NPS Blog

What your current customers might not be able to tell you

You’ve probably heard me say that the best indicator of your company’s ability to grow is how your customers feel about doing business with you. If many of them would recommend you to a friend or colleague—and if few say they wouldn’t—then you’re in good shape. If you’re a company that uses the Net Promoter System℠ to measure customer attitudes, then that willingness to recommend is probably translating into some pretty good scores.

But you have to be sure you’re measuring those attitudes in the right way. If you aren’t, those high scores can be misleading.

Imagine that you were running Tower Records, say, or Blockbuster shortly before those companies went out of business. If you were sampling the attitudes of only your own customers, you might still be hearing a lot of positive responses. The reason? People who hated doing business with you had already decamped for music downloads or DVDs by mail. Those people were no longer customers and no longer part of your ordinary feedback system. The rosy picture you were seeing came only from the people who preferred you to the newer alternatives.

This is a common problem, and not just for companies confronted with a disruptive business model. If your airline or restaurant chain faces new competition from an upstart, the first customers to defect will be those who like you least. Your customer-loyalty scores may even go up for a while, when really all that has happened is that angry customers have left. If your competitor is good enough, however, many more will follow.

So every company needs to find out what alternatives its customers and potential customers are considering, or what they might be considering in the near future. One good method is the Net Promoter® competitive benchmark process.

Competitive benchmark NPS® typically involves hiring a third-party research firm to survey a large sample of customers in your industry, your own and other companies’. The researchers ask the “how likely would you be to recommend” question about many different alternatives, score the responses on the familiar zero-to-10 scale and then probe to find the reasons behind the responses. It’s a double-blind method in which neither researcher nor respondent knows who’s sponsoring the study.

Why is this kind of survey important? Because it’s the best way to find out what everyone in the marketplace is considering. Is Airbnb a real threat to your hotel business? Are Roku, Apple and Aereo a formidable challenge to your cable business? A survey that asks about all the available alternatives helps company leaders know where the major threats and opportunities lie. It helps them determine strategic priorities, such as where and how aggressively to invest.

In some industries, of course, a company can rely on rankings published by established market research firms. But Net Promoter companies typically find that market feedback based on Net Promoter concepts and language can motivate more consistent and effective action. Competitive benchmarking produces rankings and scores that tie in with a company’s internal language and closed-loop systems. Frontline employees “get” the score and have learned how to improve it. An opaque customer-satisfaction rating from a third party doesn’t produce the same motivational bang for the buck.

Happy customers are great—they’re a sign that you’re doing your job well. But even happy customers won’t stick around if another company offers a significantly better product or service. That’s why you need to learn what the marketplace is thinking. No one wants to be the next Tower Records or Blockbuster.

 

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