Author Archives: Dana Severson

About 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

Increase survey response rates

7 Secret Ways to Increase Your Survey Response Rate

Several years ago, before I was a part of Promoter.io and familiar with the Net Promoter System, I had put together a survey for a group of early users of my newly minted startup.

I had spent at least a few hours carefully wording each question to ensure that I received the precise data I was looking for.

It was pretty darn exciting. Armed with the vast amount of knowledge that my users were about to provide me, I was going to at least triple my growth (so I thought).

Once the survey was refined to my satisfaction, I quickly sent the email out and waited in anticipation, constantly refreshing the page as the excitement of what was to come is too much to bear.

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A few responses start to trickle in and then … things went dark.

The kernels stop popping. It was cooked.

I panicked.

Maybe it was because of the time zone differences? Maybe my emails went to SPAM (as I frantically sent a survey to a friend just to be sure). I know, maybe everyone is busy right now and they’ll get to it in a few minutes.

The justifications began to build up.

The reality was: I messed up.

Well, not really. I just wasn’t armed with the knowledge of what I’m about to bestow upon you.

The truth is, most companies get this totally wrong, including even the most successful company in the world.

But, listen up, I’m not going to let you make the same mistake that I made. I’m about to give you 7 secrets to massively increase your survey response rate that even Apple isn’t aware of:

Send your survey from a human, not a department or company

This may seem obvious, but all too often, companies want responses to go to an email address that everyone on a team has access to.

What you need to know is that nobody wants to respond to a bot (i.e. support@company.com), they want to know that their voice is being heard by an actual person.

You can even create a fictitious email address or alias, so long as it looks like a human.

BONUS: If you want more honest answers, send the survey from someone that the customer doesn’t deal with on a regular basis.

Set expectations in your subject line

If you’re sending a survey that’s going to take 20 minutes to complete, let them know that this is going to suck up front.

Ha, just kidding. Don’t ever send a 20-minute survey to begin with (more on this below).

What you should do however is make them aware of how easy this will be to complete.

Something like, “Two Quick Questions” or “Have 60 seconds? We’d love your feedback!”.

Minimize the burden they instantly feel when they see a request to complete a survey.

Make your call-to-action very clear

Don’t muddy your email with a bunch of links elsewhere.

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Most of us get link happy when sending our customers an email and start using it to drive traffic to whatever page we’re trying to promote.

Don’t do that here.

Surveys should have a single CTA. Link to the survey and that’s it. Period.

BONUS: If you can embed the first question/action in the email itself, you’ll dramatically improve your response rate.

Ask no more than 2 to 3 questions

I know this is hard.

Trust me, I know how tempting it is. If I have my customers attention I want to ask every question under the sun.

This is super important for you to know though. (Which is why it’s bold.)

Statistically, every question you ask after 2 or 3, you’ll see a 30-50% reduction in response rate.

Yes, that means that if 10% of your customers answer your first two to three questions, only 5% may answer the fourth (this is called survey abandonment).

I mean, let’s not be oblivious to our own behaviors. This is just human nature.

(This is part of why NPS surveys sent through Promoter see an average response rate between 30-40%.)

Caveat: There are obviously exceptions to this. Some surveys (outside of Net Promoter) require more questions (true research, etc). More often than not however, people ask unnecessary questions which burden the customer.

Don’t ask questions that you can find out on your own. It’s a waste of time for your customers and you’ll hurt your response rate and validity of your data in return.

More on this topic here.

Send Reminder Surveys

I’m going to assume that you’re familiar with the benefits of sending a reminder email in sales or just general customer outreach.

Sending a reminder email for a survey is no different.

In fact, what we’ve seen at Promoter.io is that by sending a reminder to complete your survey between 3 to 7 days will boost response rate by up to 15% with just a single reminder.

If you’re concerned with customers getting upset and unsubscribing for “bombarding” them a reminder survey, we’ve found that only a ½ of a percent will actually unsubscribe on average.

That’s all to say that the benefit (15% boost in response rate) far outweighs the cost (.5% unsubscribes).

Just do it, but only send one reminder.

Follow up personally with EVERYONE that responded

By following up, I don’t mean, send them a reminder (like I mentioned above). I’m talking about replying and “closing the loop” with each customer that completed your survey. Individually.

This probably sounds like a daunting task because, well … it is.

You’re also probably wondering how this could possibly increase your response rate considering they’ve already responded.

Fair question, more on this below.

I’m not going to sugar coat it, this isn’t going to be easy. And, quite frankly, it’s not supposed to be.

How does that saying go? “Nothing worthwhile is easy.” Or something along those lines.

And, before you get ahead of me with your thoughts of fancy automation triggers, this is one message you CAN NOT automate. I know, I know … blasphemy.

(I’m not going to get into why you can’t automate here, but we did write a post about it.)  

Why is this sooooo important?

Let me give you an example:

Imagine you’re at a restaurant. You just finished your meal and the manager comes to your table to ask how your experience has been.

After a minute of providing some praise and constructive feedback, the manager stares at you blankly and walks away.

Ridiculous. Right?

It seems absurd that this would ever happen in real life, but this is exactly what happens when you don’t respond to your customers feedback online.

It may not feel as personally insulting, but if that’s your justification, you’re missing the point.

The greatest value that will come from your survey, happens post survey.

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When you follow up with your customer after they complete your survey, three really important things happen:

  1. Your customer feels valued. This is all they ever want. I mean, why did they fill out your survey in the first place? It certainly wasn’t for you. It was for them. They wanted to be heard.Thank them. Acknowledge them. Tell them that you care. Do that and you’ll have a customer for life.
  2. Opportunities Emerge. You may think that all of the answers you need will come from the survey questions you ask.

    That indeed is partially accurate, but not fully.

    The real gems emerge in the discussions that follow. (One of our customers launched a new 7-figure revenue channel that all started as a result of a single discussion with a customer post-survey. No joke.)

    These discussions occur with your customer because you had the wherewithal to personally follow up, which … ta da … gets them to respond back.

    Every single response to your survey is an opportunity: to build a stronger relationship, to ask for referrals, to upsell/expand customer spend, to proactively recover a customer who is about to churn and looking at alternative solutions, to capture direct and meaningful product feedback and more. Treat these follow-ups as such.

    BONUS
    : In addition to acknowledging their feedback, be sure to slip a question or call request in your follow up.
  3. Action happens. Did you get positive answers back from your customer?

    Great! Ask them to leave you a review on G2 Crowd/Siftery/Yelp/etc. Or, join your referral program. Or, an endless number of ways they can help you drive growth.

    The fact is, the average company generates roughly 50% of their revenue from their existing customers (and in some cases even more).

    The other fact is, your survey likely won’t (on its own), inspire your customers to go out and sing your praises to others.

    But your follow up will.

    What if you got negative responses back from your customer?

    Great! Well, not so great, but not terrible either. Why? Because you can follow up with them and fix their issues before they head to your competition.

    In the world of Net Promoter Surveys, a customer that has identified themselves as a detractor (gives you a score between 0 – 6) will churn within 90 days (on average). You can drastically reduce your churn by simply … you guessed it … following up. :)

So, what does any of this have to do with increasing survey response rates?

Let’s go back to my example.

Imagine you’re back at the same restaurant (in spite of the socially awkward manager that never acknowledged your feedback at your last visit). This time, the manager approaches you again and asks if you’d be willing to provide some feedback yet again.

Are you going to do it?

The truth is, you may still do it because it’s a personal setting and you don’t want to be rude. But online … hell no.

If you want to increase your survey response rates over time, let your customer know that you’re listening. It’s as simple as that.

The greatest value that will come from your survey, happens post survey. Click To Tweet

Send more than one survey each year

Several years ago I worked for a national magazine as an Advertising Director.

Every few years we would do these readership studies to gather the demographics, sociographics, etc. from our readers. (For the record, the response rate to those studies was close to nil.)

These weren’t for our knowledge, they were done as a data-gathering practice to pad our media kit for advertisers.

Of course, only the most enticing of data would make it to our presentation.

We only did them every few years because we knew if we did them more frequently the data may no longer be in our favor.

The reality is, customer data and customer sentiment changes rapidly. This is especially true with online businesses or and product or service that is used frequently.

Unlike the advertising business, most companies don’t do surveys to pad their numbers, they do it to gain knowledge. Factual knowledge.

As a result, most companies will survey their customers multiple times per year. SaaS companies and other high-touch organizations do it quarterly (which we tend to recommend for most). Service businesses may do it bi-annually.

The point is, you may not get a customer to respond to your first or second or even third survey. But chances are you will on your fourth, or fifth. Especially if you are transparent as a company with what you are learning from your customer engagement efforts (share with all of your customers regularly).

In marketing, it’s common knowledge that it takes 7 or more touches before a prospect will take action. Sending a survey can be similar in that way.

If you want to increase your survey response rate over time, send more than one survey a year … and be consistent about it.

One Last Thing (Something that you shouldn’t do)

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You may believe that providing your customers with an incentive (compensation, gift card, discount, etc.) would be a good way to boost response rates.

Without a doubt, that is true. You will indeed get a higher response rate.

BUT … it comes at a cost.

And, I’m not talking about the cost of the incentive itself.

The bigger cost is the informational cost. Or rather, the cost of inaccurate or biased responses.

Simply put, when you incentivize your customer to complete your survey, you instantly change their motivation and behavior.

Two things happen:

  • They give less consideration to the questions as their motivation shifts from “being heard” to “getting paid” and “getting done with this survey as fast as possible”.
  • You introduce guilt bias. That is, the customer feels compelled to provide more favorable answers due to the perception of a quid pro quo.

The big question you need to ask yourself is: What’s more important? Quantity or quality?

Follow the other 7 Steps above and you can have both!

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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survey incentive

This is Why Survey Incentives Don’t Work

I received an email the other day from a company (with a product that I use) that was offering me a chance to win a $300 gift card in exchange for completing their survey.

While I was tempted, I decided to pass on the survey.

Why?

Because my time is a precious asset and one that I’m not willing to gamble on … at least not without knowing the odds.

Had this company mentioned that the email was only sent to 20 people, so I knew my odds were 20:1, I might have considered it.

But, here’s what I did know … or at least perceived to know based on the email:

  • If they’re incentivizing me to take a survey, there must be a lot of questions, which means a lot of time
  • This is a mass email, so it’s likely that 1000’s of people are getting the same email (making it even less relevant to me)
  • I never win anything, so why would this time be different

The truth is, I don’t know if anything I perceived to be true, actually is. This is just what I’ve been led to believe based on my previous experiences. That’s my reality.

But, just because I’m not willing to gamble my time doesn’t mean that others won’t, so I’m sure that they got some customers to respond. How many is anyone’s guess.

Now, imagine that instead of a lottery, they had offered me a guaranteed $5 Amazon gift card for completing the purchase.

This is now a proposition that I can properly analyze.

What I know is that on the other end of this survey, I’m making five bucks. What I still don’t know is how long it will take me to earn it.

While the certainty of compensation is enticing, I would likely at least click on the link to see how long this survey will take to complete.

I may answer a few questions and hope to see a status meter of some kind. Without one, I’m unlikely to stick around very much longer.

At the end of the day, there is a point in which the value of the $5 gift card no longer exceeds the value of my time. When this occurs, I’m gone.

Have you noticed that while I’ve been evaluating my willingness to participate in this survey, I haven’t once mentioned my interest in providing feedback to this company as a motivating factor?

I mean, isn’t that really the point of any survey to begin with?

It reminds me of the early days of list building as a marketer — using a sweepstakes to build a database.

You end up capturing a lot of fresh contacts, but they end up amounting to nothing more than vapor leads.

Nearly anyone that signed up for one of these contests had no interest in what your company had to offer other than the sweepstakes itself.

When it comes to padding your subscriber count number, incentives can work wonders.

But, if you want to build an authentic database, with subscribers who have an honest interest in your product, using a sweepstakes or giveaway is the wrong approach.

The same is true for surveys.

There is no arguing that offering an incentive to complete your survey will drive a higher number of responses. Without a doubt that is true.

What you need to ask yourself is whether a higher number of responses is your only goal.

Regardless of motivation, there are very few people (if any) that are patient enough, or even willing for that matter, to fill out a long, multi-question survey. There isn’t a reasonable incentive out there that will change this fact.

Still however, most long surveys will generate a response of some kind (1- 3% generally) from customers that truly want to be helpful.

If you sent out 1,000 surveys and receive only 10 – 30 completed responses in return, it’s natural to believe that customer motivation is to blame.

As a result, many companies will decide at this point to offer a reward for completion, such as a gift card, or a sweepstakes of some kind.

Like I mentioned above, this will certainly increase the response rate, but what many don’t realize is that the cost goes well beyond the expense of the incentive being offered.

This cost comes in two forms:

  1. Financial cost: The actual expense of the discount, gift or reward.
  2. Informational cost: The cost of inaccurate or biased data.

Financial cost is pretty self-explanatory and easily predictable, the informational cost however, is much more uncertain and can be terribly detrimental to the bottom line. The two biggest factors that contribute to this cost are:

Lack of Consideration: When a customer has a financial motivation, their objective changes from providing meaningful feedback to providing quick answers, especially when it’s a long survey.

If you’ve ever had to quickly fill in the remaining circles on your Scantron form back in High School to beat the exam buzzer, you’ll have a good understanding of how incentivized customers complete your survey. (We’ve all done it before.)

Scantron

Guilt Bias: While the lack of thoughtfulness is one concern, customers who are incentivized also have a tendency to provide more favorable answers due to the perception of a quid pro quo.

This isn’t necessarily a conscious reaction, but it can become more intentional when it comes to a contest or sweepstakes where a limited number of rewards are given out. This is due to the belief that positive answers may influence the results.

The combination of these two factors ultimately means that your results will become largely meaningless.

While incentivizing your customers will undoubtedly result in a higher response rate, the cost will always outweigh the benefit.

Out of 1,000 customers, would you rather receive 20 honest responses, or 200 haphazardly filled in Scantron forms?

Most companies would prefer neither, which is why they’ll opt to try a performance enhancing incentive to begin with.

This is the reason why the Net Promoter System has become so widely adopted. NPS is a natural performance enhancer. Feedback is organic and impartial, while generating a response rate of 25 – 40% on average. Additionally, NPS results are proven to be the leading indicator of a company’s growth potential.

If you want to optimize your customer feedback, stop using survey incentives — and start using NPS.

And, if you want your influx of customer feedback to directly impact the bottom line, make sure to use NPS the right way. Book a call and we’d be happy to spend a few minutes reviewing the best practices for your company and show you how Promoter.io can help drive growth. 

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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Taxjar reviews

How Do You Outpace Your Competition? Follow This Approach From TaxJar

As Benjamin Franklin once said, “There is nothing certain in life, but death and taxes”.

While that statement is profoundly true, I’m certain everyone can agree that there is also nothing more painful in life than those same two things as well.

Where there is pain, there is usually an opportunity.

Promoter.io customer, TaxJar, is a company that’s solving one of those pains.

TaxJar is a 21-person company, currently serving over 8,000 clients, largely in the e-commerce space, which helps their customers simplify their tax requirements.


Here’s an example: If you’re someone that sells products on Amazon, you can choose to send your products into Amazon to be fulfilled and shipped. Those products are then dispersed to distribution centers throughout the country in order to be delivered quickly to customers.

That’s great for buyers, because now they can get their goods in “Amazon time”.

But, it’s not so great for sellers, because now they’re selling products in more than just one state. And, each of those states have unique tax requirements. Queue the migraines, right?

Enter TaxJar

They simplify this entire process through automation, so their customer doesn’t need to concern themselves with multi-state tax laws. The buyer is happy because they’re getting their products quickly and the seller is happy because TaxJar is making their job (heck, their life) easier.

That’s a winning scenario for any successful company.

But, with over 8,000 customers, it’s extremely important for TaxJar to maintain a pulse on the health of their relationships with their customers, otherwise they can risk making a painful process even more … well, painful.

The team at TaxJar turned to Promoter.io and NPS to help understand the impact they were having with their customers as well as test some changes they thought might improve the tax-paying experience.

In addition, they wanted to implement NPS to both prevent future churn and put their promoters to good use.

Note: As we’ve mentioned in previous posts, on average, only 20% of any given company’s promoters will actively endorse or refer new customers without further communication.

Activating the additional 80% requires a company to proactively reach out to their advocates and make specific requests that can directly (and positively) impact the business. These requests may include customer reviews, social shares or simply asking for them to refer someone new.

Promoter.io offers custom “Thank You” pages to make the immediate connection between excited promoters and positive shares an easy task, which ultimately impacts organic growth.

The way that TaxJar started with NPS was a bit unique.

Prior to beginning the process, they had become aware of a big gap in their product offering. Or, at least what they perceived to be a gap. But, they weren’t certain.

The team at TaxJar decided to release a new version of their app to a select group of their customers to address the potential gap.

To properly measure whether this new version actually made a difference in customer loyalty, they decided to segment their NPS into two groups:

  • Customers who have access to the new version
  • Customers on their legacy version

What they were ultimately looking to see is whether customers on the newer (beta) version had a higher level of customer sentiment and loyalty than those on the older plan.

After the results were in, they were able to properly validate their assumptions when they discovered those that had access to their beta app gave them an overall NPS score in the 80’s (world class), while those on the legacy version scored them in the 50’s (still great, but measurably lower).

Note: For early stage companies, NPS is a great measure of PMF (Product Market Fit). After a tool is on the market, NPS can help you validate your ideas/assumptions via your beta customers willingness to recommend others.

As a process, TaxJar collects their data by surveying 200 randomly selected customers each month from both groups. Those customers then receive continual surveys every few months, allowing TaxJar to maintain an ongoing understanding of sentiment.

Measuring NPS is most impactful when you do it over time, but that’s especially true for TaxJar. With different tax laws and filing dates with each unique state, each customer has unique user experiences based on their individual tax situations.

Staggering their surveys has been critical success factor and value point as it has allowed TaxJar the ability to gauge the sentiment of their customers over time, both as the product matures and as tax laws continually change at the state level.

In addition to the insights they’ve gained from their customers, they’ve also been able to drive their business forward in several other ways as well.

TaxJar thrives on the reviews from their customers, especially since many of them are Amazon sellers, who deeply understand the impact that positive reviews and brand perception themselves.

Through their NPS campaign, the TaxJar team was able to identify their promoters and activate them by asking directly for reviews of their experience.

 

With detractors, they’ve been able to differentiate themselves from their competitors by personally responding to each piece of feedback and being attentive to their needs, getting ahead of potential churn before the customer has made that decision to leave or find another solution.

TaxJar operates in a space where their closest competitor is a large company with impersonal communication. They’ve used this to their advantage by giving their detractors (and promoters) individual attention that they wouldn’t receive elsewhere.

———–

TaxJar is great example of a company that has utilized NPS to not only improve their product over time through customer insights, but also to support their passion of over-delivering on customer experience. 

As a result, they’ve found their secret to outpacing their competition.

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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dana_may_2_2

Uber Has a Major Customer Relationship Problem

A few years ago, I was taking an early morning flight home from Atlanta. Since it was 5 in the morning, I didn’t feel like standing outside to wait for a taxi, so I decided to use Uber.

As with most of my Uber experiences, the car arrived promptly, the driver was courteous and personable and the ride lasted no longer than expected.

That’s as much as I need as a passenger.

At the end of the ride, the driver thanked me and asked if I’d be willing to provide him with 5 stars for the ride?

Hold up, I thought.

If you’ve never taken an Uber before, after your ride has concluded, you’re prompted within the Uber app to provide the company with a driver/ride/experience rating on a 5-star scale (1 star being bad, 5 stars being great).

Not only are you prompted to rate the driver, but the driver is also prompted to rate you (the passenger).

According to Uber’s description of the star rating system, it’s intended for the protection of both the drivers and the passengers.

To ensure the quality of both the driver-partners and riders in the community, our rating system is a two-way street. Driver-partners must rate every completed trip, while riders have the opportunity to submit a rating along with comments.

Ratings, which are given on a scale of 1 to 5 stars, should be honest and reflective of the overall trip experience.

So, why my hesitation when being asked by my driver to provide him with 5 stars?

Well, up to that point, I didn’t realize it was a game.

Within that single question, I realized that their entire star rating system was nothing more than a mutual admiration society. An I’ll scratch your back, if you scratch mine transaction. The equivalent of a circa 1990’s link exchange.

Up until he asked me that question, I actually took those ratings seriously.

Frankly, at this point I don’t even remember the rating I ultimately gave him, but I’m sure it was 5 stars. And, in all honesty, after I left his car that morning I hadn’t really given it any further thought.

That was, until just recently.

Unless you’ve been sitting under a rock for the past few months, you’ve probably caught at least one or two of the controversies to hit Uber this year. To say it kindly, it hasn’t been a good 2017 for Uber so far.

From claims of sexual harassment, to a lawsuit for theft of intellectual property from Google (their investor) to a video of its figurehead, Travis Kalanick, screaming at one of its drivers, the company has been under constant fire.

Since the bad news began, it has seemed like a never-ending barrage of negative revelations that continue to pile up upon each other.

As a result, their detractors have started a hashtag campaign #DeleteUber, which according to reports, has resulted in between 200,000 to 500,000 app deletions. Or, in other words, lost customers.

I’ll be honest and say that, among the lost customers, I’m not one of them.

I still have my Uber app and I’m likely to use their service again in the near future.

That doesn’t mean that I support the things they did, nor does it mean that I’m a promoter (i.e. advocate) for their company.

In fact, given the stories that have come out, I wouldn’t dare endorse them. And, I’m guessing that they don’t have many promoters left willing to do so either.

BUT …  they wouldn’t know that.

Why?

Because transactionally (A.K.A. their 5 star rating system), customers don’t have a problem with their product or service.

And even if they did have a problem, we already know that the drivers and riders are gaming the feedback system to support each other, so the data is inaccurate at best.

If this were a CSAT (Customer Satisfaction Survey), Uber would be winning in the minds of customers. If this were an NPS (Net Promoter Score) survey, they’d be DOA.

Uber has a problem. And, it’s not just the bad headlines.

Uber has a relationship problem.

Overall, customer relationships are so much greater than the transaction that occurs between the customer and the company.

A customer can have a bad transaction and still have a great relationship with a company. Much like a married couple could have an argument but still be in love.

A customer can have a bad transaction and still have a great relationship with a company Click To Tweet

However, if the core relationship is poor, if there is no love between a couple, there is nothing that binds them together.

Uber may still have a lot of customers, but their future prospects are not looking bright, because relationally, people are not happy.

In the 5+ years that I’ve been using Uber for transportation, I haven’t once received an NPS survey from the company.

Never have I been asked to rate the company on a scale, only its drivers.

As far as Uber knows, based on the ride ratings I’ve provided, I’m a happy customer.

And, from a transactional perspective that’s fairly accurate, but it’s only a very small part of my story as a customer.

They know nothing about my intentions to ride with them in the future, or whether I might be willing to defend them in the comment section of a scathing story. Maybe I’m one step away from jumping on the #DeleteUber bandwagon or maybe I have some insights that could save their company.

But, Uber will never know this until they start caring less about the transaction and more about the relationship with their customers.

If Uber wants to get ahead of the problems they’re currently facing, they’re going to need to get serious about communicating with their customers.

This means engaging with each customer individually and in a meaningful manner. Listening to their needs and providing solutions.

Unfortunately their superficial 5-point rating game between driver and passenger isn’t going to cut it.

Like any couple facing challenges in their relationship, this may require therapy. In Uber’s case, that therapist is NPS.

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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The Important Difference Between Customer Satisfaction and Customer Loyalty

The following post is an excerpt from Chad Keck’s upcoming book on Winning with Net Promoter. Complete the form at the bottom of this post if you’d like to be notified when the book becomes available.

How many times have you heard that customer satisfaction is the key to a long lasting, successful business? Or that, if you want to succeed in today’s ultra-competitive environment, your company needs to be obsessively focused on customer satisfaction.

Let me venture to guess that you’ve heard it so many times that it’s almost become a cliché.

While this idea contains a profound truth, it also contains a profound error.

I’m not saying that customer satisfaction is not important — it’s critically important.

I mean, if a customer leaves a store having purchased an overpriced product with a subpar customer experience, yeah they’re a customer, but they’re not happy about it and they’re likely not to return and convince others to do the same.

Knowing what made them dissatisfied is very useful information in those situations.

But even with the happiest customer experience, one in which the price was reasonable and the service was stellar, satisfaction is still backward looking. It only measures whether someone was happy with your product, service, or interaction. It tells you nothing about their future intent.

The most important information for the success of your business is that which is forward looking.

You need to know how customers will behave in the future. Will they buy your product or service again? Will they recommend your business to a friend or colleague? Will they rave about you to their Facebook and Twitter followers. Or, will they get your logo tattooed on their forehead?

Believe it or not, you don’t need some sort of fortune teller named Zoltar to show you whether or not you’ll have that loyal, tattoo-branded customer. If you listen, your customers will tell you themselves.

Customer Satisfaction vs. Customer Loyalty

One of the biggest mistakes businesses make is that they focus on customer satisfaction rather than customer loyalty. It’s easy to do because most people don’t even know the difference between the two. But the difference is as important as the difference between a loyal romantic partner and one who’s merely satisfied. Think about that…

To succeed, you NEED to focus on customer loyalty rather than customer satisfaction Click To Tweet

Customer loyalty measures something more than satisfaction — it measures whether someone is willing to put their name on the line and recommend your product or service to others or if they are willing to stick with your product/service in spite of an occasional poor experience.

It’s easy for a customer to tell you they’re happy with your performance. It’s a lot harder to get them to say they’d recommend you to a family member, friend, or colleague, because now his reputation is on the line. No one wants their mother-in-law to call him up at two in the morning yelling, “Why on earth did you tell me to buy this horrible mattress …  I can’t sleep!?” A routine mother-in-law call is bad enough as is.

The fact is, there is no correlation between someone saying, “I’m satisfied” or not, and almost any other important metric:

  • How much more of a product or service they are going to buy (upsells / expansion revenue)
  • How long they’ll remain a customer (retention / churn)
  • Her willingness to recommend or refer a business, friend or colleague (organic growth, lower CAC, higher LTV)
  • Levels of customer support engagement

As far as your knowledge of that customer’s behavior is concerned, it stops at knowing his/her level of satisfaction.

In a sense, customer satisfaction is a feel-good metric. It’s easy for a customer to say he’s satisfied.

When you hear a company like GEICO say that 97 percent of its customers are satisfied, it’s good marketing, and I’m sure it makes the GEICO team feel proud. But stats like that don’t actually correlate to customer behavior. The next time a GEICO customer hears from a friend that USAA, for instance, is incredible and that he swears by it, that GEICO customer is probably going to pick up the phone and give USAA a call.

On the contrary, a loyal customer wouldn’t be so quick to leave at the first sign of a better option. In fact, they would be the one that would come to your defense and likely bring their friend to your side.

To say it again but in a different way, if you want to succeed in today’s ultra-competitive environment, your company needs to be obsessively focused on customer LOYALTY, not satisfaction. The difference is paramount.

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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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