Would Your Recommend This Product to a Friend?

Business consulting firms and academics are actively working to quantify the degree to which word of mouth advocacy drives revenue growth in industries ranging from mobile phone networks to automobiles to enterprise software.

Advocacy correlating with revenue growth seems like a reasonable assertion. Word of mouth recommendations should improve sales productivity and reduce the length of sales cycles, both of which improve revenue growth. Alternatively, “bad buzz” will drive potential buyers to seek alternatives. Bain & Company, Fred Reichheld and Satmetrix have jointly copyrighted the term “net promoter score” and formalized the statistical calculations of customer answers to the question “would you recommend this product/brand/company/stock to a friend.”

One recent study published in Brand Strategy confirmed the validity of the Net Promoter Score. Using large sample sizes across multiple industries in the UK, this study confirmed that the “Net Promoter Score” accurately predicts revenue growth (correlation coefficient of 0.484 and significance less than 0.01), and negative word of mouth correlates with reduced revenue growth (correlation coefficient of -0.524 and significance less than 0.01). Wow, that is good evidence…and it’s only one of many studies.

With repeated studies confirming the value behind the Net Promoter Score, it is worth thinking about monitoring this statistic and implementing programs that improve customer referral behavior. A few such programs include:

  • Referral rewards, ranging from service credits to hard cash for customer referrals
  • Free product trials, making it easy to progress from receiving a recommendation to experiencing the product
  • Anointing customers as brand ambassadors, this creates an emotional bond between the customer and your product. The savviest tech brands have made industries out of ambassador programs: Novel CNE and Microsoft MSCE are examples
  • And my personal favorite: having sales ask the question directly of their customers. If the answer is anything less than a yes, the reason needs to be tracked and managed.

Before you can manage your net promoter score, you need to establish a base line. So start asking your customers: would you recommend this product to a friend?