Measuring Your Business' Growth Potential

David Byrd : Byrd's Eye View
David Byrd
Chief Marketing Officer for ANPI

Measuring Your Business' Growth Potential

This week while attending RICA/RTG Spring Forum for wireless service providers, I learned one new method for measuring customer satisfaction and potential success/growth of a company and a new word. The context was during a series of presentations addressing the market trends affecting wireless carriers and service providers. I discussed the trends associated with the adoption of hosted communications, VoIP, Unified Communications and SIP Trunking; subjects that, as the CMO of ANPI, I both know well and continually monitor. The discussion that led to the discovery of a new term, dealt with the devices used to connect to wireless networks.

Fred Reichheld introduced a new customer loyalty metric in 2003 called “Net Promoter Score”. Essentially the Net Promoter Score (NPS) is the result of answers to a single question. “How likely are you to recommend product A or service B”? Respondents are asked to rate the likelihood on a scale from 1 to 10. The group responding at 9 or 10 is considered as “promoters” with those at 6 or less called “detractors”. The proportion of promoters minus the proportion of detractors is equal to the NPS. While any result greater than zero is considered as positive, obviously the higher the number the better. 10-15 is considered an average score. However, the debated use of NPS is the inference that companies with scores greater than 15 are likely to grow at a faster rate than the economy. It is this conclusion that has many analysts and consultants criticizing the methodology. Yet, it is clear that the higher the score the more likely the company is achieving significant revenue growth. Apple, Samsung, Harley-Davidson and Google all score greater than 50 and clearly are experiencing market surpassing growth.

After assessing your customer base and discovering 50 percent of your customers are promoters, 15 percent are passives (scoring 7 or 8) and 35 percent are detractors, the business’ NPS would be 15 percent (50-35=15). 

In researching NPS, I gained an appreciation for its simplicity and effectiveness. This is a measure of customer satisfaction and potentially a predictor of the strength of revenue growth that can be easily administered by a small business without the use of expensive consultants or marketing surveys. I certainly think it is worth exploring.

As for the new word, “Phablet” or a smartphone with a screen size of greater than 5 inches and up to whatever someone is willing to hold next to his or her head. All I can say is “Phabulous!”

 

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