Bill Lee May 10, 2012 www.blogs.hbr.org
Net Promoter Score (NPS) is perhaps the best known customer loyalty tool around today, based on the entirely sound principle that the more customer promoters you have (i.e., customers who say on surveys that they're highly likely to refer you to a colleague or friend), the more likely you'll be to grow your business and outpace the competition. That makes powerful sense, and the continued growth and success of Net Promoter is a testament to the idea's relevance and value.
But I have found in my years of experience working across industries and sectors, that firms who embrace NPS are often leaving tremendous sources of wealth creation on the table. That's because the focus of NPS is on creating promoters, but stops short of engaging them to actually promote the business through activities like referrals, references, blogging or tweeting, speaking at industry events, or any of the myriad ways that passionate customers can help build businesses these days. The implicit assumption seems to be that NPS is only about getting customers to buy, to keep buying and to buy more. But there are many other — often far more lucrative — ways that customer promoters can create value for your firm and help grow your business.
Here are some ways to tap this unrealized source of growth:
Be intentional about customer promotion. Many firms assume that because a customer says on a survey that he'd be highly likely to refer you, that he will in fact do so. That may not be the case at all: they need to be asked. Two studies of firms in the telecommunications and financial services industries showed that only about 10% of declared promoters actually do refer profitable new customers. That's not bad, of course, but what about the other 90%? Why not intentionally provide opportunities to such promoters and invite them to, you know, promote you?
By the way, not all referral customers are the same. Businesses that take the time to understand which customers are more likely to respond to a marketing campaign by buying, and which are more likely to respond by referring a colleague or friend — doubled the return on their campaigns, as opposed to those that treated everyone as a potential buyer.
Look for customer value beyond promoting. Loyal customers who are disposed to refer business to you probably like you a lot. Why limit the ways in which they can help you grow your business to referrals? They might enjoy helping with your sales and marketing efforts by providing references or testimonials. Or they might speak on your behalf at industry events. Or participate in your user groups or other customer communities. Or ... you get the idea.
Remarkably, even highly sophisticated firms miss these opportunities. When Coleen Kaiser took over SAP's global customer reference program, she thought it would be a good idea to have the firm's promoters — in addition to providing referrals — to provide sales and marketing references as well. (A referral occurs where a customer suggests your solution to her friend or colleague. A reference is where a customer affirms the value of your product to your prospect). As it turned out, only 20% of promoters were customer references. Indeed, very few references were identifying themselves as promoters on NPS surveys!
Kaiser took the obvious step of reconciling that anomaly — making sure that her team invited promoters into its reference program, which more than tripled their participation to 70%. It wasn't a hard sell. After all, these are customers who've said they'd be highly likely to recommend SAP. As a result, in post-sale surveys, sales people went from identifying customer references as a "neutral influence" on sales to identifying them as one of their highest rated competitive advantages.
Move beyond promoters to defenders. With the rise of social media and the ability of buyers to check out a business long before they engage with its marketing communications or sales people, the very idea of a "promoter" is looking dated. It's too passive. The concept that emerged at the 2012 Summit on Customer Engagement was "defender." That's a customer advocate who doesn't passively wait for you to invite her to promote your firm, but who is already active on the social media sites that are talking about your firm and vigilant about addressing and correcting negative comments as well as amplifying positive ones.
Salesforce.com (SFDC) and a growing number of other firms are cultivating such customers, who are often called "MVPs" (most valuable professionals). At the 2012 Summit, a panel of three such MVPs talked about their activities and wowed the audience of marketing professionals with their dedication to keeping the Salesforce.com brand strong. They blog, they attend live events, they present and sit on panels. In return, they're given front row seating and other benefits and platforms at SFDC events. And they do all this for free — any other arrangement would destroy their hard-won reputation for objectivity.
Defenders go way beyond simply being loyal customers. They identify their success with SFDC's success and both promote — and defend — the firm vigorously. In today's world, such passionate 3d party defenders can be among a firm's most powerful sources of wealth and sustained growth.
Bill Lee is president of the Lee Consulting Group, Executive Director of the Summit on Customer Engagement, and author of The Hidden Wealth of Customers: Realizing the Untapped Value of Your Most Important Asset (HBR Press, June 2012).
No comments:
Post a Comment