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Net Promoter Score to win in '08!

NetPromoterScore for 08

"Prediction is very difficult, especially about the future" said the Danish physicist Niels Bohr. This week the news is dark and gloomy about recession around the world, inflation and lack of business confidence, and it's more difficult than ever to forecast what will happen over the next year.But I'm going to stick my neck out and predict that more companies will focus on the customer this year, and that they will use the simple tool of the Net Promoter Score* (or NPS).My crystal ball is helped by a new survey from IBM and US National Retail Federation which asked 418 executives in 137 retailers their top priorities this year. The number one issue for 2008 is Customer Satisfaction (up from 5th place last year).IBM said that customer focus is always high, but this is the first time that is projected to be the most important area, due to customers becoming increasingly demanding. Internet and mobile phones are cited as reasons for this change.For most businesses, the first place to start an improvement project is by measurement. In a recent issue of the Harvard Business Review a list was given of key performance indicators for leading companies including Return on equity (ROE), Operating Margin, Equity Ratio, Return on Investment (ROI), Liquidity ratio, Personnel costs (as % of sales), CAPEX (as % of sales), ROCE, EBIT and so on.I had to re-read the list again to check. There were NO customer centric metrics. Nothing to indicate how well a company is performing in the eyes of its customers.However, it is easy to see why. All the metrics listed above are clearly defined in business schools, and codified by accounting standards boards to help investors understand how much a company is worth or is performing. And until recently, marketing people have been hopeless at defining a standard for customers satisfaction.But the Net Promoter Score has the power to change that. It is a simple to measure metric (just one question) and easy to teach and understand internally. In the last 12 months I have been hearing more companies adopting (or planning to adopt) NPS as their measurement of customer loyalty.We have had much interest in CustomerGauge (which was the first tool designed specifically to measure NPS) from organisations who want to get closer to their customer base, and improve the customer experience. So much so, that I believe that in the next few years NPS will be as important a score to report as earnings growth, market share or profits.And I believe that 2008 will be the tipping point for NPS. This will be the year that Net Promoter together with its running mate Customer Focus will be elected by business!

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