When I started my first company, Brilliant Image, I ran across a statistic that every happy customer tells 4 people, on average; unhappy people tell 27. Over the years, the specific numbers changed, but the magnitude of the difference has always stayed the same. We’d share the numbers with our staff because we wanted them to appreciate just important customer service was – especially in our business where the most important service took place before we processed orders.
Today, with Facebook, Twitter, Anglie’s List, Yelp, etc., and the prevalence of computers, tablets and smartphones, more people than ever can learn about your customer service experience, if you choose to share it.
Today, the way customers relate to brands, products and services, is more important for the companies that provide them than ever before. Therefore, it makes sense that companies would want some objective ways of measuring these experiences so they could make appropriate comparisons to competitors and analyze what they can do about it. About 10 years ago, a Bain & Co. executive created a metric that corporations could rely on, called the Net Promoter Score (NPS). It allowed corporations to categorize businesses they do with based on one question, using a zero to 10 scale: how likely are you to recommend a particular product, service or brand to a friend or colleague? A follow-up question asks the customer to give the reason for the score.
Recently, Larry Freed, CEO for ForeSee, observed a weakness in relying on this score. “Just because a consumer doesn’t recommend a product or service, doesn’t mean that he or she is a detractor or unsatisfied.” To address this problem, he developed a new metric called Word-of-Mouth Index – WoMI. Going one step further than the NPS, it asks “How likely are you to discourage others from doing business with this company?”
In his book, “Innovating Analytics”, Freed explains that WoMI allows a company to uncover the common attributes of those who are genuinely not pleased with a product or service – the true detractors.” Surveying two million customers of more than 275 companies, he found that NPS overstates the number of detractors a company has by an average of 270%. Thus, companies who use WoMI are better able “to understand where to focus their investments based on a more scientific approach to the customer.”
How do you measure your customer experience? How often do you compare their experience to those using competitors’ products or services? How could you use more accurate information to gain a larger competitive advantage? Share your experiences and ideas with us.