You don’t need to go to business school to appreciate the value of a loyal customer. Not only are they less likely to visit a competitor, but they’re also easier to satisfy, more likely to refer friends, and less price sensitive.

Most business owners intrinsically know the value of a loyal customer. But what if you could quantify the value of your most loyal customers and find a way to clone them. We’re not talking about genetic experimentation, but rather finding more customers that fit the profile of your most loyal customers.

This is exactly what Andy Taylor, CEO of Enterprise Rent-a-Car, described to CEOs in a groundbreaking 2003 Harvard Business Review Article. At the time, most companies relied on lengthy customer surveys that rarely provided good actionable feedback. Today, more than two-thirds of the Fortune 1000 use Taylor’s method, what came to be known as net promoter scores, to measure customer satisfaction.

What is a Net Promoter Score?

Net promoter score is a measurement of customer loyalty. It ranks your business on a scale of -100 to 100. A score above 0 is good and a score above 50 is considered excellent. Net promoter scores are calculated by asking a random sample of customers two questions about your business.

  1. On a scale of 1-10, how would you rate my business?
  2. Tell us, why you chose that rating?

The customers are then divided into three groups—detractors, passive, and promoters—based on their rating of your business.

detractors passive promoters

As the name implies, net promoter scores are used to help business owners focus on promoters, the people who already love and recommend their business. By zeroing in on what makes a promoter, NPS gives you an instant profile of your most profitable customers.

Limitations of NPS

While Taylor’s NPS methodology might have been novel 20 years ago, today it’s tired. Literally, 80% of survey respondents suffer from survey fatigue—or starting and not completing a survey.

In 2003, From business schools to boardrooms, NPS became the de facto customer experience metric almost overnight. But like most overnight successes, promoter scores lost effectiveness the more popular they became. Below are a few of the limitations of traditional NPS measurements.

1. One-way communication

NPS is intentionally a one-way communication tool. So even if you’re eager to understand detractors, there’s no easy way to do it. Since NPS was created before Mark Zuckerberg stepped foot in a dorm room, it doesn’t account for real-time feedback. In the influencer era, where bad reviews ruin a business, it can be just as important to communicate with detractors as it is promoters.

2. Old slow and skewed data

Another symptom of net promoter scores is bad data. After seeing the success of NPS at Enterprise Rent-a-Car, the Fortune 500 quickly adopted it. At many companies today, bonuses are even tied to promoter scores. As a result, eager executives do whatever it takes to turn detractors into promoters. More often than not, that means explicitly asking customers for better scores skewing the results in the process.

It’s not just skewed NPS data that’s the problem, overall the score is a lagging indicator. It tells you how you were doing, not how you’re currently performing. Even industry-leading customer experience solutions can take months to collect customer surveys through email. And how helpful is it to know that your customers were upset two months ago? Old data is fine for understanding the past, but a terrible indicator of current and future performance.

3. Low response rate

Response rates suck because people don’t open emails like they used to. If you’re still using email to communicate with customers, expect about 1 in 5 to even open them. If you’re trying to collect an NPS survey from customers the results are even worse. With such low engagement, it’s no surprise that it takes months to collect statistically significant NPS data. But it doesn’t have to be this way because Podium has developed a Feedback tool designed for today’s customers.

Introducing Feedback

Despite the popularity of net promoter scores, many local businesses still struggle to measure their customer satisfaction. Existing tools rely on email to get responses and require the budget of a Fortune 500 company to get started. We’ve designed a modern feedback tool that’s easy to set up, simple to use, 5x more likely to engage your customers than email-based tools.

Feedback is a new product that gives you an immediate pulse on customer perceptions. It determines your Net Promoter Score (NPS) through two automated texts. No links, no lengthy surveys—just real-time responses and immediate insights. It’s the evolution of NPS.

If you’ve ever gotten a really bad review online, you know it’s usually too late to resolve the situation. Feedback gives you real-time satisfaction scores straight from your customers. So problems are resolved and customers keep coming back instead of leaving negative reviews.

Feedback uses convenient messaging channels like SMS, Facebook Messenger, and more to improve the speed and consistency of customer responses. On average, Feedback users see 80% of responses within two just hours. Fast responses close the feedback loop and allow your business to rapidly improve.

Since Feedback is alongside all of your other communication in Podium, you have the context to know exactly which channel the customer came from, who they’ve interacted with, and how long they’ve been a customer. Not only does this give you the data to diagnose problems, but Podium also provides the tools to solve them.

Feedback makes enterprise-sized insights accessible to anyone; from a car dealership to a dentist. Replace doubts about your customer experience with data. Demo Feedback today, and turn your email surveys and phone questionnaires into instant insights.