Customer Loyalty, Net Promoter Score
Referral Programs – How Many of Your Customers Will Raise their Hands and Provide a Referral?
Everyone wants more referrals, but less than 15% get them! This is what we refer to as the “Referral Gap”. We may think we don’t get referrals because customers are unwilling to provide them. But the #1 reason for not getting referrals is that we Don’t Ask.
Top five reasons for the Referral Gap:
- Don’t Ask. Many people never get around to asking.
- Ask at the Last Minute. When they do ask, it’s an unproductive last minute request.
- Ask at the Wrong Time for the Client. We ask, but the customer can’t think of anyone at the moment.
- Haven’t Earned the Right to Ask. Asking too early before they are ready to put their name on the line for us.
- Don’t Have a Repeatable System. We ask sometimes, but not consistently because it is a manual system.
Referrals are the Top Sign of a Healthy Business
In his book, The Ultimate Question, Fred Reichheld shows the strongest predictor of a healthy business that produces long term revenue and profit is one that creates strong customer loyalty an creates customer advocates. Specifically, he conducted quantitative research using hundreds of variables and showed that asking what he called “The Ultimate Question” was the best predictor of a successful company.
The Ultimate Question asks customers this simple, yet telling question: “How likely is it that you would recommend this company to a friend or colleague?”
Customers respond on an 11-point scale ranging from “0” to “10”. Zero is no, you would definitely not recommend and ten is yes, you would definitely recommend. From this scale, people who rate 0 to 6 are “detractors” while 7 or 8 are “passives” and 9 and 10 are “promoters”. A Net Promoter Score, or NPS, is calculated by taking the promoters and subtracting out the detractors.
Read our blog book review about "The Ultimate Question".
Creating a Repeatable Process for Referral Programs
At Brand Periscope, we believe every company should be actively engaged in measuring their loyalty, asking the Ultimate Question, and building more customer advocacy.
This is why Brand Periscope has created several easy-to-use, repeatable and affordable Referral Programs which ask customers about their likelihood to provide a referral.
Contact Us to Start Building Referrals and Generating Leads from Your Existing Customer Base...Unless Your Prefer to Make Cold Calls.