Addressing customer loyalty with The Ultimate Question Customer loyalty is a great measure of how much value you’re actually providing. This measure is important because, chances are, your customers are less loyal than you think. Indeed, research presented in the books The Challenger Sale and The Effortless Experience, by Matthew Dixon, indicates that price has little to do with customer loyalty. That might mean that you’re providing less value — as measured by customer loyalty — than you think. But that’s actually great news, because it means you can provide more value, and be more competitive.
We recommend dispensing with the assumption that returning customers are returning because they’re loyal. There’s a strong chance that they’re only returning for two reasons:
1) switching suppliers is too inconvenient
2) your price is competitive — or at least, competitive enough that they can justify not going through the hassle of switching.
What you really need is a way to measure how satisfied your customers actually are. You could do this by hiring expensive consultants to conduct research programs and intensive surveys, but that would just harass your customers and leave you with a massive pile of data to work through. For these reasons and more, that simply won’t advance your customer loyalty, or even really give you an effective measure of it.
What you need is a solution that’s short and sweet. You can do it all with one simple question, named The Ultimate Question (see the book The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World by Fred Reichheld) by its inventors:
“On a scale of 1 to 10, how likely are you to recommend our product/service?”
The researchers found that those who scored a 9 or 10 are “Promoters”, meaning they will actively promote your business. 1 to 6 are “Detractors”, meaning that they will actually say bad things about your business. The rest are neutral. Your goal is to end up with a Net Promoter Score of 9 or greater.
NPS is very simple to implement, and leaves you with one simple metric to interpret. Of course, to actually improve that score, you’ll need to dig a little deeper into the root causes behind the scores that your individual customers are giving you. What you’ll end up with, then, is a clear cut plan of action on how to improve customer loyalty.
You can start implementing NPS immediately by simply asking your customers the Ultimate Question, recording their score, and then sorting the data according to relevant categories. You want to be aware of any existing patterns. For instance, if all of your low scores are sales from one salesperson, you may need to investigate that individual’s approach.
For the full story on NPS, you can read the The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World.