3 concepts every account manager should know.
1. Net Promoter Score
2. Client’s journey
3. Life-Time Value
Net Promoter Score (NPS)
Net Promoter Score is the answer to the simple question ”How likely are you to recommend a company to your friends/partners/family on a scale from 0 to 10?”
Ask your clients about it. When you’ll get the answer, you can group your customers into three categories: promoters, passive and detractors.
The promoters give you a strong 9 or 10 mark for your services. They are the happy clients who will recommend you to others.
The passive clients are neither unhappy nor super excited by what you offer. They don’t wanna upset you, so they give you a 7 or 8 out of 10 rating. They actually don’t care about you either, they just need somebody to do that certain kind of job.
The detractors are those who buy from you, but are super annoyed by one or two things in your product/service. Their rating vary from 0 to 6. Usually, if you can fix that one thing that annoys them, they will become your vocal promoters.
When can you measure NPS?
You can apply NSP theory only with the clients that bought more than once from you. You can try with them a quiz on customer satisfaction using Typeform, or if you want a more professional approach, you can use a specialized NPS product like Retently, to measure it.
What you can do:
- Start a free trial with Retently to send a Net Promoter Score survey to your clients and start gathering, analyzing and acting on the received customer feedback.
- Count how many of your clients you have in all three groups: promoters, detractors, passive. What can you change in your service or product to turn the detractors into your promoters? What things annoy them? Can you fix them?
Client’s journey.
The Client’s Journey is the idea that you should take your client from point A to point B. Point A is the moment when they became your client, and point B is when they will become your unpaid promoters.
The right way to do it is by delivering more than the client expects, make his life easier and help him get to the next level (in terms of sales, brand-love of his customers for his brand, quality of service, etc.)
What can you do:
- Make a list of your clients.
- Sort them in a few categories: the ‘one time’ clients, the clients that bought more than once from you, the clients that bring you other clients.
- Which group is the largest?
- What can you do to have more clients that promote you?
The Life-Time Value
The Life-Time Value explains how much a client will buy from you in his/her life-time.
For instance, if you sell Roll Royce, you expect a person to buy one or two in their lifetime. If you are a digital marketing agency, you expect to have 1, 5, or 10 years contracts with your clients.
For those of you who like math, here is the formula of LTV:
LTV = (Monthly Revenue per Customer * Gross Margin per Customer ) / Monthly ChurnRate.
How do you measure ChurnRate?
ChurnRate = Q / Nt
where Q is the number of users that stopped using your product service during a certain period of time, and Nt — the number of remained users after that period.
Or, there is another formula:
LTV = AC * N * P * t,
where AC is the average check, N — the average sales per month, t — the average duration of a relationship with a client.
How can you apply this?
Count the Life-Time Value of your customers. This will help you understand how much you should invest in a relationship with a client and at what stage of the cycle you are with them.
These three concepts intertwine and help you have a better understanding of the relationship with your clients. If you liked this article, please press ❤ for others to see it :)
