Convincing the powers that be that they need to be investing more money in your current customer base or a Loyalty Programme is a good move, but it can be a mean feat.
However, accurate measurement of your existing customer base, can help marketers show the commercial benefit and positive impact on the bottom line.
Companies should be looking to develop detailed customer loyalty dashboards for their programmes and should include a very strong focus on measurement through customer lifetime value, voice of customer, return on investment (ROI) and net promoter scores (NPS).
The net promoter score of a company is a common measure of customer loyalty and is calculated by taking the percentage of customers who are promoters and subtracting the percentage who are detractors, based on their response to the question: “How likely are you to recommend this company to a friend or a colleague?” Companies should look for opportunities across their entire operation to ask this question, e.g. call centre, sales agents etc.
Responses are measured on a scale of 0 – 10; 9 and 10 are promoters, 7 and 8 are passives and 0 – 6 are detractors. Companies that use the score find a tight link between profitable growth and their NPS.
To further enhance their understanding of NPS many businesses are looking into Relational NPS and Transactional NPS or rNPS and tNPS respectively.
Relational NPS or rNPS is designed to gain insight into a customers overall satisfaction rate and loyalty toward your brand, by surveying them to learn more about their overall perception of and experience with your business. To provide an even deeper understanding of customer sentiment toward the brand, Relational NPS is intended to survey the customer independently of any transactional experiences, and instead provide a view of their combined brand and product experience.
Transactional NPS or tNPS instead attempts to measure a customers experience in the immediate aftermath of a specific engagement or transaction, such as after ordering a product, after product delivery, or after purchasing a product in-store. A transactional survey aims to gauge a customers rating of the brand at the time of the specific event in question.
For a full and all-encompassing view of your company’s NPS scores, both rNPS and tNPS should be measured on a regular and on-going basis.
Companies with the most efficient growth engines operate at NPS efficiency ratings of 50 – 80%. The average business has a NPS efficiency of only 5 – 10% and some entire industries have negative net promoter scores.
It is therefore worthwhile adding your NPS to your customer loyalty dashboard and then doing some research to benchmark your company’s NPS against the industry average, to see where you stand.