Building Brand Loyalty

When it comes it building a fan base of loyal customers, using personas is just the beginning.

For those who count on satisfaction surveys to measure performance, they are a waste, says renowned business strategist Fred Reichheld. “Glowing customer satisfaction surveys don’t correlate tightly with profits or growth,” he said. “Most senior executives, board members, and investors don’t take them very seriously.”

If Reichheld’s name is familiar to any readers, it’s because he is associated with the Net Promoter Score, a loyalty model he developed from his consulting work at Enterprise Rent-A-Car. Enterprise, the rental car company, seemingly came out of nowhere to rise to the top of the rental car industry, surpassing long dueling rivals Avis and Hertz. When Reichheld began working with Enterprise, he stumbled on their interesting approach to growing their business.

He discovered company executives put their energies into deconstructing positive customer experiences, and sharing those lessons with managers across its retail stores.

When it comes it building a fan base of loyal customers, using personas is just the beginning. Click To Tweet

The Findings

Managers surveyed returning customers, asking whether they would recommend Enterprise to family and friends. Of those who responded positively, store managers wrote up the details of their experience and forwarded them to management. Enterprise discarded all of the other customer responses — by the way.

This practice, involving just one survey question and discarding answers that didn’t measure highly, came across as a bit odd. So, Reichheld, a researcher, looked to try and correlate this method to not just personas, but gaining loyal customers.

He spent years, he writes, researching and experimenting to solve the riddle.

Ultimately, he created what he considered the next best approach: a survey question and a scoring method. He called it Net Promoter Score, now referred to simply as NPS.

Enterprise executives were singularly focused on discovering customers’ positive experiences and deconstructing them for lessons to share across the company’s stores.

Enterprise surveyed customers when they returned the cars, asking them if they would recommend Enterprise to others. Managers would then sort through the responses looking for those who said they would. They tossed away all the other responses.

As Enterprise vaulted to the top of the rental market, Reichheld wanted to see whether there was a correlation between its market growth and the company’s approach to positive experiences. After research studies and further testing, Reichheld conceived the Net Promoter Score, or NPS.

NET PROMOTER SCORE (NPS)?

The Net Promoter Score differs from a satisfaction survey in that NPS reflects loyalty, while satisfaction surveys reflect someone’s attitude at the time of completing a service. Reichheld’s NPS uses a similar approach to that of Enterprise, asking respondents whether they would recommend the service to others. Respondents choose one of ten answer choices — from 1, the lowest, to 10 the highest.

HOW TO SCORE

Using the Net Promoter Score is quite straightforward. Responses 1 through 10 are sorted into three categories: Promoters, Passives, and Detractors. The score is calculated by totaling the categories and subtracting.

Add Totals
– Add totals for 9s and 10s (x) “Promoters” – Add totals 7s and 8s (y) “Passives”
– Add totals 0-to-6s (z) “Detractors”

Normalize Totals
(Convert the numbers into percentages (x/100=%, y/100=%, z/100=%)

Then subtract Promoters (x) from Detractors (z)
Convert the result back to a positive integer.

Finally, weigh the result using the total percentage of Detractors:
If “Passives” exceeds fifty percent of the total responses, add five points.

Categories in Detail

Promoters (9s and 10s): Users are intensely loyal and willing to put their reputations on the line to recommend the service to others. These users may discuss the service with others and promote its benefits.

Passives (7s and 8s): The service somewhat satisfies this group, but the users are uncertain whether to repeat their experience. In additional, competing offers that satisfy the same need may tempt the users. Their lack of enthusiasm will prevent them from supporting the service or service provider, and less likely to discuss it others. However, these users are not likely to be corrosive by spreading negativity.

Detractors (0 to 6s): This group is the least likely to repeat their experience and not likely to take advantage of related, follow-up offers or be tempted by discounts. These users can be fairly negative, whose negativity could spill out beyond one-time experiences, thereby potentially causing the organization harm.

Using the Net Promoter Score determines who is most likely to recommend your service. Consider the aspects that make these users loyal and you may even be able to construct more relevant personas based off these characteristics. Read more about the background to personas.

sign up for the apprentice

Hits: 12