How Do Your Customers Answer the “Ultimate Question”?

by Charles Sipe

When Fred Reichheld wrote The Ultimate Question, he argued that the best way to drive strong revenue growth and return on equity, was by using the simple question “How likely is it that you would recommend this company to a friend or colleague”? This question, goes right to the source of your business, the perceptions of the customer. According to Bain & Company analysis, “NPS(Net Promoter Score) leaders outgrow their competitors in most industries—by an average of 2.5 times” (1).

Do you know how likely your customers are to recommend your product or service? Recommendations from friends or colleagues are much more effective than almost any company marketing message. What does your company do to encourage recommendations? Do you have a remarkable return policy like Zappos which allows returns within 365 days and provides free shipping both ways? Does your product’s unique selling proposition blow the competition out of the water, like the BlendTec blender which can turn an iPhone into dust within seconds? People usually don’t tell their friends, family, or colleagues if they are satisfied with their purchase. They usually recommend products that are exceptional, or provide over the top value.

Social technologies like Facebook or Twitter are empowering customers to be able to communicate faster and easier than ever before.  The Ultimate Question, was written in 2006, before almost everyone had a Facebook account and before Twitter started. Rather than having to be physically with a friend or on the phone, to recommend or detract a brand, anyone can now go on Twitter and Facebook and send a message instantly to hundreds of people. If Net Promoter Score was important before, just imagine how social technologies are affecting the influence of promoters and detractors. I can send a text message from my mobile device, and my Tweet will be sent out to 200 followers. This has scary implications for companies – if your product is average or worse. But if your offering is exceptional, this can also be a great opportunity to engage your customers to market your products for you.

The Companies With the Top Net Promoter Scores (Mar 30, 2009 Brandweek)

1. USAA
2. Apple
3. Amazon.com
4. Costco.com
5. Google
6. Facebook
7. Wikipedia
8. eBay
9.  Craigslist
10. Barnes & Noble (bn.com)

1. The Ultimate Question Website

Photo by ninjanoodles

Interim Management Question: Should Companies be Focusing on Retaining Customers vs. Acquiring New Customers

Should companies be focusing on retaining current customers rather than going after new customers due to the poor economic environment?

Often in life, we hear people wonder, “should I be doing X or Y?” I like to use my kids as examples — only because they are so clearly reflections of ourselves.

The question is not, “should I take out the garbage OR brush my teeth?” It is: given that we cannot let garbage pile up in our house, and we will lose our teeth — over time — if we do not brush… how can we get both done? It’s BOTH-AND rather than EITHER-OR.

Prioritization becomes easy, when we consider how much more expensive cost-of-sales is for new customers than existing customers (see my video). Most businesses do NOT regularly monitor this.

Back to your question, companies should have both a RETENTION and an ACQUISITION strategy.

Especially if they haven’t done so recently, leaders should analyze their customer base. SOME (usually ~10%) are customers we’d just as soon lose to the competition! They’re unprofitable, not a good fit from the start, etc. Nudge them to find a good home and get good karma points in the process.

Talk to the other 90% and learn what you can do to keep their business. NOT EVERYONE is jumping ship, so you’re likely to find that ~30% are solid. Another ~30% are unable to pay and you’re likely to lose them — proactively help them with a payment plan. The remaining ~30% are on the fence; maybe a “lighter” product/service offering would help them remain “in the fold”.

ONLY THEN should you consider how much energy/resources/investment to put into new customer acquisition. As always, metrics against controllables are best (that is, # calls made — rather than # new accounts).

Paul Travis is an interim marketing executive at OneAccord. Mr. Travis is based out of Seattle with 25 years of experience in high technology, marketing, and consulting. He can be reached at Paul.Travis(at)oneaccordpartners.com and at 206-910-2222.

The Consumer in Control

by Greg Verdino

If “the consumer is now in control” is the most often cited truism in new marketing, then “marketers need to shift from push to pull” is surely a close runner-up.

True enough, but here’s the rub. I’ve heard more than a few people in our industry elaborate on this statement by explaining that, “marketing used to be about pushing messages out to consumers, but now it’s about pulling consumers to the brand.” Um, ok but no.

Pull is not about pulling consumers in; it’s about giving consumers a reason to pull us in. Remember truism #1 – they’re in control; they (not we) decide where they go and what they experience. We’ve lost the right to pull consumers anywhere (if we ever really had that right at all.)

Pulling consumers toward our brands is really just the desired result of push marketing – we interrupt consumers as they go about their business and hope to redirect (or pull) them into some kind of brand experience. It’s still old marketing.

Pull means that we to go to them, join their communities, give them reasons to voluntarily draw us into their personal media experiences. We’re not interrupting them. They’re opting into us.

So next time someone asks you about the shift from push to pull, remember that “push marketing” is what old marketers did, “pull marketing” is what new consumers do. Different? Yes. But this is how the game is played today.

This article was originally posted at gregverdino.typepad.com and is licensed under the Creative Commons 3.0 License.

Why Use Interim Marketing Management?

Why is using interim executives in key marketing and sales leadership positions beneficial to companies?

As my co-author and I showed through case study after case study [in Leadership on Demand], interim management specifically focused on revenue represents one of the quickest ways to innovate.

Innovation doesn’t have to be in your product line or your technology – it can be in new thinking about how to use your CRM (customer relationship management) system. It can be in going direct where previously you’ve relied on the channel. It can be in looking at your product offering and customer base a new way.

For example, a few years back I helped a software company that had a product line ranging from $295 to $11,995. After spending a couple months with the salespeople and in the trenches with customers, I stratified the product line for efficiency. The low-end products could be freely test-driven on the site and upgraded to paying versions by talking to the support technicians. The high-end products could no longer be obtained via the site, but rather began with a sales conversation to qualify buyers. Prices were no longer published but quoted custom. Within 9 months, the average selling price increased ten-fold and the company got acquired by a publicly traded competitor at an extremely healthy multiple.

Management guru Peter Drucker predated the advent of interim managers but his philosophies support them wholeheartedly, especially: “Marketing and innovation are the two chief functions of business. You get paid for creating a customer, which is marketing. And you get paid for creating a new dimension of performance, which is innovation. Everything else is a cost center.”

Paul Travis is an interim marketing executive at OneAccord. Mr. Travis is based out of Seattle with 25 years of experience in high technology, marketing, and consulting. He can be reached at Paul.Travis(at)oneaccordpartners.com and at 206-910-2222.