PROMOTING YOUR BUSINESS

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Promoting your business

By Adam Bernstein

Do you really know how valuable your customers are to you? Have you ever stopped to think if they actively promote or harm your reputation?

Of course, it is entirely possible to run a business on a diet of ‘one-hit wonder’ customers, but it’s a wasteful, time consuming and expensive way of generating business. It’s much better to win and keep customers by understanding their lifetime value through studying their loyalty. One way of doing this is to generate what is termed a ‘Net Promoter Score’.

 Net Promoter Score

The Net Promoter Score (NPS) is a loyalty tool used to monitor and gauge the loyalty of a business relationship, irrespective of whether it’s business to consumer or business to business. The key benefit of NPS is that it gives insights into elements of a relationship such as customer satisfaction, effectiveness of communications and how well customer service is judged.

For some, it can be a very effective way of measuring customer experiences precisely because it’s possible to see if customers would recommend you to others, with answers based on a zero to 10 scoring method.

Calculations

From a business perspective, understanding how the scoring is calculated is essential as this drives communication with those who might buy from you. Essentially NPS asks a series of “why” and “would” questions which return scores of between zero to 10.

And over time NPS allows firms to regularly canvas customers for their opinions, asking numerous questions via a 20 – 30 second questionnaire which can be answered quickly. Because of the ease of answering NPS questionnaires the response rate can be high.

There is a standard to scoring NPS responses:

Those reporting nine to10 are labelled as a promoter. They are likely to buy again and promote the business to others as a recommendation. They are a great advocate for the business to have and they will be a loyal customer in the future.

A score of seven or eight labels customers as ‘passive’. These people fall in the middle of being a promoter or detractor. They are undecided and do not want to commit and so do not give active responses to the questions and try to remain impartial.

Customers giving a response under six are labelled as detractors. A detractor can be detrimental to a business as they can become negative, give comments that will influence others, and they may not complete business transactions.

The problem for businesses faced with detractors is that the web feeds the subconscious. This is because consumers often look online for comments made about the products and services of a business and this can have a negative or positive effect and may well influence their own buying decisions.

The actual calculation when measuring NPS is a function of the total number of respondents who reply, the total number of promoters and the total number of detractors; the percentage of detractors need to be subtracted from the percentage of promoters. The closer the result to 100, the better it is and anything with a negative should be dealt with quickly.

 Best effect

It should go without saying that NPS needs to be used properly if the right result is truly wanted. Having a score for a product or service will give an insight of how well a job has been done. If the scoring is poor, a business can see the areas that need work and take proactive action to improve them.

NPS can be used generally or specifically, depending on the strategy being deployed. For example, after a customer has purchased a simple automated email can be sent asking for feedback. It’s important to note, however, that for NPS campaigns to work a business-wide strategy needs to be implemented and it needs to take into consideration factors such as making all staff aware of what NPS is, how the measurements work and what they mean; not ignoring or failing to respond to negative comments; and actively seeking to engage with those classified as promoters.

Think also about how you will communicate further with promoters. They have given you a good score but how will you continue to communicate positively with them now that you have their goodwill? And negative scorings should also create the same thought process – think about how you will work with those customers that give a low score? Everyone needs to communicate effectively to customers and the key is to keep monitoring the scoring results and act upon them.

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