Magazine article Marketing

Marketing Masterclass: Customer Loyalty

Magazine article Marketing

Marketing Masterclass: Customer Loyalty

Article excerpt

Marketing's new monthly series starts with a masterclass on how to improve your NPS. By Nick Hague, director, B2B International.

Customer loyalty is of strategic importance to all organisations. It generates customers with a high lifetime value. A loyal customer is more likely to recommend a brand to others, affecting business growth and reputation.

A widely used metric to measure loyalty is the Net Promoter Score (NPS) This is easily determined. Customers are asked how likely they are to recommend 'brand X' using a 0-10 scale. Scores of nine and 10 are promoters; scores of seven or eight are neutral (passives); and six or less are detractors. The NPS is calculated by subtracting the proportion of those giving a score of six or less from those giving a score of nine or 10.

The NPS provides a great benchmark by which to judge an organisation's performance. The average B2B company has an NPS of +24, which is far from ideal. Best in class companies score 50 to 80.

All three groups of customers are important in maintaining a high NPS Clearly a company must continue to delight those who give a score of nine or 10: there is no scope for complacency. Promoters love to tell others when they have received good service. About four out of 10 are likely to spontaneously mention their favourite supplier to a friend or colleague.

Those who give a score of six or below must be addressed urgently to find out whether they did so because the brand is deficient or they would be better off choosing something more suitable to their needs. …

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