One of my clients is firmly grasping the concept of Net Promoter – and is committed to make it be a part of their plan in 2008. To set their goals, they scanned the materials that were readily at hand: information from The Ultimate Question with aggregate and summarized high and low Net Promoter performance scores and published materials they had seen on Net Promoter Scores out in the marketplace.
Based on this information, they were setting a series of stretch goals for their upcoming year plan and were considering attaching compensation to the achievement of those goals. They had also run the calculations of revenue projections that should be realized based on achievement of different levels of Net Promoter performance.
The challenge was that they were using aggregated data assembled across many industries. And this is when I stepped in with a bit of coaching. After huddling with John Abraham, Satmetrix’s General Manager, Net Promoter Programs, we agreed it needed to be sent out there that setting a Net Promoter goal based on averages or general revenue increases identified is not the most accurate way to determine your goals for your industry.
Many of these indicators were created by the collective data across multiple industries. Industry differences and variations in business models can greatly impact the outcomes and how easy or difficult it is to attain these scores. Therefore, it’s highly recommended to dig a bit deeper into your industry if you are set on establishing Net Promoter goals.
Instead, set targets only in context with direct industry competition. First, understand the general baseline for other companies in your competitive set. “Software as a service” may not be a competitive set with strong comparative Net Promoter Scores. If this is the case, seek out the most closely similar businesses who are tracking Net Promoter Scores and performing… and only once you understand where they began, their growth in Net Promoter and their goals – set your goals and stretch targets accordingly. It’s important to also understand what actions those companies made to achieve their scores – to determine if you are putting the same amount of focus and resources into your actions when you set comparable goals.
John shared that much coaching is needed in industry to ensure that people are setting relevant Net Promoter goals. There are many companies setting goals based on high level and averaged Net Promoter targets that span all industries – and this is just not relevant enough to build a business plan around. It sets you up for the interminable changing and shifting which will dilute the effort. Goals based on an across industry average and revenue growth rate are just not going to necessarily yield the same outcome down a specific vertical or industry or business model.
This is important food for thought. I know that “what gets measured gets managed.” But we need to make sure that the goals we are setting for Net Promoter create momentum for this concept and the operational commitment to make changes that drive performance up. Swift goal setting without doing the homework to determine operational and industry relevancy will help you get that “to do” item done to complete this year’s scorecard. But if it doesn’t track with the reality of making progress in your business, it may have you revising that goal so many times that it clouds its potency and impact and could lead to scrapping it all together.
We just completed our annual satisfaction survey which included the NPS question. This is a blind survey whicjh gives us the opportunity to ask the NPS question about other manufacturers that customers use. Our score is higher than the other manufacturers, but our score did not improve over the same survey in 2007. Any recommendations on how to set a goal for 2009?
Posted by: Tim Proctor | November 18, 2008 at 11:20 AM