The Goal: Our Most Important Metric?

word-of-mouth.jpg
We’re debating at Atlassian what’s the most important metric. Our Chief Metric God and CEO Scott Farquhar thinks Net Promoter score might be it. He has threatened to take a few months off to think about it. While we mere weak-minded mortals spend far less time on metrics, Serious Metric People such as Scotty devote lifetimes of thinking to what to measure and why.

Atlassian’s culture is fun, but it’s also about metrics. So, we decided to start measuring our Net Promoter score. Experts such as Fred Reichheld, a fellow with consultancy Bain & Company claim that companies with high Net Promoter scores far out-perform in growth and have far lower costs of sales. It’s seems intuitive given Net Promoter is all about word of mouth, a subject dear to my heart.

What is a Net Promoter score? Customers are asked “How likely would you be to recommend our product(s) to other people” on a scale of 0 [Never] to 10 [Definitely]? Then you divide the responses:

  • Scores of 9 or 10 are promoters; divide the total number by the total surveyed to get a percentage or score.
  • Scores of 7 or 8 are not promoters; ignore these responses.
  • Scores of 6 or less are detractors; divide the total number by the total surveyed to get a percentage or score.
  • Subtract your detractor score from your promoter score to get Net Promoter Score.

How We Stacked Up

We surveyed 500 customers, chosen at random, and our Net Promoter score was: 52%. Although this puts us in great company with the likes of…

nps-stars.jpg

… we’re now obsessed with the comments we got back on what we need to fix. Imagine the kind of customer loyalty Harley Davidson has! How does one achieve that?

How We Surveyed Customers

We learned something simply about how to survey. We made it clear we only required answering one question to participate in the survey. The other three questions were entirely optional:

  • “If you wish to elaborate on your response, do so here…”
  • “Is it OK for us to contact you?”
  • “If so, what’s your contact information?”

I felt it important that we reduce the survey to the smallest possible, even to the point of editing out superfluous words so each sentence was concise. I hate surveys that say “This will take 10 minutes” instead of “This survey has 10 questions”. I absolutely hate surveys where I never know when the end is coming. Always state how many questions!

Other Lessons from the Net Promoter Survey

The survey had a 40% response rate, and 20% of the customers said it was OK to contact them. Given how busy people are, we were pretty happy with these statistics, but while these stats compare well in marketing circles, that’s not our goal. Our goal now is understanding what we have to do to get better.

What Are We Doing About it?

First priority is personally calling every single detractor [who agreed to be contacted]. I am again obsessed on this process: one person needs to conduct these calls so the information is properly assimilated and understood. Passing support problems to support and product problems to development loses this vital analysis.

Second we are thanking everyone who participated and is willing to contacted.

Third, we are working out a process for contacting the promoters and the “middle” scores. As this is our first time, we have much to learn, and most important, apply what we hear.

14 responses to “The Goal: Our Most Important Metric?

  1. Jeffrey,

    I too am an NPS zealot. I had the great pleasure of spending a couple of days with Fred Reichheld in an NPS class recently.

    I’m constantly asking myself, “WWFD?” What would Fred do? Sounds like you are doing it RIGHT!

    Your response rates are good, following up immediately with detractors will actually yield more promoters (according to Fred).

    I have to go light my candle in my NPS shrine now.

    Peace out,
    D

  2. Denise — Fred Reichfeld says following up with detractors will yield more promoters? Really. that’s encouraging although I feel something in their experience is clearly off and needs more fundamental attention.

    What music goes with a NPS Shrine? Coltrane? Acoustic Eddie Vedder? Do you use incense?

    peace

  3. Deborah Eastman

    Jeffrey,

    Congratulations, you get that NPS is not about the score. It’s about what you do to change it. Too many people focus on the score and forget that Net Promoter is about catagorizing customers into Promoters and Detractors and defining the plan of action for each catagory (including Passive). The financial gain is real. If you are interested in the connection of NPS to word of mouth economics, you may be intersted in our research paper: http://satmetrix.com/resources/download_white_paper.php?pdf=NP_Economics_Technology_Final.pdf.

    Keep up the great work!

  4. Deborah, I would be interested in your research but there’s one problem: I have to enter 20 fields of information to get it, which is a _huge_ barrier. This is the type of marketing that online users runs from. I would encourage you to be much more transparent, and people like me would not run, we might stick around.🙂 Thanks for reading the blog and being a NPS thinker. — jeffrey

  5. Jeffrey,

    I was wondering what your source was for the Select NPS Stars. I am familiar with the Satmetrix database, but the most recent one I found of theirs is from 2004. Your list looks to be different. – Thanks, Melissa

  6. This list of NPS Stars is from here:
    http://www.netpromoter.com/calculate/nps.php
    Thanks for reading the blog, Melissa — Jeffrey

  7. Jeffrey,

    Great blog! Too many in IT marketing lose touch with this philosophy and disappear you know where. Just cause you don’t see many of them over the net don’t mean you should care less. People are a mix of emotional and rational – satisfying both creates real motivation. Group hug to that!

    Seriously though, there is a bit of consumer behaviour research out there on the benefits of converting detractors (ie. reversing dissatisfaction). Whilst the process is potentially effort intensive (or not), they can indeed become accolades and further, tent to be less sensitive to minor issues later on. Its a relationship after all.

    Another refinement to consider is self-rating level of WoM influence. If they would recommend you then…have they…maybe you could ask to how many (decision-makers or seats). There is a grey ‘intrusion line’ somewhere here you may not want to cross. Its easy to go too far!

    Anyhow, some thoughts which I hope help out. Michael

  8. “something in their experience is clearly off and needs more fundamental attention” —> such as … ?

    how have the NPS worked for the banks? what action plans have been made by the banking & finance institutions out of their NPS? were they effective?

  9. Lyzah — What I meant is those who are not promoters have had some experience — product features, installation, tech support, etc. — that is not meeting their expectations, and we need to understand the patterns better, listen better to these problems, and fix them.

    I cannot speak to how financial services companies use NPS per se. Other than: I would pay close attention to what Vanguard does as they are a standout.

  10. Pingback: Igniting User Endorsements « A Discussion on Endorsement Marketing

  11. Great Blog! Been reading for a while now. Just wanted to say good job.

  12. thanks jeff.

    i’m still amazed on how a “simple” metric such as the NPS can generate vast information. especially whenever respondents state their reasons for rating. like this one study we made for a bank. it’s interesting to note that although the bank has a high Net Promoter Score (relative to Reicheld’s NPS Stars), 19% of its promoters believe (and agrees w/ most detractors) that the bank renders slow service. just goes to show that industries should not simply focus on reducing detractors but should also focus on basic customer issues that cut across the NPS spectrum

  13. Hi! I was surfing and found your blog post… nice! I love your blog. 🙂 Cheers! Sandra. R.

  14. Is it alright to insert a portion of this on my webpage if perhaps I post a reference to this website?

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