Know more about this Bain fellow’s “Net Love Score” and see how you can use this to connect with your customers! [Monday: Marketing Marvels]
Miles Everson’s Business Builder Daily speaks to the heart of what great marketers, business leaders, and other professionals need to succeed in advertising, communications, managing their investments, career strategy, and more.
A Note from Miles Everson:
Happy Monday, everyone! I hope you all had a good rest during the weekend.
Let’s start this work week with a dose of inspiration from one of the world’s “Marketing Marvels”―outstanding people in the field of marketing, communications, business, etc.
Each Monday, I feature specific business owners and leaders, marketers, communicators, and independent professionals because I believe it’s good for us to gain motivation and fresh ideas from them by learning about their work, experiences, and insights.
Today, we’ll talk about one of the best-selling authors in the field of customer loyalty. Are you curious to know who I’m referring to?
Continue reading to find out.
Miles Everson
CEO, MBO Partners
Chairman of the Advisory Board, The I Institute
Marketing Marvels
Fred Reichheld is a New York Times best-selling author, speaker, and business strategist. He is known for his research and writing on the loyalty business model and loyalty marketing.
You’re probably familiar with him by now. In a past “Marketing Marvels” article, we’ve also talked about Reichheld and his insights on customer loyalty.
Today, we’ll highlight another one of his brilliant ideas on how brands and businesses can measure improvements in their profits and developments on their engagement rates with customers.
We’re talking about…
The Net Promoter Score (NPS)!
―a customer loyalty and satisfaction measurement taken by asking customers how likely they are to recommend a particular brand, product, or service on a scale of 0 to 10.
Photo from Netigate
Most business owners, leaders, managers, and marketers want their customers to be happy. However, the challenge lies in knowing what their target market is feeling and establishing accountability for the customer experience.
According to Reichheld, conventional customer satisfaction surveys don’t work for these purposes. The reason?
The results of these surveys aren’t directly linked to financial outcomes or customer behaviors. Additionally, the questions aren’t sufficient and detailed enough to drive behavioral changes.
To fill this gap, Reichheld and his team at management consulting firm Bain & Company launched a research project in 2003 to determine a more effective approach to knowing more about customer satisfaction.
They searched for the best one-question indicator of customer lifetime value. Through testing a variety of questions, they identified the one that resonated best for competitive industries. That is…
“On a scale of 0 to 10, 0 being the lowest and 10 being the highest, how likely are you to recommend Company X to a friend or colleague?”
High scores on this one-question survey showed strong correlations with repurchases, referrals, and other consumer behaviors that contribute to a company’s growth and profitability.
What’s more?
This likelihood-to-recommend question became the basis for the creation and calculation of Reichheld’s NPS!
As of now, thousands of companies, including two-thirds of the Fortune 1000, are using this metric system to know how well their business is doing in terms of customer loyalty and satisfaction.
Here are some of the benefits of the NPS:
- Linkage to financial outcomes. In Bain & Company’s research, there is no better metric that’s correlated with financial outcomes other than Reichheld’s NPS.
- Simplicity of process. NPS surveys require customers to answer only one question using a simple 0 to 10 scale. This makes it less complicated for them and keeps the burden of answering too many questions low.
Additionally, businesses can track their NPS by weeks or months. They can also use this scoring system more specifically―by business line, store, product, or individual customer service representative.
- Ease of use. It’s easy for businesses to conduct NPS surveys then compile and post their scores. This provides a company’s leadership team and employees with up-to-date feedback so they can see the results of their performance as needed.
- Convenience in conducting quick follow-ups. Thanks to the ease of use of the NPS, business owners, leaders, managers, and marketers can do a quick follow-up with customers to make sure they “close the loop”―identify customers’ concerns and fix those issues as soon as possible.
Companies also use these data to guide their decisions about changes in business processes, products, services, and other innovations.
- There’s a growing body of experience among NPS users. An increasing number of NPS-user companies, including Apple, Enterprise Rent-A-Car, and Vanguard, are sharing their experiences, insights, and key lessons learned through The NPS Loyalty Forum.
This shows a lot of these firms have developed effective systems with the help of the Net Promoter principles.
- Adaptability. As an open-source method, the NPS can be used in a wide variety of business settings. For example: Apple uses this metric system in its retail stores to identify whether or not consumers are satisfied with its offerings, overall store ambience, customer service, etc.
Thanks to Reichheld’s NPS, companies have an additional guide in creating a culture that’s focused on earning the loyalty of customers and inspiring employees to help accelerate profitable, sustainable, and organic growth!
—
According to Reichheld, the golden rule of the NPS is LOVE―a four-letter word that compels brands to create offerings that enrich the lives of their target market.
For him, the NPS is truly a “Net Love Score” because he believes love is the notion that makes people loyal. You don’t trick your customers with fine print; you treat them well and set them up for the best experience possible.
In other words, great and successful businesses LOVE their customers… and for Reichheld, it’s that simple!
After all, when you’re genuine about serving your target market, you’ll be more dedicated to treat them well. This then leads you to generate relationships worthy of their trust and loyalty.
When that happens, you’ll see the NPS not only as a metric but also as a management system that fosters customer-centric disciplines and helps improve the way you transact with consumers.
Try adapting the NPS and see how this will help you level up your business and marketing strategies!
By taking note of Reichheld’s golden rule and insights on customer satisfaction, you’ll be on your way towards converting more consumers into your brand’s long-term promoters.
(This article is from The Business Builder Daily, a newsletter by The I Institute in collaboration with MBO Partners.)
About The Dynamic Marketing Communiqué’s
“Monday Marketing Marvels”
Too often, industry experts and the marketing press sing the praises of some brand or company’s marketing strategy.
… only for the audience to later find out that its product was a flop, or worse, that the brand or company went bankrupt.
The true ROI in marketing can’t be separated from the business as a whole.
What good is a marketing case study if one can’t prove that the company’s efforts actually paid off?
At the end of the day, either the entire business is successful or it isn’t. And the roles of marketing and communication are always paramount to that success.
Every Monday, we publish a case study that highlights the world’s greatest marketing strategies, marketers, and communicators.
However, the difference between our articles and the numerous ones out there is that we will always make certain that the firm really did generate and demonstrate earning power worthy of study in the first place (compliments of Valens Research’s finance group) in keeping with a person’s leadership skills in the area of marketing and/or communication.
We’ll also study the greatest marketing fails and analyze what they did wrong, or what they needed to improve. We all make our mistakes, but better we learn from others’ mistakes—and earlier, rather than later.
Hope you found this week’s marketing marvel interesting and helpful.
Stay tuned for next week’s Monday Marketing Marvels!
Cheers,
Kyle Yu
Head of Marketing
Valens Dynamic Marketing Capabilities
Powered by Valens Research
www.valens-research.com
