Promoters Versus Detractors

There's a great article in the December issue of Harvard Business Journal: "The One Number You Need to Grow." . That one number is how many customers promote your business. Instead of measuring customer satisfaction, simply ask your customers one question: "How likely is it that you would recommend (company X) to a friend or colleague?" The author's research indicated that responses to this one question were highly likely to predict actual customer behavior that would lead to profitable growth. The article summarizes what Church of the Customer has been evangelizing: "The only path to profitable growth may lie in a company's ability to get its loyal customers to become, in effect, its marketing department."

Here's one of the takeaways from the article that will help me do a better job in consulting for my clients. I've been working with an online research firm to develop online customer surveys with live cross-tabs for several clients... it's pretty cool, and generates extremely useful and actionable information. I always include questions on likelihood to recommend and likelihood to purchase additional products. However, here's how the HBR article recommends structuring the survey:

"Resist the urge to let survey questions multiply; more questions diminish response rates along with the reliability of your sample. You need only one question to determine the status -- promoter, passively satisfied, or detractor -- of a customer. Follow-up questions can help unearth the reasons for customers' feelings and point to profitable remedies. But such questions should be tailored to the three categories of customers. Learning how to turn a passively satisfied customer into a promoter requires a very different line of questioning from learning how to resolve the problems of a detractor."

Great suggestion.

On a related note, here's the 'duh' quote of the day from the top story at Reveries. They're interviewing Robert Lutz, GM's Vice Chairman of Product Development, on getting Pontiac out of the 'cheesy' category. He says, "You just have to get vehicles more to the point where people want them."

Comments

[Ben McConnell]

As Reicheld's article makes clear with some excellent data, companies with strong growth tend to outpace their competitors when they also have widespread word of mouth.

Taken a step further, one could argue that customer evangelism isn't part of the marketing plan... it IS the marketing plan.

P&G, the originator of brand management and big-buck marketing campaigns, is moving toward the customer evangelism model.

"The mass-marketing model is dead," says James Stengel, P&G's global marketing officer in the current issue of Forbes. "[Recruiting teens to schill for us] is the future."

The only limitation is belief.

[Jennifer Rice]

Absolutely agree. How can we generate word of mouth if we have no customers? I'm not advocating an "if we build it they will come" strategy (although there are examples of companies that built their business on word of mouth, like Starbucks)

[Wayne Hurlbert]

The emphasis on "customer evangelism" has merit, but is really a repackaging of "word of mouth" advertising in a new wrapper.

I have often heard business people say they intend to build their customer base by word of mouth. That is fine, as word of mouth is tremendous testimonial to the company's products and services, but the limitations must be realized.

Without those first "mouths", there is no "word" being spread. The need for marketing, as a holistic entity still exists, to establish that initial critical mass of customers.

To depend upon only one part of a marketing strategy, in this case word of mouth, is not the best solution.

[brett]

It seems logical that companies whose customers promote them would be profitable. But there are a number of counter-examples: companies that were/are adored by their customers, and still lagged. Prime among them is Apple, which of course is a special case and faces other business challenges. But there are others, of which ReplayTV is one. That company had an excellent product, way ahead of its time, an incredibly loyal customer base that constantly evangelized its product, and still went into bankruptcy. So what happened? I think it failed from a "real" marketing standpoint; i.e. its customers weren't enough to get the message out, and it had essentially no other marketing. By contrast, TiVo, which had the same functionality (although inferior until recently), did rather well, though not as well as some had hoped. Why? Probably because it was more visible nationally; it had TV spots, a DirecTV deal, and pop-culture street cred (which probably followed the other two). TiVo even has entered the lingo, a la Google or Kleenex. So why am I going to TiVo the football game and not Replay it?

[David]

Great summation!
"You need only one question to determine the status -- promoter, passively satisfied, or detractor -- of a customer."
One could establish a consulting practice on that basis.

Great articles! They realy get me thinking.