Net Promoter score (NPS) provides a simple and valuable way for businesses to measure customer satisfaction and promotion. The assumption is that the more likely customers are to recommend, the more likely those recommendations will turn into new business and revenue. But the question remains: how to grow the promoter group. Businesses that successfully identify what makes their promoters tick can more successfully bring other customers into the profitable promoter group.
The Allegiance National Benchmarking study found that banking customers with high engagement or emotional loyalty were much more effective at turning recommendations into new customers. This isn’t so surprising considering that customers with high engagement are more than satisfied, so are pre-disposed to do business. In fact, they are excited to do business with a company. Their excitement translates into more frequent and effective recommendations.
Engaged customers not only recommend a brand, but they identify themselves as being proud of their association with it, and they identify that brand as ‘the best’. Their emotional loyalty makes them more likely to recommend and bring in new business. The link between engagement and NPS is clear. Engaged customers had an NPS of 85%, and Disengaged customers were at -80%. On-the-fence, or Swing customer had an NPS of 10%. Allegiance National Benchmarking data for the last 12 months reveals that 32% of banking customers are engaged.
Our data from Q2 of 2009 through Q1 2010 shows that engaged customers are four times more effective at bringing in new customers. Out of almost 2500 banking customers, 779 were engaged customers. Of the 779 engaged customers, more than 1500 positive referrals were made, resulting in 337 new bank customers.
The remaining 1683 customers made fewer than 1000 positive recommendations resulting in only 168 new customers. On average each engaged customer gave positive recommendations to two of their friends or colleagues. By comparison, only 16% of less engaged customers gave any sort of positive recommendation. In other words, it took about six non-engaged customers to make one recommendation.
This same pattern is evident in data gathered by Allegiance clients. It takes about two engaged customers to bring in a new customer, compared to 10 lukewarm or marginally satisfied customers needed to bring in a new customer.
Measuring engagement and its associated drivers can help drive up NPS. By measuring and exploring actionable engagement drivers, a business can then act in the most impactful way to increase engagement. Creating feelings of engagement in the minds and hearts of customers empowers them to be more frequent and effective promoters.
“On average each engaged customer gave positive recommendations to two of their friends or colleagues. By comparison, only 16% of less engaged customers gave any sort of positive recommendation. In other words, it took about six non-engaged customers to make one recommendation.”
Very interesting stats here. Does your data suggest this is similar in other industries? How about B2B?