We know more satisfied customers spend more, are more loyal and are more likely to share their positive feelings about a product or service.

Two case studies below show just how much more and the impact the satisfied customers can have.

As such, we aspire to increase customer satisfaction levels since that’s good for the bottom line.

We introduced a customer satisfaction measurement and improvement (CSMI) program at my company based on net promoter score (NPS), so this is a particularly relevant topic to me and one with which I have significant experience.

The following, from Fred Reichheld the founder of NPS and the author of The Ultimate Question, are six suggestions for improving your NPS along with my experience:

  1. Ask your customers to vote—don’t just add the ultimate question on existing market research surveys. The ultimate question was only one of three questions we asked. In addition to “likelihood to recommend,” we also asked “why did you give us that score?” and “what would it take to earn a 10?” This enabled us to understand how we needed to improve in a particular customer’s eyes.
  2. Measure at least 60% of your customers—a sample is not enough. We had a small customer-base, as such we were able to survey all of our customers. Sadly, response rates were 45% which indicated a lack of emotional engagement to me.
  3. Tie each response to customers’ profitability—to understand how valuable the vote is. We began to learn the profitability of each customer, distributor and manufacturers’ rep.
  4. Hold employees accountable for how customers vote—align incentives with executive compensation: good profits + loyalty = bonus. We planned to do this once the program was established and we had some benchmarks with customer response rates and the feedback we receive.
  5. Use the feedback to help convert detractors and increase promoters—engage and empower the front-line to act. This is why we’re only asked three questions. We wanted to promote a dialogue with “detractors” and convert them to “passives” and ultimately “promoters.”
  6. Publicize departments with high Net Promoter Scores—share best practices and develop tools and training. Given that we are a small division of a multi-national company, we looked forward to implementing this initiative enterprise-wide and using the results to positively differentiate ourselves in the respective industries in which we compete.

Bain & Company provides two great case studies on the positive effects of NPS.

One is with Costco (http://bit.ly/q5zgp6) which has an NPS of 79% and 43 million members having spent little to no money on advertising or marketing to acquire new customers.

Sales per store are twice those of Sam’s Club. Costco treats their employees very well with a starting salary of $10/hour and the opportunity to earn up to $40,000 within three years.

This positive treatment of employees has resulted in low turnover, long tenure, reduced hiring and training expense and low inventory shrinkage (13% of the industry average).

During the 10-year test period, Costco’s earnings grew an average of 17% per year and the stock price went up 20% per year.

Costco was number nine in the most recent rankings of the 10 best customer service companies (http://wp.me/pYHt6-pI).

Bain & Company also provided a case study of Dell (http://bit.ly/qttuKX) determining the value of “detractors” (NPS <= 7) and "promoters" (NPS <= 9).

Bain determined that Dell’s average customer is worth $210, while a “detractor” costs $57 and a “promoter” generates $328.

Positive word-of-mouth provides the greatest source of the difference between the two since 25% of Dell’s new customers said their primary reason for choosing Dell was referrals and “promoters” tended to refer more people to Dell than “passives” or “detractors.”

Are you using NPS in your business? Would you like to start?

Tom Smith

Experienced marketing professional who has worked with more than 120 clients in 18 different vertical industries. ♦ Differentiate products and services by improving UX and delivering memorable CX to create an emotional connection to the brand. ♦ Obtain insights from analytics to solve business problems and drive revenue. ♦ Develop and implement marketing campaigns that double traffic and leads in three months. ♦ Certified Marketing Automation Professional ♦ Certified Voice of the Customer (VOC) Professional