Page 166 - HBR's 10 Must Reads on Strategic Marketing

REICHHELD

of promoters—and the dangers in order to grow.” Explain the
of detractors. Consider these dangers of detractors: if your
guidelines: new-customer flow can’t keep
up with leaks in your customer
• Be sure that everyone in the
company knows which bucket, marketing costs will
customers they’re responsible mount and cash flow decline.
for. Then ensure that all • Create a sense of urgency
business functions—not just by tying rewards to score
market research—own and improvement—giving
accept the survey process and customers, in essence, veto
results. power over raises and
promotions.
• Make your scores transparent
throughout your organization. Example: By making field
Present employees with managers ineligible for
numbers from a previous week promotion unless their branch
(or day) showing the percent- or group of branches matches
ages (and names) of customers or exceeds the company’s
who are promoters, passively average net-promoter scores,
satisfied, and detractors. Enterprise Rent-A-Car has seen
its survey scores rise—and its
Then issue the managerial
charge: “We need more growth increase relative to its
promoters and fewer detractors rivals.

instead may be trapped by inertia, indifference, or exit barriers
erected by the company or circumstance. (Someone may regularly
take the same airline to a city only because it offers the most flights
there.) Conversely, a loyal customer may not make frequent repeat
purchases because of a reduced need for a product or service. (Some-
one may buy a new car less often as he gets older and drives less.)
True loyalty clearly affects profitability. While regular customers
aren’t always profitable, their choice to stick with a product or ser-
vice typically reduces a company’s customer acquisition costs. Loy-
alty also drives top-line growth. Obviously, no company can grow if
its customer bucket is leaky, and loyalty helps eliminate this out-
flow. Indeed, loyal customers can raise the water level in the bucket:
Customers who are truly loyal tend to buy more over time, as their

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