Customers Are Important

Customer Are Important? And what can you do about it? 1 Thursday, February 25, 2010

Why are Customers Important? • Current customers are your most reliable and cost-effective, source of future revenue 400 Promoter Ease of Service 300 X-Sell/Up-Sell Value ($) Premium Price 200 Cust Base 100 0 -100 Time 2 Thursday, February 25, 2010

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. *Source: The Ultimate Question 3 Thursday, February 25, 2010

“How likely is it that you would recommend this company to a friend or colleague?” Promoters - Detractors = NPS Not at Extremely all likely likely 0 1 2 3 4 5 6 7 8 9 10 Detractors Passives Promoters 4 Thursday, February 25, 2010

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 5 Thursday, February 25, 2010

Optimize customers by proﬁtability and NPS High Proﬁtability Low Detractor Passive Promoter 6 Thursday, February 25, 2010

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 7 Thursday, February 25, 2010

JTH Consulting LLC James Hipkin 415-505-0632 jhipkin@gmail.com 8 Thursday, February 25, 2010

Customers Are Important

by James Hipkin on Feb 25, 2010

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