By Vibons Team   |    4 min read


By Vibons Team
 4 min read

Is there such thing as bad profit? Yes, there is. In the old days, it was said that an unhappy customers talked five times more than a happy one. Today, social media and the Internet delivers a negative view to thousands, and even millions of people instantly. Management consultant Fred Reichheld focuses on “customer satisfaction” in his famous book. Let's take a look at the book to learn the “Ultimate Way” to sustainable growth...

Company profits are mainly divided into two: good profit... bad profit... Bad profit is seen in every industry. Hotels that charge excessive fees for phone calls... Insurance companies that try to keep most illnesses out of the scope of coverage... Hospitals that request an endless amount of unrelated tests... Profits made at a cost of making the customer unhappy do more harm than good in the long term. Customers bad-mouth the company and run off to competitors.

Let's see what America Online did. The Internet Service Provider earned a significant revenue from the public offering in 1992. Instead of using the money on improving service and quality, it inundated the country with free software CDs. The campaign was a success with the number of subscribers increasing rapidly. However, the onset of news users constrained the company's network capacity. People couldn't connect to the Internet, or lost their connection, speed issues... and the result was dropping revenues. In order to reverse the situation, the company focused on advertising and marketing. A 2002 study revealed that 42 percent of AOL customers were unhappy. And the rest of the story...

This is what we found out in our field studies. Most executives compromise service and quality when looking for ways to achieve short-term profits. One side of the coin: increased revenue, positive financial statements. The other side: angry and unhappy customers. Complaints... Bad-mouthing.... And decline... Don't fall into this trap. The golden rule to long-term growth is simple: "Do not abuse your customer, do not try to take advantage of weaknesses.

So, how do we measure whether we are on the right track or not? With a complicated customer satisfaction survey consisting of dozens of questions? No... Go to your customer and ask a single question: “Would you recommend me to your friends?” 0 never, 10 always. Those scoring between 0-6 are “defamers”; they will say bad things about you and sabotage your business. Those scoring between “7-8” are “passive”; they are kind of happy, however, not enough to praise you. Those scoring between “9-10” are the “promoters.” These people are your volunteer ambassadors. They mention you in their environment, praise your products and services and spread them by word of mouth.

The rate of promoters minus the rate of defamers equals the "net recommendation score." Let's assume that you have 100 customers. Of this total, 35 are marketers, 45 passive, and 20 defamers. That gives you a Net Promoter Score of 15.

NPS in short. NPS studies have been around for many years. Some results: The most successful companies in the world have an NPS of around 80. Whereas average companies have 10-20. A company that increases its NPS by 12 points double its growth rate. So, how can we achieve this?

One: Give your customer an excellent experience. You tried a new restaurant. When you say, "not bad," are you recommending it to your friends? "Good enough" does not suffice. Those in the passive group do not praise your product or service by word of mouth. Of the recommendations, 80-90 percent come from those who give a score of 9-10. This is why spends an amount much higher than its advertising budget on free delivery, lower prices, and improved services. High satisfaction and loyalty turn regular customers into unpaid sales reps.

Two: Find the "defamers" and find out the reason for their dissatisfaction. Remember that as long as this group rises, long-term growth will become harder and harder to achieve. A car rental company raised it revenue to $7 billion, up from $2 billion, by decreasing negative experiences to 5 percent from 12 percent.

Three: Keep track of the NPS regularly. Analyze the reasons for up and down trends.

In short, the key to long-term success and growth is to decrease the number of defamers and increase the promoters.

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