Raving Fans and Loyal Customers = More Sales (Pt.4)

A Loyalty Measure for Businesses of All Sizes - Net Promoters

The idea of Net Promoters of your business is a quick and easy way to identify the positive, raving fans (net promoters) vs. the detractors of your brand.

The concept is based on one question: Would you recommend us to a friend or colleague? Then answer is provided in a format of 0 for “extremely negative” to 10 ” extremely positive.”

What does a high percentage say about a company? A higher Net Promoter score has been correlated to a future increase in sales and referral sales. Categories of responses are shown below:

Promoters ( those who answer 9 or 10) are loyal enthusiasts who keep buying from a company and spread the word to their network

Passive (7 or are satisfied but unenthusiastic customers that can easily be lost to competition

Detractors (0 to 6) are unhappy and will stop their relationship with the company at the first opportunity

NPS (Net Promoter Score) = % of Promoters - % of Detractors

Why is this metric important? Especially to a small business.

1. It is easy to implement and monitor over time, it is for all intensive purposes one question.

2. It is easy to score and monitor over time.

3. It is easy to explain and understand.

For more information on Net Promoters: www.netpromoter.com

Loyalty as Part of a Program

The most common form of loyalty is seen in programs from Credit Card or Airline type programs. These are incentive programs, not true loyalty programs. The test of loyalty is if the program discontinued, will the customers stay. If not, it is an incentive. The use of incentives are perfectly fine, however, understand why your customers are staying with your business.

However, non-conventional loyalty programs are less incentive based. They can be internal programs for service, sales or marketing; goals to hit shipping times, quality tests, or customer service levels. It all adds up to loyalty.

It is a key driver of success for enduring businesses, small and large. The importance of knowing your customer groups, their lifecycle, needs/wants that drive their purchase behavior and finally consistent measures of loyalty that correlate to increased revenue. It is a long journey to understand your customer; loyalty is a large part of the journey of that understanding.

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Raving Fans and Loyal Customers = More Sales (Pt.3)

Thomas Shaw

Step 3) Dive deeper into the needs of the groups

You’ve identified your groups, now you’ve put them on a logical continuum or lifecycle to understand how they evolve – now what do they want?

When someone walks in a store, visits a website from one of these groups they are looking for 2 – 3 core items.

For Example: Holiday Expediters want:

1. Next day shipping is required as their #1 item and will pay for it

2. Prices do not need to inexpensive, only competitive

3. Reminders or wish lists are appreciated during Holidays

Step 4) Knowing the Group’s Needs, Can You Provide Service that differentiates and leads to Loyalty.

For Example: Holiday Expediters

Knowing they want next day delivery, would they want/desire immediate delivery or local pickup?

Step 5) Market Relentlessly to your customer’s needs. Marketing more effectively in this manner lowers cost per sales / acquisition costs substantially.

Marketing to your segments at the right time with the right message is crucial. For example, you may choose to not market to Holiday Expediters about your new product. However, your Big Spenders would want to know immediately about any new products.

Measuring Loyalty by Segments

Now you can see why segments are important. They provide a meaningful way for organizations to develop products, market and discuss strategy.

A key idea in measuring loyalty is determining what “Loyalty” is for your organization. In some markets, loyalty is a multi-year, multi-sale relationship. In others it is a 18 month cycle and the goal is to continue business with the customer for at least 18 months.

Be clear and honest about what loyalty means to your organization and be clear about the benefit of establishing and driving that loyalty.

For example: “Customers that remain with the organization for 18 months cover the margin goals for the quarter. For every 2 months beyond 18 a customer stays, we enjoy a 5% incremental monthly margin”

Ideally loyalty is beyond sales. It is about the emotional attachment to the brand, service or product. And that can be hard to measure.

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