Use THIS one key metric to grow your startup (it’s got nothing to do with social media)
What’s the true value of customer feedback?
Metrics bring targets, focus, and scary pivots to startup teams. George Chilton, Creative Director of Hubbub Labs and prolific tea drinker, looks at one metric he believes could be the difference between life, death and impressive growth at your startup.
When I’m at parties people often approach me and ask, “George, what’s your favourite business metric?”
Okay, that’s never happened. Firstly, I don’t go to parties, and if I did, people wouldn’t approach me. Regardless, I’m here to tell you about Net Promoter Scores (NPS).
The NPS is an effective metric for startups, SMEs and enterprises, because it boils down how well you are serving your clients. What’s more, it’s not pie in the sky. According to the Harvard Business Review, your NPS directly correlates with growth.
So what are Net Promoter Scores, exactly? And why do they work so well?
Your company’s NPS can range anything from -100 to 100. The higher the number, the happier (and more evangelical) your client base is.
Finding out your NPS is, understandably, a little nerve-wracking, especially if you own a new business or startup. It’s akin to turning on the house lights in a theatre; you’re either going to see happy smiling faces, or a bunch of angry people about to hurl tomatoes.
But whatever the result, it gives you a solid baseline to work from, and a chance to dodge those rotten vegetables.
NPS enables you to focus on your clients and their needs, which is especially great news for startup CEOs and founders, who find it increasingly difficult to stay on track as their startups grow.
How do I calculate my company’s NPS?
Like all the best metrics, it’s stark and to the point.
First, survey a statistically significant sample of your clients – or contact them all, if you’re a smaller company. Simply ask:
On a scale of 0-10, how likely are you to recommend our service to your friends or colleagues?
Then, deciding whether someone is a detractor (D), neutral (N), or a promoter (P) is simply a matter of looking at their score. If a client responds with anything from 0-6 he or she is a detractor, 7-8 and your client is neutral, 9-10 means he or she is a promoter.
Finally, to calculate your company-wide score, simply take away the percentage of detractors from the percentage of promoters. Here’s an example:
You have 1000 results. 200 results ranged from 0-6; 300 were from 7-8; the remaining 500 were in the 9-10 bracket.
Your percentages would be as follows:
20% – D
30% – N
50% – P
P – D = NPS
So here your NPS is 30.
Easy right? So easy it’s worth doing right now.
How do I know if my score is good or bad?
Your score can be positive, or negative, even zero – and the higher it is, the better your company is serving client needs and exceeding expectations.
Context is everything, so if you want to see how you fare against your competition, SurveyMonkey offers industry benchmarks.
What do I do now?
- Run the survey and make NPS a company focus. Each department should be aware of the NPS and its consequences.
- Strive to increase this metric. It will focus your team – at all levels – on seeing things from the customer perspective.
- Rinse and repeat. Regardless of your current NPS, if you focus on pushing it up, you will see improvement in feedback, UX, revenue, referrals, reviews, and a whole range of good things.