This past week I read a very interesting Harvard Business Review article, "The One Number You Need to Grow," penned by Frederick Reichheld. I encourage you to get a copy of the article ... it is a worthy read.
Reichheld’s research indicates that there is a strong correlation between a company’s growth rate and the percentage of it’s customers who are willing to recommend the company to a friend. His working assumption is that evangelical customer loyalty is one of the most important drivers of growth as Reichheld contends, “the ultimate act of loyalty is a recommendation to a friend.”
His article focuses on how companies have gone astray in trying to measure “loyalty” through complicated customer satisfaction surveys. Instead, he contends, “you don’t need expensive surveys and complex statistical models. You only have to ask your customers one question: How likely is it that you would recommend [company x] to a friend or a colleague."
In his case studies, Reichheld used a ten-point scale to measure the likelihood of a customer recommendation where 10 means “extremely likely” to recommend, 5 means “neutral,” and 0 means “not at all likely” to recommend.
Customers that answered with a 9 or a 10 were classified as “Promoters.” Those that answered with a 7 or 8 were classified as “Passively Satisfied” and those that gave ratings from 0 to 6 were classified as “Detractors.”
This leads to Reichheld’s simplistic premise -- “The path to sustainable, profitable growth begins with creating more promoters and fewer detractors.”
I may have overly simplified his HBR report but the critical nugget of knowledge for marketers is that Reichheld, a long-time believer that customer loyalty is the harbinger for whether or not a company can activate and sustain profitability, is now singing the praises of getting evangelical loyal customers to become, in essence, the marketing department.
Sound familiar? It should.
In Creating Customer Evangelists, Ben McConnell and Jackie Huba expertly wrote about not only the importance of getting current customers to become, in essence, a volunteer sales force but they also gave tactical advice on how businesses can engage their loyal customers to become evangelical “promoters.”
While I have your attention, I gotta close with a plug. On March 16th, Ben and Jackie will drop by the Brand Autopsy coroner offices for the second leg of their Business Blog Book Tour.
Recent Comments