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The 4 Steps For Setting Goals with Net Promoter

Posted on September 24, 2010 , by Andrew Schulkind

Congratulations for working on goals for improving your Net Promoter Score (or other customer loyalty metric)!  Most companies measure customer loyalty (or satisfaction as a poor proxy), but unfortunately many use the scores simply for internal or external marketing (the perils of which are briefly described here).
Since we know that Net Promoter is all about improving customer loyalty, a natural next step after acquiring an initial baseline is to determine appropriate goals for the organization to drive the improvement effort.  A few lessons-learned on doing this:

  1. Set appropriate targets for improving your metrics

    Setting appropriate targets for improving your metrics requires good planning, and the rewards are significant

    Identify and prioritize the right improvement opportunities.  What segments are impacted and what is the financial gain that will be had by improving loyalty within them?  By focusing on the segments and opportunities that matter most, you should be able to estimate resulting loyalty and revenue gains to drive your priorities.(By the way, a note on competitive benchmarking: Especially if you are in an industry in which your customers work with both your company and your competitors (i.e. you don’t have 100% share-of-wallet) then your customers are in the best position to tell you how you are doing relative to your alternatives.  And even more so for your Promoters!  Use this to help prioritize.)

  2. Goal-setting depends on the level of effort to improve.  So determine the level of effort (cost and time) by understanding what is driving customer loyalty (or taking away from it).  Are the issues that are creating Detractors requiring major changes in product(s) or business model?  If so, you may want to set smaller steps along the way, working on “low hanging fruit” to acquire short-term wins while planning the longer-term fixes.
  3. Get organizational buy-in to the program and process.  Improving the % of Promoters in your business is almost always a cross-functional effort, and there is little point in setting targets unless the requisite teams are with you.
  4. Set appropriate measurement cycles.  You have the baseline, now how long before customers “feel” the change that you are working?  In many case it can take some time before customers experience the change.

An example:  A software client had issues in the installation process for a major product which was creating detractors in a key segment of their business.  Before setting improvement targets, the 2 key questions they had to answer were

  • What is the ROI on improving the installation experience for this segment?  What is the anticipated loyalty improvement (measured in revenue gains), and what will it cost?
  •  How long before the effect takes hold?  That is, how fast will customers adopt the change?

After completing the investigation above, appropriate priorities were set, a scorecard was established, and the improvement initiative is underway.  The key element here is organizational adoption.  Showing the installation engineering team the revenue growth that will be had by improving this metric created the “winning team” atmosphere that kick-started the process.