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Everyone accepts that customers are important. But why are they important and how do you make this meaningful, how do you use this idea to drive strategy? This brief presentation provides two ideas to consider that will help you understand this important issue.
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Customer Are Important?And what can you do about it?
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Thursday, February 25, 2010
Why are Customers Important?
• Current customers are your most reliable and cost-effective, source of future revenue
-100
0
100
200
300
400
Cust BasePremium PriceX-Sell/Up-SellEase of ServicePromoter
Valu
e ($
)
Time
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Net Promoter Score*• The concept of Net Promoter Score, first described in
The Ultimate Question - Driving Good Profits and True Growth by Fred Reichheld, which suggests that one question, “How likely is it that you would recommend this company to a friend or colleague?,” produces a clear measure of an organization's performance
• Bain & Company analysis shows that value-creating companies, companies that achieve long-term profitable growth, have Net Promoter Scores two times higher than the average company. And NPSSM leaders outgrow their competitors in most industries-by an average of 2.5 times.
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*Source: The Ultimate Question
Thursday, February 25, 2010
“How likely is it that you would recommend this company to a
friend or colleague?”
Promoters - Detractors = NPS
100 54321 9876
Extremelylikely
Not atall likely
Detractors Passives Promoters
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What can you do about it?• Develop customer marketing strategies for
each sector
- Maximize Promoter quantity and profitability
- Minimize Detractors quantity and investment
- Find more Promoters
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Profi
tabi
lity
Hig
hLo
w
Detractor Passive Promoter
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Optimize customers by profitability and NPS
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Implementation• Ask every customer the question - you need
more than a sample
• Base compensation/bonuses on NPS performance
• Use position on the grid to drive messaging
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JTH Consulting LLCJames Hipkin415-505-0632
Thursday, February 25, 2010
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