Net Present Value
Assignment
“Net Promoter Score: a strong indicator of loyalty and growth?”
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Table of Content Page Introduction…………………………………………………………………………3 1 Main advantages of the NPS……………………………………………...4 1.1 1.2 1.3 2 Simple and understandable – the calculation of the NPS……...4 Simple categorization of the customer groups - …………………. application of the NPS……………………………………………...5 Motivating Change - customer-focused management by NPS...6
Main disadvantages of the NPS ...........................................................6 2.1 2.2 2.3 NPS - superficial view of loyalty research………………………...6 Why a single question is not a true indicator …...........................8 Other critic points……………………………………………………9
Conclusion………………………………………………………………………….10 References………………………………………………………………………….11
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Introduction A company´s biggest asset is its customers loyalty. The term customer loyalty describes the demand-side perspective of a bond, e.g. the customer has reduced willingness to change (Homburg / Bruhn, 2000, p.8). Customer loyalty can be seen as an solidarity leading to the customer´s deliberate and intentional continuation of a business relationship, developing a positive attitude towards the supplier. Customer satisfaction is a key fact of customer loyalty. It depends on the provider´s performance and the variety of competitors. The difference between customer loyalty and customer satisfaction is, that the latter is a voluntary binding of the customer to the supplier. (C.Zerres / M. Zerres, 2005, p.205). Empirical studies have shown that the relationship of customer satisfaction and customer loyalty are industry-dependent. The stronger the competition, the closer the observed correlation between customer loyalty and customer satisfaction. Context is quite complex and includes such factors as: repurchase rate, cross-selling, price sensitivity, and word of mouth.(Blum, 2004, p.17-19) In today 's competitive markets, the sustainable development of customer loyalty
“Net Promoter Score: a strong indicator of loyalty and growth?”
2
Table of Content Page Introduction…………………………………………………………………………3 1 Main advantages of the NPS……………………………………………...4 1.1 1.2 1.3 2 Simple and understandable – the calculation of the NPS……...4 Simple categorization of the customer groups - …………………. application of the NPS……………………………………………...5 Motivating Change - customer-focused management by NPS...6
Main disadvantages of the NPS ...........................................................6 2.1 2.2 2.3 NPS - superficial view of loyalty research………………………...6 Why a single question is not a true indicator …...........................8 Other critic points……………………………………………………9
Conclusion………………………………………………………………………….10 References………………………………………………………………………….11
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Introduction A company´s biggest asset is its customers loyalty. The term customer loyalty describes the demand-side perspective of a bond, e.g. the customer has reduced willingness to change (Homburg / Bruhn, 2000, p.8). Customer loyalty can be seen as an solidarity leading to the customer´s deliberate and intentional continuation of a business relationship, developing a positive attitude towards the supplier. Customer satisfaction is a key fact of customer loyalty. It depends on the provider´s performance and the variety of competitors. The difference between customer loyalty and customer satisfaction is, that the latter is a voluntary binding of the customer to the supplier. (C.Zerres / M. Zerres, 2005, p.205). Empirical studies have shown that the relationship of customer satisfaction and customer loyalty are industry-dependent. The stronger the competition, the closer the observed correlation between customer loyalty and customer satisfaction. Context is quite complex and includes such factors as: repurchase rate, cross-selling, price sensitivity, and word of mouth.(Blum, 2004, p.17-19) In today 's competitive markets, the sustainable development of customer loyalty
References: Blum, G. (2004): Abheben mit dem CRM-Cockpit: Kundenbindung und Controlling. In: Database-Marketing, Ettingen. Bruhn, M./ Homburg, Ch.(2000): Kundenbindungsmanagement – Eine Einführung in dietheoretische und praktische Problemstellung, in: Bruhn, M./Homburg, Ch. (Hrsg.): Handbuch Kundenbindungsmanagement, 3., überarbeitete und erweiterte Auflage, Wiesbaden. Dr. Bauer, F/ Bössow, O/ Studzinski, J.(2007): in Planung und Analyse, Zeitschrift für Marktforschung und Marketing. Owen, R/ Brooks, L. (2009): Answering the Ultimate Question: How Net Promoter Can Transform Your Business – Jossey-Bass. Reichheld, F.F. (2003): The One Number You Need to Grow, in Harvard Business Review. Schmolke, H.J.(2007): Mentalities and rating scales. Using NPS in a multicultural environment. Präsentation von H.J. Shmolke (Metrinomics GmbH) auf der NPS Anwendungskonferenz, Bonn. Schüller, A. M. (2010): Kunden auf der Flucht? Wie sie loyale Kunden gewinnen und halten, Zürich. Zerres, C./Zerres M. (2005): Handbuch Marketing-Controlling, Springer, 3. Auflage.