B2BMonday, October 1, 2007 9:28 PM CDT

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SALES: May I have
the question, please?

By Brian ‘Moose’ Naber

Many businesses today do not track how well they are doing with their customers. That, in itself, is a silent, mortal blow to the financial health of the business.

And many of those who are attempting to regularly track customer sentiment are using the wrong tools. They should be using “Net Promoter Score.”

Net Promoter Score is the net percentage of your customers who would refer your product(s) or service(s) to someone else, such as a friend or business acquaintance. It’s not a “satisfaction” survey, a focus group, or some other impotent measure of success. It’s a realistic picture of the net percentage of your customers who are willingly assuming the role of unpaid promoter for your products and services.

When you think about the suppliers you use on a regular basis, how many of those suppliers would you recommend to your friends? Chances are the number would be anemic. In fact, you were probably challenged to name as few as three suppliers. If so, what does that tell you about businesses today? What does that tell you about your business?

Years ago, when proprietors knew their customer’s every whim, merchants truly had a handle on their sales and service delivery. If they had a dissatisfied customer, they knew about it and went to great lengths to correct the problem immediately.

Today, with businesses reaching across the globe, it is very difficult to get an accurate picture of your sales and service delivery performance. You simply assume that your customers are satisfied if you don’t hear back from them. In fact, sometimes businesses don’t have the courage to find out; they are strictly focused on getting new customers and hoping that the sales revenue keeps increasing.

Many companies today are using Net Promoter Score to ascertain their company’s true performance. General Electric is one. Intuit, the software company that brings you Quicken, TurboTax and other products, is another. The bottom line is that surveys and focus groups are being recognized as “feel good” devices designed to assuage CEOs and presidents. Frankly, they are of little true value.

Net Promoter Score represents a reliable link between customer attitudes and what the customer did (regarding their post-purchase behavior) — a strong statistical correlation with repeat purchases and referrals.

So what questions do you ask your customers to determine your Net Promoter Score? There is just one, single, solitary question… “How likely is it that you would recommend (your company) to a friend or colleague?”

Can you imagine finding out your true customer delivery performance by asking just one question? Surely, it can’t be that simple! Happily, it is.

In his book, “The Ultimate Question,” Fred Reichheld tells the remarkable story of how Intuit took its business to a higher level by uncovering “the” question and understanding, for the first time, how simple it is to determine true performance — a performance that correlates directly to customer loyalty and future corporate profits.

Intuit’s TurboTax retail market share had been flat for years, but after uncovering “the” question and determining what they could do to improve their customer experience, their market share increased from 70 percent to 79 percent. That’s an increase of 12.85 percent in a mature market. A remarkable turnaround, with just one question.

The customer referral is based on two conditions, according to Reichheld:

Customers must believe that the company offers superior value in terms of price, features, quality and ease of use (attends to the customer’s head).

Customers must believe that the company understands them, values them and listens to them (attends to the customer’s heart).

The Net Promoter Score represents a percentage of the company’s promoters minus the percentage of the company’s detractors (non-promoters).

On a scale of 1 to 10, 10 being high, the promoters give a company a score of 9-10 while the detractors give a score of 0-6. Those in the middle (with scores of 7-8) are essentially benign regarding their promotion/detraction.

When you study this scale you begin to realize how special promoters become to your future growth and the level of performance required by your organization to “earn” additional non-paid sales people for your company. As you can see, it’s not easy. But it is simple.

It may fascinate you to know that based upon Reichheld’s research, the average U.S. company has an NPS of less than 10. That means that 90 percent of its customers are not promoting the company to their friends and acquaintances. Now you understand why advertising firms will always be needed.

Word-of-mouth advertising is truly powerful when your company is doing well with its customer experiences. For those companies who are not doing well, their futures are sealed by the detractors they are creating.

Ironically, once again, we find that the enemy is us. One simple question can turn that around.

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