Leveraging Online Surveys To Retain Your Current Customers

Your customers represent the lifeblood of your company. Your profitability is directly tied to their level of satisfaction with every facet of your organization. This is the foundation upon which customer satisfaction surveys are designed.

Satisfaction levels can be used to gauge the likelihood your customers will remain loyal to your business and tell others about you. Because accommodating an existing customer is far less costly than acquiring a new one, you should strive to maintain your current customer base. Doing this requires tracking their loyalty to your organization.

Below, we'll explore how to use survey research technology to monitor your customers' loyalty. You'll learn about a method known as the Net Promoter Score (NPS). It can be used (loosely) to identify the growth - or attrition - of loyalty in your company's customer base. We'll explain how to derive the NPS from your surveys, and describe a few of its limitations.

The NPS is a quantitative tool used to categorize a company's customer base into three distinct groups: Promoters, Passives, and Detractors. This is accomplished by asking a single question: "How likely is it that you would recommend our company to a friend or colleague?" Survey responses are based on an 11-point rating scale - from 0 (zero) to 10. A "10" is considered "Extremely Likely" while a "0" is considered "Not At All Likely."

Those who choose "9" or "10" are deemed Promoters. Those who choose "7" or "8" are considered Passives; they're neutral or undecided. Everyone else is considered a Detractor. This data provides a barometer that suggests the net percentage of Promoters and Detractors in your customer base.

For example, suppose you surveyed 1,000 customers with the goal of identifying your company's NPS. Twenty percent of those surveyed responded with a "6" or lower; sixty percent responded with a "9" or "10"; the remaining twenty percent chose "7" or "8." Your organization's NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters. In this example, the result would be 40%.

This measurement is mostly useful in the context of how it changes over time. For example, if your NPS drops to 30% within six months, that indicates your company is failing to meet the expectations of a greater number of customers than before. Conversely, if your NPS climbs to 60%, it suggests recent changes are perceived favorably.

The Net Promoter Score is useful for identifying how your company is perceived by your customers. Its simplicity, however, exposes it to a few potential problems that have attracted criticism.

Critics suggest there is scant evidence to support the classifications of Promoters and Detractors. That is, they argue that a "9" or "10" is overly simplistic, and thus cannot convey any real insight regarding a respondent's intent.

Some also claim that people are agreeable by nature, and inclined to respond with higher scores than they would candidly. Simply put, respondents are biased and the survey results are likely to reflect their bias.

Another argument posed by critics is that a single question cannot be used as a reliable predictor of customer intent. They reason that multiple questionnaire items must be used to build a profile of a respondent before that person's loyalty and intent to promote the company becomes clear.

Given the above, is the Net Promoter Score worth calculating for your organization? Is it worthwhile to include as part of your list of ongoing survey projects? Despite the tool's limitations, it can provide a general look at the perception your customer base has for your company. Moreover, online survey technology makes it possible to execute an NPS survey quickly and at low-cost.