Net-promoter nonsense

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Recently talked with 3 sector-leading firms obsessed with their NP score – the % of customers who are Promoters minus the % who are Detractors. Having more people like you than not is for sure “a good thing”, and NPS advocates like to point out that firms with a high score out-perform others (never mind how the causality actually works, or what to do with it!).

But others already saw that it’s badly flawed, with illogical reasoning and a disconnect from what really matters. First, ...

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Understanding customer churn

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Great seminar last week by my colleague Bruce Hardie at London Business School on the complications involved in the simple idea of customer churn. Bruce probably knows more than most experts how to extract useful information on the issues from corporate systems. A few key messages I heard …

Bruce feels the word ‘churn’ should only be used for customer relationships based on contracts, e.g. in banking, mobile phones, media subscriptions. It’s not always simple, even then – many people ...

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Customer satisfaction and growth

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Interesting article in Sloan Management Review on linking customer satisfaction to growth. Looks based on very thorough research on customer satisfaction metrics and their subsequent behaviour – especially passing on recommendations. Of course, to do the customers-to-sales link properly, you would want to break apart the three elements [a] customer win-rate, [b] customer loss-rate .. and their combined effect on the total customer base .. and [c] purchase rate. See Strategic Management Dynamics chapter 6.  Do beware ...

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