So how can you use one number to grow your business?
We asked the following questions at the recent SCA Conference in Hobart to find out what strata management businesses are currently doing to grow their businesses:
How do we grow our business in strata? This was the response from 70 Strata Managers.
How often do you get a new client that has not spoken to or read at least one referral?
“What others say about your brand is more important than what you say about yourself”
Measuring customer satisfaction is important in any business so we know those referral sources are saying good things about your company. But what is the best way to measure customer satisfaction? How do you collect data in a timely fashion? What are the challenges in comparing client feedback data? Is there a superior metric industry can use which is consistent, reliable and proven?
Is there one superior metric for Strata?
Yes there is. There is one metric which has been used extensively world-wide known as the *Net Promoter Score - NPS.
The Net Promoter Score, or NPS®, is based on the fundamental perspective that your customers can be divided into three categories: Promoters, Passives, and Detractors.
By asking one simple question — How likely is it that you would recommend your company to a friend or colleague? — you can track these groups and get a clear measure of your company’s performance through your customers’ eyes. Customers respond on a 0-to-10 point rating scale and are categorised as follows:
- Promoters (score 9-10) are loyal enthusiasts who will keep using your services and refer others, fueling growth.
- Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to other suppliers.
- Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.
* Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc
To calculate your company’s NPS, you take the percentage of customers who are Promoters and subtract the percentage who are Detractors.
It is not only about asking for just a number and ending the survey – we also ask why they gave this score. It is important to understand why each customer gave you their particular score for effective process improvement or corrective action. This will also help you identify what your core strengths and competencies are and what needs to be improved on.
Making the right improvements based on the feedback of your customers can help turn passive and detractor customers into promoters and increase customer loyalty and profitable growth.
NPS is currently used by such companies as Qantas, Hertz, Westpac Bank and Dell to gauge customer loyalty but also to use the data to improve their services.
So why has such a simple solution gained so much uptake? Here are just a few reasons.
- Intent focused not emotion focused
- Plants the idea of recommendation in the clients mind
- Very high response rate (33% compared with 10 -15)*
- Easy to understand
- Easy to compare
- Fast to get result
Does NPS translate to more actual referrals?
‘Exploring the Relationship between Net Promoter and Word of Mouth’*, a research paper presented by Satmetrix, co-developers of NPS, supplies a pretty convincing argument that Net Promoter can translate to more referrals for your business.
Their research found that 75% of promoters gave a positive referral over a 12 month period to an average of 3.24 people. This contrasted to 32% of detractors that gave negative referrals to an average of 4.33 people over a 12 month period. You would definitely prefer your business had more promoters.
To be successful, companies need to understand what actions they can take to increase Promoters, decrease Detractors, and to move all customers up the loyalty chain. Once you determine what actions to put in place and take the steps to empower your employees to execute these actions—you will start to see an impact on loyalty and growth.
*(http://cdn2.hubspot.net/hub/268441/file-1479657669-pdf/White_Papers_%28PDFs%29/Aug_19/WP-NetPromoEconTheImpactOfWordOfMouth-Wireless.pdf accessed 12 June 2018)
StrataMax and NPS
StrataMax introduced NPS for their clients to use three years ago and have been able to collate some interesting trends from the data collected. Each year, more and more strata businesses are opting in to be included in the half-yearly NPS survey, sent to committee members of bodies corporate under management.
The key objective of this initiative has been to help our clients grow through:
- identifying internal strengths and weaknesses across geographic areas, managers, and building profiles
- identifying key themes that resulted in promoter or detractor ratings
- benchmarking against industry averages to better understand opportunities for business growth
Based on the StrataMax NPS *data collected over the past three years, more than 50% of committee members that rate a business badly, cite poor response time, lack of follow-up and poor communication as the main reasons. Only 18% of committee members gave the main reason for a bad rating as poor value for money or overpriced.
On the flip side, a committee that rated a business well gave promptness, professionalism, efficiency and friendliness as the top reasons with “good value or price” cited by only 0.75% of respondents.
It was interesting to see that 44% of respondents at the SCA National Conference were already using NPS to measure their business. While NPS is just one number it has huge potential to grow a strata management business.
* Based on over 118,000 surveys sent to committee members over the past three years.
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