nps promoter

The Anatomy of a Promoter

According to research by McKinsey and Company, anywhere between 20% to 50% of a company’s revenue is driven by referrals and/or word of mouth. In some industries it may even be as high as 80%, according to Jason Lemkin of SaaStr fame.

Yep, you read that correctly, upwards of 50-80% of every penny you make is a result of someone that you made happy and in turn, they recommended you. In the world of Net Promoter (NPS), we call those customers promoters.

Let’s say your company makes $2 million a year in revenue. Of that two million, let’s split the average and say that 35% is driven by word of mouth. That’s $700,000 of revenue driven by loyal customers. The other $1.3 million in revenue is brought in with advertising and direct sales — both of which cut approximately 50% into your profit, resulting in a net profit of roughly $650,000.

As a decision maker, which of these two channels would you rather drive revenue?

The answer is obvious.

What most people don’t realize however is that the customers who are driving 35% or more of your revenue are only a fraction of those that are actually willing to recommend you. On average, only 20% of a company’s promoters will actively endorse their product or service without instruction or specific engagement.

In other words, using the scenario above, by not engaging with your promoters, you would be leaving upwards of $3.5 million on the table.

Take a deep breath now. Before you fire up your next NPS campaign and start hitting up your promoters, it’s important to understand what a real promoter looks like and how to properly engage them.

Ask most people how to identify and engage a promoter and they’ll suggest you look for the customer with the biggest network and ask them to post a recommendation on Facebook or some other social channel.

While those aren’t bad ideas, online recommendations only represent 7% of all word of mouth recommendations. And, with promoters, it’s not as much about the size of your network, but rather the message that they’re sending.

The truth is, promoters are much more useful than an online recommendation — they’re loyal customers (advocates), defenders of your brand and willing to put their reputation on the line in your honor.

Promoters are much more than just an online recommendation — they're loyal customers & defenders of your brand Click To Tweet

To really understand what a promoter looks like, it’s best to look at a real world example.

In a recent conversation, Chad (CEO & Co-Founder of Promoter.io) and I were talking about the number of financial service providers that were asking him to switch to their solution. The problem, as Chad explained, was that each of them were wanting to take over payroll as a part of their offer — something Chad wasn’t willing to do.

You see, Promoter is a proud and loyal customer of Gusto (previously ZenPayroll) and for multiple reasons, he has no desire or intention of ever leaving. They’ve been borderline extraordinary and that’s the formula for advocacy.

By NPS standards, Chad is a promoter of Gusto. He’s certainly willing to endorse them socially, but that’s only the beginning. Here’s what being a promoter of Gusto means in the real world:

They’re loyal – Chad has received multiple offers from competing products/services, sometimes with cheaper offerings and/or better features. In spite of that, Chad refuses to consider other solutions. In fact, even when it comes to getting a full financial solution, he’s declined the offer because it required him to move payroll from Gusto.

Promoters don’t just recommend you at every turn, they also won’t leave you on a dime. They are the rock that provides stability in your business and will often times be the first to pay more when you increase your offering.

They’re defenders of your brand – A promoter will fight in your honor, and has the power to singlehandedly disarm any naysayers. Whether it’s coming to your defense in the comment section of an article or debating your value over a tweet storm, your promoters will stand up and fight for you.

When questioned about his loyalty to Gusto, Chad has repeatedly had to explain that when a company delivers a great product that is supported by an incredible team (from the founders to the front-line staff), there is simply no desire to switch. Countless competitors have come along, some even offering additional services we did want, but if we couldn’t get it without moving payroll it was an instant pass.

They’re willing to stake their reputation – While posting an endorsement of your company on social is a bold statement, your biggest promoters will often take it one step further.

Chad grew up in a household of entrepreneurs, both his parents having long-established businesses with strong reputations in the community. Being an entrepreneur himself, he’s always resisted the urge to offer advice or recommend products, for fear that they won’t work out and he’ll be to blame. That was until Gusto.

This was the one product that he felt comfortable enough to endorse, and now both of his parents are using it as well. They’ve apparently been highly resistant to change for some time.

While Chad’s recommendation wasn’t blasted out to his entire network, the referral was extremely targeted and stood for way more than just a suggestion to friends. To date he has directly recommended (or even helped personally set up) at least 7 new customers for Gusto on his own, not to mention others he may not be aware of. What would the LTV for those 7 customers amount to for your company?

It also doesn’t hurt that customers who are recommended to a brand by a trusted friend or colleague are easier to convert, have higher than average ARPC/LTV and are more likely to refer others themselves.

Don’t take your promoters for granted, you may be the only company that they’re willing to comfortably endorse. And remember, they’re putting their reputation on the line just for you.

Give Promoter.io a try to learn who your most loyal customers are, what they have in common, and how you can leverage them to drive more profitable growth.

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Dana Severson

Dana Severson is the Director of Marketing at Promoter.io and cofounder of Startups Anonymous. Former founder & CEO of Chasm.io/Wahooly and AngelPad Alum. In addition to focusing on growth at Promoter, Dana is a weekly columnist for Inc.com

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