Many companies are striving to calculate the benefits of improvements in NPS. And for businesses that focus on customer churn, the economics are often compelling based on just the value of churn reduction.
Last week I was watching a presentation by a multi-billion euro service provider who drew out for me another source of economic advantage that I had not been switched on to.
They made the observation that Net Promoter driven reductions in customer churn resulted in improvements in customer acquisition performance. So what? That's word of mouth right - the whole point of Net Promoter - more promoters creating more new business opportunities for you. But that's not the whole story.
For them, it turned out that reduced customer churn had meaningful internal operational benefits that directly impacted new customer acquisition. Specifically, management spending less time and resources firefighting customer issues freed them up to focus on growing new opportunities. The flip side being that companies with low NPS and high corresponding churn find themselves diverting significant internal resource and management attention to putting out fires. You certainly can feel this when it's impacting your business. In an extreme case companies can spend their entire management bandwidth struggling to protect revenues that have been damaged by poor customer decisions made years earlier in the interest of short term economics.
Like word of mouth, this is not the easiest measure to quantify, but if your own experience supports this idea, at least include it in your arguments for investing in an improvement in NPS.