NPS Blog

What does an angry customer cost?

This article originally appeared on LinkedIn

The byproducts of happy clientele are obvious. Sales rise. Stores fill. Facebook “likes” stream in. These promoters recommend the companies they like to their friends.

The cost of detractors—a company’s “haters”—is less clear to many business leaders. For one thing, they may still do business with you — even though they don’t like it and they make sure their friends and your employees know they don’t. By the time their irritation is evident in traditional metrics—declining sales, failed product upgrades, defections to rivals—the cause of their discontent often has ballooned into a widespread problem.

Detractors are so dangerous for companies that the Net Promoter score — the measure of customer loyalty — weights them more heavily. When asked “How likely are you to recommend our product or service to a friend?” on a scale of zero to 10, those who offer ratings of six or less are deemed detractors. Promoters are only those who respond with a nine or 10.

Why? Detractors are detrimental to a company. They cost more to serve. They’re responsible for 80% of a company’s negative word of mouth, detailing their frustrations on Facebook and Twitter for the world to see. And negative referrals are often far more powerful than positive referrals. How many four- and five-star reviews do you need to see before you dismiss a one-star review on Yelp or Amazon? If someone you knew personally told you their dentist was terrible, how many positive recommendations for the same dentist would it take to get you into the chair?

Successful companies take detractors seriously. They get to the root cause of customers’ anger by listening to complaints, taking them seriously and fixing problems that might be more pervasive. For many customers, that’s where true loyalty begins.

Has a company ever so impressed you with its response to a complaint that it turned you from a detractor into a promoter?

My colleague Rob Markey and I discuss the importance of measuring detractors in the video below:

 

 

4 Responses to What does an angry customer cost?

  1. Fred, what’s your view on measuring NPS via internal surveys (from branded emails with no incentive) vs. external surveys (blind using standard online panel that incents respondents in some way)? I am reading 2.0 now and you talk about great stuff like response bias…my internal survey has <10% response, I think we're fooling ourselves by saying THEIR score is reflective of the entire customer base. In theory, this wouldn't apply to external surveys as people's participation has nothing to do with satisfaction w/our card or the category overall. We measure both internally and externally, external is always substantially lower and when I'm asked "What's our NPS?" I refer to the external score, because in my mind it's the "true" NPS. Do you agree? Anything else I should consider?

  2. Thanks for the great question. The focus of internal surveys should be to identify promoters, passives and detractors to enable appropriate closed-loop follow up—which drives innovation and action. You are absolutely correct in dismissing the reliability of “scores” derived from internal surveys with low response rates. The best way to derive a “score” that can be benchmarked against other companies is the external (double-blind survey).

  3. Also, we have a great explanation of the NPS competitive benchmark process (top-down scores) here: http://www.netpromotersystem.com/about/bottom-up-and-top-down-scores.aspx. When done correctly, a competitive benchmark can provide an excellent comparison vs. competitors, and should drive strategy and resource commitments.

  4. Fred, thanks so much for your response, appreciate you confirming that I’m using the right mindset. I’d recommend ear-marking this topic for the 3.0 edition of the book — I’ve chatted with several research colleagues across industries and nearly all have similar differences between internal & external studies and are unsure which to report, when.