Marketing Masterclass: Customer loyalty

Marketing's new monthly series starts with a masterclass on how to improve your NPS. By Nick Hague, director, B2B International

calculating the net promoter score
calculating the net promoter score

 

Customer loyalty is of strategic importance to all organisations. It gen­erates customers with a high lifetime value. A loyal customer is more likely to recom­mend a brand to others, affecting business growth and reputation.

A widely used metric to measure loyalty is the Net Promoter Score (NPS). This is easily determined. Cust­omers are asked how likely they are to recommend ‘’brand X" using a 0-10 scale. Scores of nine and 10 are promoters; scores of seven or eight are neutral (passives); and six or less are detractors. The NPS is calculated by subtracting the propor­tion of those giving a score of six or less from those giving a score of nine or 10.

The NPS provides a great bench­mark by which to judge an organi­sation’s performance. The average B2B company has an NPS of +24, which is far from ideal. Best in class companies score 50 to 80.
All three groups of customers are important in maintaining a high NPS. Clearly a company must continue to delight those who give a score of nine or 10: there is no scope for compla­cency. Promoters love to tell others when they have received good ser­vice. About four out of 10 are likely to spontaneously mention their favour­ite supplier to a friend or colleague.

Those who give a score of six or below must be addressed urgently to find out whether they did so because the brand is deficient or they would be better off choosing some­thing more suitable to their needs. This group is dangerous because seven out of 10 will tell others about a bad product or service they have suffered. They must be appeased or they will destroy the promoters’ good work.

The middle band, giving a score of seven or eight out of 10, comprises the silent majority, and here is a good opportunity to improve the NPS. This is the band into which most custo­mers fall, as these scores are usually good enough to keep doing business, if not high enough to drive loyalty. A little extra effort may be all that is required to move these customers into the promoter band where their accolades will push the NPS higher.

Further reading: three steps from NPS to customer loyalty

Looking to improve your net promoter score? Check out this handy infographic with some crucial dos and don’ts on how to foster loyalty among your customers.

http://bit.ly/1xrIFUD

Not sure how to measure and improve your customer satisfaction? Check out our in-depth guide to understanding the scores and a four-step plan for making improvements.

http://bit.ly/1Hez3wH

After improving your scores, it’s time to switch focus to customer loyalty. This paper looks at why it is so important and three steps to winning devotion from your customers.

http://bit.ly/1bImsI4

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