Measuring Customer Satisfaction, the SMB way

We all know that companies that offer superb customer experience and enjoy high customer satisfaction are more successful and competitive in the long run. Often when I meet managers in for Small and Medium Businesses (SMB) companies, I hear that they are convinced that their customers love them. When I ask for a “proof,” they say that they just know it: they don’t need to measure it since they talk with their customers all the time. When I dig more, I usually discover that they think that measuring customer satisfaction is too hard and expensive for a small company. In this post I will try to offer an easy way to measure and compare customer satisfaction for SMB companies.

Why measure? You should measure customer satisfaction for the same reason you measure sales. When you want a number to go up you ought to measure it so you can establish a baseline and a way to measure the impact of business strategy on customer satisfaction. Imagine investing in marketing without checking the sales impact, and you will get the idea.

What to measure? You can measure individual transactions (rate your satisfaction from support at the end of a call), measure a specific product or measure the overall experience from a company. When measuring a transaction, the results are often used to measure consistency of delivery, while measuring the overall experience can provide a more holistic and strategic insight about your efforts and allow comparing your company to other companies.

How to measure? There are many companies that specialize in measuring customer satisfaction and provide benchmarks to other companies. Companies like TNS, for example, benefit from having a huge database of companies they serve. This means they can easily provide a good comparison between your results and other companies at your size or industry. The issue is that the cost and complexity makes this process unattractive to most SMBs.

How to measure with ease? The simplest and most effective way I know is called The Net Promoter Score (NPS). It is super simple, allows a readily available benchmark, and you can even do it yourself if you like. Since it requires asking only one question, you can easily call, mail or otherwise communicate with your customers to get the answer.

What is Net Promoter Score? NPS is a simple way of measuring customer satisfaction by asking one question: “On a scale of one to ten, how likely is it that you would recommend us to a friend or colleague? The difference comes in the way the results are analyzed. Regularly, you would either average the results or try to show a fancy pie chart with the percentage for each answer. With NPS, you use a different method:

you sum up the ones that answered 9 or 10. They are called Promoters. These customers are likely to go out there and promote you with or without your request. Then you take the ones that gave you a 6 and below and sum their number up. They are called Detractors. They are likely to go out there and say bad things about you. To get your NPS score you need to simply subtract the detractors from the promoters. By the way, I did not forget the ones that gave you 8 or 7, the passives. We ignore them because we assume that they would not say anything good or bad about you. This is the whole idea behind NPS—Your biggest supporters minus your worst detractors equal your word of mouth power. 

Net Promoter Score

Can you give me an example? Yep—here goes: say you got the following results:

Rate

Answers

1

0%

2

0%

3

0%

4

5%

5

5%

6

10%

7

10%

8

20%

9

20%

10

30%

The NPS score will be 30% [(30%+20%)-(10%+5%+5%)], which is fairly high. It puts you below NPS stars like eBay, Costco and Apple but above the average company that will score between 5% -10% and bad companies that will have a negative score.

What to do with the number? One paragraph cannot provide a sufficient answer for this question, but here is the overall direction:

  • · High score (30% and up)—you have a treasure in your hands. Think of programs that can leverage it like reference program or customer generated content on your website.
  • · Average score (0%-30%)—While not an emergency, you should think of ways to improve the overall score by providing better service and products.
  • · Low score (any negative number)—you have a time bomb in your hands. More people out there are saying bad things about your business than there are people saying good things. This calls for special measures like companywide customer satisfaction efforts and specific intervention programs with the most problematic customers.

Most importantly, you have to come back and measure NPS every year or even twice a year, so you can evaluate your success in increasing your score and discover early warning signs before they turn into catastrophes.

Gadi Shamia

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Measuring Customer Satisfaction, the SMB way

7 thoughts on “Measuring Customer Satisfaction, the SMB way

  1. Net promoter debunked…

    Small business guru Gadi Shamia has written about Net Promoter scores as a key metric for small businesses. Net Promoter is certainly very popular. Every web survey I have seen in the last year has included the Net Promoter question…

    1. I think you want to calculate it every year at the minimum and possibly every quarter for a subset of your customers. It does change by industry but at the end of the day the question is generic enough that it can be helpful in every industry.

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