This article came to mind after a trip to a Michelin starred restaurant called Hambleton Hall. This is a very expensive hotel and restaurant in a beautiful location overlooking Rutland Water. We visited to have a drink before moving on to somewhere else but were refused entry as they said 'they were too busy'. We could see this was blatantly untrue. This made us feel very unworthy and under-valued as potential customers.
I think they should reflect on this article and realise that for every customer they alienate the cost implications are far greater. We, for one, will not be a Net Promoter of their brand and indeed will tell as many people as we can about the rude service we received.
Article
Why customer satisfaction makes all the difference
Few executives ever met a profit they didn't like. But customers know there is a world of difference between good profits and bad, and the consequences for companies that fail to distinguish between the two can be disastrous.
Bad profits are earned at the expense of customer relationships. Simply put, whenever a customer feels mistreated, those profits are bad. Bad profits come from unfair or misleading pricing, from saving money by delivering a poor customer experience, from giving customers less for their money rather than more.
Bad profits create legions of detractors who blacken a company's reputation, making it vulnerable to competitors. At many firms more than 3pc of customers fall into this category.
Good profits are dramatically different.
A company earns good profits when it so delights its customers that they not only come back for more - they recommend the company to others.
Satisfied customers become, in effect, part of the company's marketing department. They become promoters.
A simple technique can help you distinguish good profits from bad. Ask your customers to answer what we call "the ultimate question": How likely are you to recommend this company to a friend or colleague? Ask them to rate their answer on a scale from 0 to 10.
The responses will help you tally a metric we call the Net Promoter Score. NPS has been shown to correlate well not only with customer referrals and repurchases, but also with companies' growth rates.
Customer responses cluster into three groups. The first group - customers who give the company a 9 or 10 - we've labelled promoters.
The second group, which rates the company 7 or 8, are "passively satisfied".
Detractors, with ratings from 0 to 6, make up the third group. A company's NPS is simply the percentage of promoters minus the percentage of detractors.
We've found that companies with the leading NPS in an industry usually enjoy superior growth - typically, more than 2.5 times the average growth rate of the competition.
How can a company raise its NPS?
First, by designing the right propositions for the right customers. A vital step toward clarifying your priorities is quantifying the average lifetime value of your company's promoters and detractors, factoring in margins, cost efficiency and referrals.
But understanding where your customer base falls on the promoter-passive-detractor spectrum, and separating each of the three groups into profitable and unprofitable customers, will also help you.
High-profit promoters love doing business with you. These customers should be your top long-term priority for strategic investment and innovation.
Your entire organisation should focus on delivering flawlessly to them. Too often, however, customers in this sector are taken for granted (no squeaky wheels here). Inadvertently, companies may be milking profitable promoters to fund solutions for less profitable customers.
In the 1980s, American Express took the healthy profits from its core travel-card business and financed an expansion into financial services.
Within the card division, margins from high-volume customers subsidised the acquisition of new customers outside the core business.
Predictably, American Express's growth and profits tailed off - until it revitalised compelling propositions for core customers.
For example, the company transformed its Membership Miles programme into Membership Rewards, one of the industry's most generous rewards programmes, and created the Rewards Plus Gold card, now one of its most popular products.
High-profit detractors should be the second priority. They don't like doing business with you and are telling others. They will likely defect at the first opportunity.
A mobile phone provider found that many accounts in this sector were locked into long-term contracts at fixed prices. When these prices became uncompetitive, the customers were furious.
The fix was easy: offering more favourable terms in advance of renewal. That cost money but holding angry customers hostage would have cost even more.
Moving more customers into the profitable promoter sector should be your third priority. Begin by looking for ways to encourage low-profit promoters to do more business with you - as Amazon.com did with personal recommendations and incentives such as premium shipping.
You'll also have to figure out what would win over the passives and calculate whether such investments make sense or would merely "steal" resources away from your core.
Leading companies like GE, Intuit and American Express are now deploying NPS and discovering how versatile it is.
Like any good metric, NPS allows experimentation and accelerates learning. It helps you understand your core customers and design propositions that captivate them - and discover opportunities to deliver a great customer experience at every touchpoint.
By producing NPS data regularly, you'll institutionalise a cultural shift, making customer metrics every bit as auditable and practical as financial metrics like profit and return on equity.
You'll develop your capability to keep turning customers into advocates that lead your company to lasting growth.
And it all starts by asking just one question.
Source. Daily Telegraph
