How to Use Net Promoter Scores to Better Understand Your Customers

One of the most important pieces of information for key account managers is derived from one simple question: “How likely are you to recommend our company to a friend or colleague?” In essence, this is a direct way of determining how many of your customers would promote your business. Since word of mouth is the most powerful form of marketing, this is an accurate predictor of your company’s future sales growth.

By asking key clients this question, a metric called the Net Promoter Score (NPS) can be determined. This metric can be used by key account managers to gauge customer loyalty and predict company growth. This is in contrast to traditional customer satisfaction surveys, which are not geared toward predicting growth.

NPS, first introduced in the Harvard Business Review in 2003, has become widely adopted by businesses, including two thirds of the Fortune 1000.

Is NPS Effective for B2B Companies?

You may wonder if a survey with a single question about customer satisfaction can really be useful to your B2B company. However, many B2B companies successfully use this approach. Of course, it is more effective when there are more respondents within a bigger market. For a small, niche market, it may be more difficult to gain accurate metrics. Also, it may depend on how many of your business’s customers are acquired by referrals or word of mouth.

How is NPS calculated?

The NPS score is calculated based on the question mentioned above. The respondent is asked to choose a number from 0 to 10, indicating their likelihood to recommend the business. The respondents are then grouped into three categories: promoters, passives, and detractors.

• Promoters indicated likelihood was 9 or 10. These are loyal customers who will refer others.
• Passives indicated their likelihood of recommending was 7 or 8. They are satisfied customers, but not enthusiastic enough to stimulate growth.
• Detractors indicated their likelihood of recommending was 0 to 6. These customers are unhappy and will create negative feedback, damaging your brand and impeding growth.

The NPS is derived by subtracting the percentage of detractors from the percentage of promoters. Passives are not used in determining the NPS score, but they do figure into the total number of respondents. The resulting score will range from -100 to 100.

What the Score Means

• A positive score, anything higher than 0, is considered good.
• A score of 50 or higher is excellent. Rapid growth should be expected.
• A negative score (any score lower than 0) is poor and indicates stagnation or that a decline in sales is imminent.

Going a Step Further

Deriving your NPS is just the first step. As a key account manager, it is also important to learn more about why respondents chose their answers and to devise a solution to address those concerns, before they have a lasting, negative impact on your brand and customer retention. In order to enhance the NPS approach, a second question can be added to the survey, allowing respondents to provide open-ended comments to explain why they chose a low score.

Closing the Loop

Net promoter strategy often includes a “closed loop” philosophy, which means that the clients’ feedback is only the first stage of developing better understanding. Key account managers should be aware of what customers are saying and what that means for the health of their key accounts.

In the spirit of “democratizing” the net promoter process, employees are usually grouped into three categories: executive, management, and frontline. Executives and management would take on the task of developing a strategy to address the issues brought up in customer feedback. The key account managers (frontline) would be given the task of contacting key clients to follow up with them and address their concerns.

By incorporating NPS data and methodologies into your company’s key account relations and brand promotion strategies, your business will be more capable of predicting growth and addressing client issues.