The One Number You Need

1
The One Number You Need

• Written by Frederick F. Reichheld
• Presented by Giani Julander
• Isaac Peace

2
Loyalty and Growth

• Loyalty is the willingness of someone to make a
  personal sacrifice in order to strengthen a
  relationship
• Customer loyalty is about more than repeat
  purchases
• Loyalty drives top-line growth

3
The Wrong Yardsticks

• Retention rates provide feedback about
  profitability but cannot predict growth
• Satisfaction indexes do not give accurate
  information about customer behavior and growth

4
Getting the Facts

• Reichhelds group gathered information from more
  than 4,000 customers to build 14 case studies
• One question was best for most industries to
  predict growth
• How likely is it that you would recommend (this
  company) to a friend or colleague?

5
Getting the Facts

• A simple scale is necessary to use the
  information gathered from the survey
• respondents can be divided into 3 categories
• promoters
• passively satisfied
• detractors

6
The Growth Connection

• Survey of customer responses in 14 companies
  across 6 industries
• Began tracking would recommend responses for
  400 companies in 12 industries
• Not best predictor of growth in every case
• Computer system referrals
• Not valid in monopoly industries

7
The Dangers of Detractors

• Internet Service Provider example
• AOL focused on acquiring new customers, not on
  converting these customers to promoters
• Lost 200,000 customers per month in 2003
• 42 of customers were detractors while 32 were
  promoters, giving AOL a net promoter percentage
  of -10
• Illustrates danger of seeking growth through
  shortcuts rather than building true loyalty

8
The Danger of Detractors

• AOL example
• Demonstrates detrimental effect word of mouth can
  have
• Very expensive to correct
• Customers who are not enthusiastically loyal
  raise service costs
• Every detractor represents a missed opportunity

9
Keep it simple

• Customer surveys
• simple useable
• Current, relevant data
• Customer feedback ? market research
• Operating management tool
• Enterprise rent-a-car

10
Converting Customers into Promoters

• If simple surveys are so effective, why arent
  they implemented more?
• Profit margins are low for research firms
• To be effective, process and results must be
  owned and accepted by all business functions

11
The One Number You Need to Grow

• The path to sustainable, profitable growth begins
  with creating more promoters and fewer detractors
  and making your net-promoter number transparent
  throughout your organization. This number is the
  one number you need to grow. It's that simple and
  that profound.