Issue 24 - March 19th, 2021
Net Promoter Score is a very well known metric in Silicon Valley circles, but I think this process and mentality should be applied to every forward thinking business in the world today. Reputation and customer loyalty is more important than ever in 2021, and companies who do not pay attention to this super important metric are losing ground every day to their competitors who are hyper focused on customer promotion, loyalty, and organic growth.
All companies seek to grow. And growth—profitable, sustainable organic growth—occurs most often when customers and employees love doing business with a company and sing its praises to neighbors, friends and colleagues.
Most leaders want customers to be happy; the challenge is how to know what customers are feeling and how to establish accountability for the customer experience.
Conventional customer-satisfaction surveys often don’t work for this purpose, because the results don’t make it back to the front line in a timely and individualized manner to actually drive behavior change.
Some years ago, a Bain consulting team launched a research project to determine whether a different approach would prove more fruitful. As it turned out, one question worked best for most mature, competitive industries:
What is the likelihood that you would recommend Company X to a friend or colleague?
High scores on this question correlated strongly with repurchases, referrals and other actions that contribute to a company’s growth. True loyalty clearly affects profitability. While regular customers aren’t always profitable, their choice to stick with a product or service typically reduces a company’s customer acquisition costs. Loyalty also drives top-line growth. Obviously, no company can grow if its customer bucket is leaky, and loyalty helps eliminate this outflow. Indeed, loyal customers can raise the water level in the bucket: Customers who are truly loyal tend to buy more over time, as their incomes grow or they devote a larger share of their wallets to a company they feel good about.
And loyal customers talk up a company to their friends, family, and colleagues. In fact, such a recommendation is one of the best indicators of loyalty because of the customer’s sacrifice, if you will, in making the recommendation. When customers act as references, they do more than indicate that they’ve received good economic value from a company; they put their own reputations on the line. And they will risk their reputations only if they feel intense loyalty.
The tendency of loyal customers to bring in new customers is particularly beneficial as a company grows. In such a case, the tremendous marketing costs of acquiring each new customer through advertising and other promotions make it hard to grow profitably. In fact, the only path to profitable growth may lie in a company’s ability to get its loyal customers to become, in effect, its marketing department.
Resources to learn more about NPS scoring:
“The One Number You Need To Grow”
Newsworthy Links To Share
DepositLink, the industry leader in electronic payments for residential real estate transactions, announced the close of its successful Series Seed financing. The $3.5 million raised from angel investors will bolster Deposit Link's sales team, enhance technology, and boost infrastructure to accelerate marketplace adoption and the company's development roadmap. (Yahoo!)
WorkChew, a startup looking to connect remote workers with restaurants and hotels that need to make use of their space, has raised $2.5 million in a seed round of funding, the company announced Wednesday. WorkChew is focused on the B2B side of the business, signing up enterprises looking for flexible work options for their remote employees. The company also has a self-serve option, where remote workers can sign in, see the space options and all the amenities offered near their locations, and book a seat for up to four hours. For hotels on the WorkChew platform, users can also book a conference room or guest room. (Crunchbase News)
“They’ve got Berkshire Hathaway’s cost structure and eXp’s revenue structure,” the industry source said. Compass continues to get heat and pressure on their business model as they work through the IPO process as most industry insiders and Wall Street Analysts cannot wrap their head around the valuation and massive losses incurred at the company in recent years. (Inman)
Vacasa, a fast-growing company that manages thousands of rental units across the world, announced Thursday that it is acquiring TurnKey Vacation Rentals, a major rival that oversees properties in more than 80 destinations. The acquisition will add more than 6,000 vacation rental units to Vacasa's portfolio. The units are spread across the U.S., and in a statement Vacasa notes that many are in "premier destinations" such as Los Angeles and Napa, in California, and Santa Fe, in New Mexico. (Business Wire)
JetClosing, a Seattle-based maker of home closing software and services, raised $11 million in Series B funding. JetClosing is a leading digital title and escrow company for real estate transactions. Through its innovative platform, JetClosing provides unprecedented transparency, security, and efficiency throughout the home closing process. (PR Newswire)
In an interview this week with Brad Inman, the co-founder of Trulia, Pete Flint, and now managing partner at NFX says that “we are never going back to normal in the real estate world. At the higher end of the market, I think the opportunity there is for agents to think of themselves [as] management consultants, investment bankers, or strategic experts to help people through more complex [transactions] and there’s more opportunity in that,” he added. Flint also said there’s an opportunity for real estate techies to create the industry’s version of Shopify or Etsy to help smaller brokers create a comparable level of efficiency with Redfin or Compass without a treasure chest of funds. (Inman)