September 23, 2009
I’ve been writing in various forums about using Net Promoter as a cost-effective growth engine. Doesn’t every company want to optimize its business to increase growth? To me this makes sense and is easy:
Can growth projections alone define priorities?
- Segment your customers into 3 groups: those that are with you (“promoters”), those that are against you (“detractors”), and those that have no opinion (“passives” – but who are those people…? more on that in a future post).
- Slice up your actual customer revenue into those 3 categories.
- Find out what creates promoters and detractors in your business (your customers will tell you). This is the investment (cost) side of the equation.
- Model what will happen when you address those drivers (i.e. what revenue will result when you create more promoters by addressing that key driver). This is the benefit side of the ROI.
OK, so this requires a little math and statistics, but it’s not rocket science and we can do this quickly. We have done this and PROVEN that it works. So why aren’t more companies doing this? Wouldn’t every company want to know which initiatives will produce the best results at the lowest cost??
The answer, I believe, lies in that fact that too often there’s a personal agenda involved. If the “company” had its own mind and thought entirely logically then the process would work on its own. But personality and politics play a role. “Prioritization” is often a game of politics. And if you don’t have a plan to change that mind-set, then all the statistics in the world won’t help you.
- Get buy-in and know who’s with you. And understand that there are ‘best practices’ in managing this change. Use them to build your team.
Prioritization of the right initiatives to drive growth requires teamwork
- Then get the stats and create the model.
What do you think?
July 17, 2009
I continue to talk with people that are working to hold on to their customer research programs. It seems that (in this economy) if you’re running market or customer research and can’t demonstrate a real, tangible ROI your program is in jeopardy of being cut.
There are 2 parts to demonstrating the return your program brings:
1. Structural: Link overall customer loyalty to growth. Whether you use Net Promoter or some other vehicle, show how much money is tied up in Detractor, Passive, and Promoter customer segments. Show how much growth ($) can be had by implementing treatment strategies that move each segment of customers “up the loyalty ladder” to ultimately drive word-of-mouth. Once you have the benefit side of the equation, you can then prove it out by either looking historically and back-casting the ROI, or by implementing a small, low-risk pilot.
2. One-to-one: When you change the nature of the conversation with individual customers you also create cross-sell and up-sell opportunities. Your survey instrument can generate real up-sell and cross-sell just by asking the right questions. This process also comes naturally with more complex buying decisions in B2B environments, where account managers can move from a salesperson to that of active listening and customer advocacy. Either way, growth comes when you serve your individual customers by demonstrating that you are listing to their problems and providing real solutions and not just pushing product.
Regardless of what you are spending on your program, it better show real results. What do you think? I look forward to discussing this in more detail over the coming weeks.