The Importance of NPS (Net Promoter Score®) and ENPS (Employee Net Promoter Score®)

It’s clear to see how the ratio of detractors versus promoters would indicate a company’s potential for success. Starting from behind, it would cost a company much more money to win back a detractor as opposed to simply keeping promoters on board. A detractor can file complaints and eat up valuable company resources. They won’t buy more products and services from the company, given their negative experience, and they might very well bad mouth your brand to their friends, families and peers.

The reverse is true with a customer enthusiast and promoter. They’ll buy more from the company they love, they’ll need less company resources, and will refer friends and relatives. Free publicity from a promoter means the company need not spend as much on marketing and advertising! As Fred Reichheld said, “essentially promoters become the company’s marketing department.”

How can the Net Promoter Score® work for your business? And how can you increase your NPS®?

Bain and Co, who originally introduced these metrics, have researched the correlation between a company’s growth and its Net Promoter Score and Employee Net promoter Score. They found that for most industries, the Net Promoter Score itself accounts for 20% to 60% of a company’s organic growth rate. On average, the leader in an industry has a Net Promoter Score more than double of its competitors and ENPS helps drive this number. (You can find more on the Bain’s website: “NPS and growth”.)

Bain & Co shows on its website a partial list of companies using the Net Promoter Score system. The list is far from comprehensive but gives an idea of the Net Promoter Score popularity and widespread use. The list can be found here: Companies using NPS.

 Calculating an organization’s Net Promoter Score or Employee Net Promoter Score every once in a while, is not enough in itself to bring about any longstanding value. They need to be part of a broader ecosystem whereby the entire organization lives and breathes by them.

First off, without senior leadership sponsorship and a strong commitment to improving the customer and team member experiences, it will be difficult for any one part of the company, be it marketing, sales, operations, customer service, HR or a customer experience team to get the necessary cross-functional adoption and accountability for the program. It needs to be a company-wide effort.

Secondly, the NPS ecosystem needs to have a closed loop. Frontline team members need to be able to act upon real-time feedback and customer insights, whereas operations, sales, and marketing teams should also be able to learn and improve from the utilization of the information obtained. HR needs to be able to track ENPS and guide efforts to improve the team experience in meaningful ways.

Third, the data needs to be properly analyzed. The power of the Net Promoter Score (NPS) and the Employee Net Promoter Score (ENPS) lie in their simplicity, but unless a business dissects the data and figures out the root causes of its detractors’ experiences, or the factors of the success that turned simple customers or team members into promoters, it will miss out on a recipe for future growth, profitability, and sustainability.  

It is paramount for a company’s leadership to seek out the “whys” behind the data and to adapt and evolve accordingly. This is why AFFINITY OS makes so much sense. By monitoring the AFFINITY SCORE and drilling down as needed on the data, you can dissect and disseminate as much information as you need to help guide your teams’ efforts and decisions in the most efficient and effective way possible.

What is Earned Growth Rate (EGR) and why is it so powerful?

With high NPS and ENPS numbers driving referrals and retention, there is also a simple way to measure their ultimate impact on revenues.

Frederic Reicheld, who invented the NPS system, has recently developed a revenue metric that is called Earned Growth Rate (EGR). This is a combination of two elements: Net Revenue Retention (NRR) and Earned New Customers (ENC).

Net Revenue Retention (NRR) simply measures this year’s revenues from customers who were with you last year, divided by last year’s total revenues.

NRR (%) = Current Year Revenue from Retained Customers from Previous Year ÷ Previous Year’s Total Revenues

This tells you if you’re expanding your existing customers’ spending, or if existing customer spending is contracting.

Expressed as a percentage result which you can track over time, NRR is a bellwether of retention; more spending per customer = increased revenue and retention.

The second element, Earned New Customers (ENC), is the percentage of spending from new customers generated by referrals versus the percentage generated from bought customers. This not only helps you calculate your Earned Growth Rate (EGR), but also allows you to qualify your customer acquisition spend and justify investments in delighting current customers.

When we illuminate which customer segments and acquisition channels represent the best investment, invariably “bought leads” turn out to be far more costly than referred leads.

FACT: Sales conversions and lifetime value are significantly higher among referrals versus bought leads.

To prove this out, it is critical to ask all leads the primary reason for their enquiry, on the day. The importance of this question is often overlooked or underappreciated by salespeople. The truth is, the better the intel they secure from the lead on the source of their enquiry, the more they can help your marketing team tune up their efforts and in turn generate higher quality leads for the sales team themselves.

When referrals are tracked diligently, we can prove this phenomenon out and justify increased focus, attention, and resources on delighting customers and leveraging Promoters.

Once you have established these two important numbers, you can then determine Earned Growth Rate. To do that, you simply add Net Revenue Retention (NRR) and Earned New Customers (ENC) together and then subtract 100%.

EGR (%) = (NRR + ENC) – 100%

As is the case with NPS and ENPS numbers, Earned Growth Rate (EGR) is most relevant in comparing same location sales over time. Even though many companies want to benchmark themselves against their competitors, or industry averages, these numbers most importantly reflect trends within your business and provide early insights into shifts taking place at your various locations.

That said, it is entirely valid to compare these metrics across your locations and this will help define and refine best practices among your sites. Even though there are a huge number of factors affecting each location’s performance, as explained in “The Affinity Principle”,

the engagement of your team and happiness of your customers will more significantly influence Earned Growth Rate than many other economic or environmental factors.

Being able to measure and track these leading indicators allows you to optimize the delicate balance between marketing efforts and customer care initiatives. This increased efficiency and effectiveness will directly lead to increased sales and expanded lifetime value of your customers.

AFFINITY OS™ FAQs

Is the AFFINITY OS™ expensive?

AFFINITY OS™ is pricing is proportional to your customer base to ensure it remains as affordable when you’re starting out as it is when your business is growing exponentially.

On average, you only need to save 3-4 annual members to cover the cost of the AFFINITY OS™ for a year.

Do I need a full-time team member to use AFFINITY OS™ effectively?

Only a relatively small time commitment is needed per day, per site. As a general rule, the amount of team time required is proportionate to the size of your customer base and number of sites being managed. With unlimited user accounts, you can have multiple team members working on feedback and sharing the load.

Is the AFFINITY OS™ easy to use?

AFFINITY OS™ is a very visual system and intuitively easy to use and understand. As your appreciation of the systems capabilities grow, so will your ability to leverage your accumulating database of feedback. 

Does the AFFINITY OS™ require a lot of training?

In as little as an hour, whoever you make responsible for the system will be able to manage its day to day operations. As your appreciation of the benefits of the system grow, we can help you deepen your understanding of the system and reporting as requested.

How many times per year do customers and team members get surveyed?

On average, everyone gets surveyed four or less times per year. Customers only get surveyed if they are active.

Can you automate responses to customer and team surveys?

While you do have the ability to automate your responses, we recommend against it. In order to build relationships, authentic communication is best. To save time, we recommend using response templates that are customized to the specific feedback received.

How long does it take to answer a customer and team survey?

A customer survey consists of 6 questions on which the customer chooses a 1-10 rating as well as an optional text box for specific written feedback. The survey can take as little as 90 seconds to complete.

A team member survey consists of 4 questions on which the team member chooses a 1-10 rating as well as an optional text box for specific written feedback. The survey can take as little as 60 seconds to complete.

How can I best leverage my AFFINITY SCORE?

You can uncover negative trends BEFORE they impact your bottom line and you can uncover positive trends that can be implemented in other departments or at other sites.

Watching your Affinity Score over time will reveal trends and nuances to your business that provide invaluable insights and early warning signals. In multi-site operations, comparing site to site will also reveal best practices and allow the multi-site operator to keep a finger on the pulse of their operations no matter how spread apart they are.

How customizable is the AFFINITY OS™?

AFFINITY OS™ has a powerful engine driving the system and has many options to explore. Any additional customization of the system would need to have universal appeal to warrant changing the OS system-wide. We never stop innovating though, and provide new releases with updates and improvements on an ongoing basis.

Can I use the AFFINITY OS™ for multiple locations?

The system is ideally suited to multi-site operations. Comparing site to site can provide invaluable insights into best practices and local, regional, and even international trends in your business.

Do you provide technical support?
We have an experienced tech team who can provide timely and appropriate support as needed.
Do you provide training?

We provide an initial training session to get your team established with the system. This is included in the set-up fee. Additional training is on-demand and billed separately.

CONTACT US

+61 475 866 592