This article originally appeared on LinkedIn.
I’ve spent 40 years consulting to and studying for-profit companies, searching for clues to what makes the best of them so exceptional. Time after time, I find that the organizations that outperform the competition over the long term are those that seek to enrich the lives of their customers and employees. We created the Net Promoter System as a framework to help companies nurture that focus.
Recently, I had the opportunity to think about how this system born of the for-profit world might apply to the not-for-profit sector. The impetus was an in-depth talk I had with Jill Robinson, president and CEO of TRG Arts, a consulting firm focused on the nonprofit arts industry. (You can view our full six-part discussion here.)
Enriching the lives of customers is this sector’s entire reason for being, and many of the specific approaches that work well in business are just as applicable to nonprofits. Sometimes, however, seeing those connections requires a slight shift in perspective.
This is true, for example, with one of the central concepts of the Net Promoter System: loyalty. The Net Promoter System starts by evaluating how likely a customer (or employee) is to recommend the company to a friend. Those who are very likely to do so would rate the company a 9 or a 10 on a scale of zero to 10; we call this group promoters. Those who were not at all impressed, who score their experience anywhere from zero to 6, are detractors. A company’s balance of these groups is an indicator of how well it’s enriching customers’ lives.
Promoters are the best kind of advertising for any operation, a volunteer army to help build your business. They are also great repeat customers and spend more than average.
Certainly, any arts or cultural institution benefits just as much from this kind of positive word of mouth, but as Jill explained to me, loyalty is a complicated topic in the nonprofit world. In recent years, the term has been associated with retaining current (often mature, rich and white) patrons. With economic models changing, spending habits evolving and demographics shifting, many nonprofit leaders worry that a focus on loyalty could endanger their organizations’ long-term sustainability.
I agree that loyalty programs, whether frequent flyer miles or exclusive ticket offers for subscribers to the ballet, often get too much focus. Rather than bribing customers to come back, loyalty initiatives should focus on how innovative an organization is and whether its innovations are making customers’ lives better. Organizations meeting this high goal are in the best position to both satisfy existing fans and create new ones.
The Net Promoter Score® is a first step, the beginning of a process of learning, action and testing. Smart companies provide customers with an opportunity not just to answer survey questions but also to give feedback in their own words, an open text response to a prompt such as: “Please explain why you feel the way you do and how we can do better.” Then they follow up.
Once again, this can be tricky for artists, Jill explained. Artists and, of course, others working in the nonprofit health, education and cultural fields, care deeply about what they are doing. Slavishly responding to audience whims could undermine their artistic integrity. “There’s a tension in arts and cultural organizations between doing what we believe and inviting feedback on our precious art and mission,” she explained.
From my perspective, a refusal to seek or listen to feedback is not going to increase anyone’s chances of success. If you are trying to enrich a life, you’ve got to measure whether you are succeeding or not. Courageous people at all levels of accomplishment seek feedback. They are smart enough to know that they don’t have all the answers.
Nonprofit and for-profit companies share another challenge that a focus on loyalty can help address—namely, the loss of talented staff. This can be especially tough on small arts organizations that may only offer limited paths to promotion, Jill explained.
These organizations may not be able to hold on to every ambitious person, but by taking a more expansive view of loyalty, nonprofits can turn these losses into a wonderful asset. Very few people work most of their careers for a single organization these days. But if during their time with your organization employees have the opportunity to enrich the lives they touch, if they believe in the product they are delivering and receive regular feedback that they can really learn from, those people will be promoters of your organization long after they leave. And as everybody knows, opinions from successful employee alums carry enormous credibility because of their inside knowledge.
By the end of our conversation, Jill and I had found more commonality than difference between the nonprofit and for-profit sectors on customer loyalty and its value. When the curtain falls, every artist wants to have earned a standing ovation. The principles of the Net Promoter System give nonprofit organizations a way to regularly evaluate their performance, a chance to get better at the things that matter most and the satisfaction of knowing when they’ve earned a standing O of their own.
Net Promoter®, Net Promoter System®, Net Promoter Score® and NPS® are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.