Net promotor score versus custmer satisfaction
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Transcript of Net promotor score versus custmer satisfaction
Loyalty
Behavioral and attitudinal
Driving top line growth (turn over)
Driving profitable growth
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Customer Loyalty: top line growth (p48 Reichheld)
0 1 2 3 4 5 6 7Year
An
nu
al
cu
sto
me
r p
ro
fit
Price premium
Referrals
Cost savings
Revenue growth
Base profit
Acquisition cost
Source: Reichheld
Current practice
Focus on retention:
relates to profit, not growth
switch costs and retention (lock in effect)
Focus on customer satisfaction:
ACSI (200 cy): no strong correlation with
outstanding sales growth; outlier: K-mart
(sales drop)
Dealer: no relationship with growth and profit
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Too import not to
be measured
The ultimate question
How likely are you to recommend our
organisation to a friend or colleague? (on a
scale of 0 to 10)
© ICSB Marketing en Strategie
0 1 2 3 4 5 6 7 8 9 10 Extremely
likely Not at all
likely
What is the primary reason for your rating ?
Research
N (Q1, 2001): 400 companies, >12 industries,
15,000 responses – ultimate question (2 yrs)
Desk research: revenue growth data (3 yr
period; 2 yr nps was measured and one prior yr)
Analysis: Δnps versus revenue growth
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Keiningham et al: three target industries; nine other
industries small sample size
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NPS and firm value
50 organizations, different industries:
average growth rate doubled by improving NPS
with 12 points
Median NPS for 400 service industries: 12%;
highest scores >= 80%
Keiningham
NPS
Even being presented to investors
Reichhelds research not been subject to
rigorous scientific scrutiny and peer review
Morgan and Rego (2006): different data and
miscalculation
This study: NCSB (Norway), 21 firms, 15,500
response (intention, recommendation,
satsfaction) + subset of Reichheld’s dataset
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Critics Reichheld: current research
1% increase in American Customer Satisfaction
Index (ACSI) (0-100 scale) correlates with $275
million increase in the firm’s value (1.016%, on
average, measured by Tobin’s Q)
Tobin’s Q = Market
value/Asset value
Further: Gruca and Rego; Fornell et al; ACSI correlates with Casf Flow, Shareholder
Value by reducing variability
© ICSB Marketing en
Strategie
HIER NOG EEN KREET
Managerial relevance
X is a company to recommend X is a company to return to
Managerial relevance
Elements that promotors appreciate
Root cause analysis
Relate to processes
Process metrics
Process owners
Improvement programs
One study…
Financial sector US
The difference between the intention to recommend and the actual behavior: 70% says they will; 44% actually does
42% of the recommendation attempts is effective: a prospect will come in
77% of the prospects becomes a customer
Kumar, Petersen, Leone, 2010
