net promoter score, by itself, is meaningless unless you understand the reasons behind the ratings. When we do net promoter score research for our clients, we always follow up the rating response with the question “why.” While you can’t respond to a number, you can respond to the experience behind the number, and that is where you can leverage the net promoter score — if you take action.

Several Fortune 500 Companies measure their net promoter score on regular intervals to determine if their actions made a difference in their scores.

Comparing multiple scores over time is not only a good report card, it can be predictive of growth.

The takeaways: measure your customer loyalty; and, if you far exceed their expectations your business will take of itself.

Andrew Ballard is the president of Marketing Solutions, a local agency specializing in growth strategies. For more information, call 425-337-1100 or go to www.mktg-solutions.com.