As a company selling to SMBs, if you’re not paying attention to your Net Promoter Score (NPS), then you’re missing on a critical lever to manage churn.  Dan Slagen, CMO of Alignable, walked through case studies yesterday at the LSA’s SMB Cloud Summit, showing how some companies have figured out how to actively use NPS to drive lifetime value and in turn, to build a more sustainable revenue stream.

So what is NPS?  It’s basically a score that helps you understand the strength of your brand perception.  NPS = % of promoters – % of detractors.  The higher your NPS, the stronger your brand perception among your target audience.  Your promoters are those SMB customers who are actively promoting your business and acting as your evangelists, sharing positive stories about experiences with your brand at any level – and telling that story through word-of-mouth, social media and various other mediums.

NPS is important because the lifetime value of those promoters is 2.5x higher than that of a detractor.  And those detractors are 2.3x more likely to switch brands – a direct correlation to loyalty and churn.*

So while many companies focus much time and money on the acquisition and on-boarding phases of the customer journey, even more energy has to be placed on the customer experience.  And the use of NPS can help direct and inform retention efforts in this second half of the customer journey.

Dan explained an approach Apple took to move the needle on churn and revenue by using “detractor targeting.”**  Apple called its detractors within 24 hours of a purchase.  This test resulted in a retention increase of 10%.  Final analysis showed that every hour spent calling detractors was generating more than $1,000 in revenue or additional sales, for a total of $25 million in the first year of detractor targeting.

By going the extra mile for those customers who were not bought into the Apple brand, the company was able to shift perception and drive loyalty and spend.  It seems pretty simple, but it is not a typical approach to retention, nor is retention always top of mind for marketing teams.

Another way to leverage NPS is to integrate into your customer feedback loops.  Thomas Cook, a travel company in the UK, implemented NPS into its review cycle. The company actively monitored customer complaints, identified solutions to address those stated challenges, took actions to put them in place, monitored impact to NPS and reviewed feedback again – all within a two-week cycle.  Such rigor is needed and alignment with all internal teams to ensure focus remains on the customer experience.

In today’s world, it’s impossible to ignore the impact of word-of-mouth and social media on your business.  And with the trusted and vibrant community of SMBs, it’s not only critical that you actively measure, monitor and track your brand perception, but also smart to use new approaches to influence and drive that perception to impact your bottom line.

*Source: The NPS Industry Benchmark Series from CustomerGauge

**2017 Morgan Stanley report/CustomerGauge

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