Assessing Customer LoyaltyIt is particularly effective to determine your organization’s net promoter score (NPS), as it provides a means to establish, very accurately, the levels of loyalty in your customer base and the success, or otherwise, of the services your company is providing.
NPS is a Harvard Business School concept also known as 'Ask One Question', and provides accurate evaluations of customer loyalty and attitudes towards a company.
The question: "How likely is it that you would recommend us to a friend?" has proved to be the best predictor of customer loyalty across the vast majority of businesses. The NPS is the percentage of customers who identify themselves as promoters of the company, minus the percentage whose response indicates that they are detractors.
Promoters are assets, while detractors are liabilities. By subtracting the liabilities from the assets, you are left with the net worth of the customer base or the company's NPS, and this is regarded by Harvard as the single most reliable indicator of a company's ability to grow.
Customers can be divided into three categories:
- The promoters - loyal enthusiasts who buy from the company and urge others to do the same.
- The passives - satisfied but unenthusiastic customers who could easily be lured by the opposition.
- The detractors - unhappy customers who feel trapped in a bad relationship.
Striata has developed a survey and reporting tool used over email and text message (SMS) , which helps monitor and assess customer loyalty based on NPS. This tool has been successfully deployed on behalf of companies in the financial services and other business sectors. To achieve an accurate measurement, the customer being polled must have had a recent interaction with the company, such as buying a product or interacting with a service. The poll should preferably be conducted less than seven days after that interaction. Customers are then also generally well-inclined to respond to the message.
An in-depth reporting system has been built, allowing companies to view the results from customers immediately. The details of customers responding with low scores (detractors) are emailed to the company's call centre for immediate follow-up. A swift response often means that any issue or problem is resolved quickly, the customer is not lost and the company gets a second chance.
Proper evaluation of the results gives the company an accurate view of how effective their customer service and relationship management initiatives are proving in practice, providing feedback, so that corrective actions can be devised and implemented.
These NPS surveys are a valuable source of information from which actual levels of customer liaison, sales, service and other customer interface attitude, commitment and performance in a real-time environment can be gauged.
Companies can benchmark themselves against their own goals, against their competitors and against their partners in joint brand/business promotions. That's valuable strategic information.