The primary stakeholder in any business is their customers. Without customers, there is no business. Establishing a metric for your industry is an important first step. Maybe that means measuring repeat buyers, maybe it means measuring a failure rate, or more commonly, it might mean measuring the likelihood someone refers your business to a friend. How do you know if your customers are satisfied? Asking is the first step to figuring it out. Most commonly, a percentage is used to determine overall levels of customer satisfaction. If ACME Corp has 100 customers today, and 88 of them claim to be “satisfied” or “happy” with the service they received, then ACME knows they have an 88% customer satisfaction rating for the day. Setting an organizational goal for a certain percentage of positive reviews helps set the expectation for the customer service team members. By setting a goal for the whole team, everyone knows explicitly what the metric is. If ACME has a goal of 95% customer satisfaction, a day of 88% should raise a concern for them and let managers know to pay attention to the CS department, or wherever there are touch points with customers.
As another example, if someone is in a high end commercial real estate business, they may only have a few customers a year. With such a low number of customers per year, measuring a percentage of satisfaction might not be useful. Instead, tracking something like how many referrals they get, how many repeat clients they have, or how many deals they lose, might prove to be more valuable. A large number of lost deals might be an indicator that a competitor is offering a more compelling service (or product) to your would-be customers. Regardless of the industry your business is in, tracking customer satisfaction is a must.
The Net Promoter Score (NPS) is the most common measure of what percentage of customers are actively supporting your company. By asking customers to rate their satisfaction on a scale of 1-10, one can identify what percentage of customers are being delighted. In general, those who claim to be a 9 or 10 on the scale are your promoters. They’re the ones who tell stories about your business and recommend their friends check your company out. Those who claim to be a 7 or 8 are considered passive. They like your company but not so much that they rave about it to their friends. These are folks that it’s worth spending time with to learn how to delight them into a 9-10. Figuring out what to do less of or what to do more of will yield a lot of information. Finally, anyone at 6 or below is considered a detractor. They’re the customers who were dissatisfied and might be actively telling their friends to avoid your business. Over time, a business with more detractors than promoters will not survive.
The NPS score comes from taking the percentage of promoters and subtracting the percentage of detractors (ignoring the passives). The range goes from -100 (no promoters) to +100 (no detractors). The higher the score, the better. A low NPS means there is a lot of work to do. A high NPS is good, but it’s not a reason to rest. Maintaining a high level of customer satisfaction won’t happen by accident.