FreshNetworks Blog

Whether you use the Net Promoter Score or not yourself, you will undoubtedly have come across this ‘single number everybody needs to know’. On one level it is a calculation that takes into account how strongly people would be likely to promote your brand and returns a single score, expressed as a percentage. On another level, it is an entire approach to business and interacting with your customers that leads to the calculation of this score.

The score itself is what most people are interested in – the difference, expressed in a percentage, between those people who are very likely to recommend your brand and those people  and the beauty of it is that it can reflect the different levels of engagement and loyalty that customers feel to different types of brand. A luxury hotel chain, for example, should be expecting a Net Promoter Score of about +70%, an airline shouldn’t expect one higher than +10%, and a cable TV company needs to prepare for a score below -5% (yes, scores can be negative).

At the Marketing 2.0 conference we were lucky to hear from both Richard Owen of Satmetrix (the people behind the NPS) and Conny Kelcher from LEGO (a fervent user of the NPS). Both were able to highlight exactly what the benefit of Promoters is, in hard cash.

Conny’s example looked purely at revenue generated by the individual themselves, and clearly showed that Promoters spend more than Detractors and so it makes good business sense to improve your NPS. Looking at expenditure on LEGO, over the same time period customer spend was as follows:

• Promoters spent 208 Euros
• Fence Sitters spent 165 Euros
• Detractors spent 136 Euros

So, for LEGO, a Promoter will spend 53% more on their product than a Detractor.

Richard, quoting a study of network providers in the US, looked at this in more detail. He considered not just direct spend that the individual makes on the product, but the total contribution they make to the brand – including from recommending others (or indeed otherwise). When looked at like this, the average lifetime value for the network providers was as follows:

• Each Promoter brings an additional $693 in revenue
• Each Detractor is responsible for $1,495 in lost revenue

So the difference between a Promoter and a Detractor was almost $2,200. For Richard this showed that sometimes it can make business sense to buy your Detractors out of their contract with you. Overall it shows that Promoters are a category worth keeping and worth growing.

Read all of our posts based on the Marketing 2.0 Conference here.

Some more reading

• NPS is Growing Up (adaptivepath.com)
• Net Promoter Score: an operational tool to measure customer satisfaction (startuplessonslearned.blogspot.com)

Image via Wikipedia

One of the first speakers at the Marketing 2.0 conference in Paris was Conny Kalcher from LEGO, and if anything her presentation was an example of how good segmentation and really understanding your different consumer persona types can make a real difference to a successful social media strategy.

At LEGO, the core target is a young boy, and they group their customers into six groups

1. Lead Users – people LEGO actively engage with on product design
2. 1:1 Community – people whose names and addresses they know
3. Connected Community – people who have bought LEGO and also been to either a LEGO shop or LEGO park
4. Active Households – people who have bought LEGO in last 12 months
5. Covered Households – people who have bought LEGO once
6. All Households – those who have never bought LEGO

These six types of customers are defined based on the strength and depth of their relationship with the brand – from having no experience with the brand to being actively involved in it not just as a product but as a business. There are fewer Lead Users than there are Covered Households and when volume and closeness to the brand are combined like this it lends itself to neat segmentation of the marketing (and indeed the social media strategy).

Indeed LEGO uses a different approach for the top three segments than for the bottom three. This is the cut-off point at which customers become truly engaged. They are not just entering into a transactional relationship, but they actually care about the brand. LEGO uses social media to work with these three segments – from co-creating online with the Lead Users to engaging the Connected Community and 1:1 Community in online communities and social networks. These are, perhaps, the easiest and best people to engage and empower online and so the most efficient use of social media. They are the people LEGO wants to feel special, and the people they want to test new ideas and products with. They are also the people to keep engaged and close to the brand – the people who will spend most and be your biggest advocates.

Proper customer segmentation and persona profiling helps you to understand how your customers differ and how their needs differ. Social media and online communities let you treat different people in different ways and also to engage with them in the way they want to be engaged with.

Read all of our posts based on the Marketing 2.0 Conference here.

Some more reading

• Community Marketing: three things to do differently (thecustomercollective.com)
• Some brands will love the new Facebook (sharemarketing.wordpress.com)