Net Promoter Score: The Gap Between Satisfaction and Loyalty
Hi everyone! I wanted to introduce you to the newest SurveyGizmo Survey Expert, Ryan Farmer.
Ryan’s expertise is in customer feedback. He’s been helping grow small companies by using the information gained through customer feedback surveys for the past 6 years.
Please welcome him to the SurveyGizmo Survey Expert Team! Now onto his first post.
Customer Satisfaction is Not The Same As Customer Loyalty
Whether you realize it or not, there is a massive gap between a customer indicating that they are “satisfied” on a traditional 5-point scale and their likelihood to remain a customer. As a matter of fact, we’re finding there is only a very loose correlation between the two.
For years, customer satisfaction surveys have been held as the gold standard for measuring a customer’s connectedness to a product or service. However, in an increasingly competitive and price acute market, satisfaction is a minimum requirement.
More importantly though, if satisfaction is used as problem indicator, companies can be seriously deluding themselves.
Does this sound odd to you?
It did to me as well until we began to look into it further and relate it to some of our real life experiences. Allow me to recount one of these experiences:
I recently signed up for mobile high speed internet service with a company which shall remain nameless (there’s plenty of online trash talking, no need to add to it). The order process was completed in a single phone call and the equipment was promised to be delivered within 24 hours.
Great experience up to this point! In fact, I recall telling several acquaintances how easy the process had been. Fast forward 24 hours and I await the delivery of my equipment like a child waiting for Christmas morning. Ultimately the UPS truck rumbles right by our home without a delivery. Problem! Enthusiasm for company X and their ability to deliver on promises is slightly tarnished.
A call to the customer care department reveals they didn’t even get the order into their system in 24 hours, let alone attempt to ship the product. Furthermore, the agent was unwilling to admit any wrong-doing on their company’s behalf or offer any level of concession.
It took two more phone calls and a total investment of almost 90 infuriating minutes to remedy the situation and finally get an apology for a poorly handled transaction. At this point, I’ve lost all faith in their ability to deliver on promises BUT they have resolved the situation.
Shortly after that call, I received a customer satisfaction survey and this is where things get interesting for this post’s sake.
One of the questions was titled: “How satisfied are you with how your problem was resolved?”
How do you think I answered it? I answered 4 out of 5 – satisfied – because my problems were ultimately solved the way I desired. However, would I buy the product again? No. Would I recommend a friend buy their product? No.
Net Promoter Score Addresses the Gap
Enter the gap. Based on my survey reply, company X would believe that I am just another in a line of satisfied customers. Mathematically, I’m in the top 80% of satisfied customers or at least that’s what my reply would lead them to believe.
Obviously that is not how I actually feel and therefore: satisfaction does not equal a loyal customer. We need a more accurate measure. We need a measure that goes beyond mere satisfaction because satisfaction is too vague. Satisfaction does not do a good job of identifying and quantifying the varying shades of emotional engagement that customers feel to a brand, service or product.
There are a number of additional questions that can be asked to help bridge the satisfaction gap. The problem with adding an abundance of additional questions to gauge loyalty is that with each additional question added, survey abandonment rate grows. In fact, research has shown that for each additional question over 8 questions, abandonment rate goes up exponentially.
With more questions, you’ll get better data but you’ll have less of it because fewer people are interested in investing the time to complete the form. So the solution is not in asking more questions, it’s in asking better questions.
What is a better question?
Good question. Enter Fred Reichheld and his work with a metric he calls Net Promoter Score (NPS). In his book The Ultimate Question, he details a body of research mined across a plethora of companies of diverse size and industries. What they found is there is one single question that has been more closely tied to people’s emotional satisfaction with their purchase and more importantly their intent to repurchase. The question is this:
How likely are you to recommend company X to a friend or family member?
Simple. But incredibly powerful. This is a better question.
A number of companies have found the answer to this single question to be so revealing and accurate that they have become NPS purists -they only ask that one question in their customer feedback loop. As a matter of fact, I recently received an NPS survey from Legalzoom.com. Clearly, they’ve found benefit from maximizing their customer feedback using NPS.
If you’re looking to minimize the satisfaction gap in your company, begin integrating an NPS survey into your next round of customer surveys. You may not become a purist right away but at least you can begin closing the gap. Instructions on how to set up an NPS survey within SurveyGizmo can be found here.