What is A Net Promoter Score?

Your business is doing OK, but it could be better. It grows when things are going well, then stagnates periodically when the “news” or marketing budget runs dry. Many of you say that you get your business through WOM, or tout that as main marketing objective.

Most companies strive for customer advocacy (including your competition), but how well are you really doing in this department? Do your customers actively endorse and champion you? If you don’t know the answer, I’ve got good news for you – it’s easier to figure out then you might think.

Try to answer this question: “What is the likelihood that your customers would recommend your company to a friend”? Not anecdotally; a real quantifiable number. Think this might be valuable to know? You’re right, it is. Here’s how:

Just over a decade ago, Fred Reichland and his team at Bain and Co. uncovered the one question that worked best to determine customer behavior, which they coined, Net Promoter Score (NPS). Their research showed that this “likelihood to recommend” question was the MOST accurate predictor of how many repurchases, referrals, recommendations, etc, a brand was likely to receive.

As it turns out, Net Promoter leaders grew on average 2X faster than their competition! No other question tested provided a response that was a better indicator of the actions you want your customers to take: buy more, tell their friends, and generally share good-will about your business.

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Do your customers feel this good about your brand?

The value of measuring NPS is strongest in categories where customers can switch easily, have abundant choice, and there is high demand. Sound like the arena in which you compete? If so, you’d be well served to measure this easy to uncover metric.

There are many ways to make use of Net Promoter Score, but if nothing else, think of the value in identifying those detractors inside your customer base, then working to bring them around to advocacy.

Without identifying a single new buyer, you could potentially have a dramatic impact on the bottom line and raise the likelihood that they will rate you highly in the future; significantly enhancing the value of your existing customer base.

One question. Many implications. Huge value to your business.

What’s your net promoter score?

What Really Is the 80/20 Rule?

You’ve probably heard of 80-20 rule (also known as Pareto’s Principle), which when applied to business, states that 80% of your sales come from 20% of your consumers. Seems nice and tidy right?


If it were true, it would definitely simplify your marketing efforts and narrow your focus to your most ‘valuable’ buyers. Unfortunately, doing so may dramatically limit your opportunity for success.

In 2007, Byron Sharpe and J Romaniuk from the Ehrenberg-Bass Institute for Corporate Sponsors, concluded research that showed the ratio to be more along the lines of 60/20 (at the high end).

When they analyzed brands across many categories over the course of a year, they found that all brands, regardless of their market share, typically could attribute 50% of their sales to the top 20% of buyers. That means another 50% of revenue came from the remaining 80% of consumers!

The implications are far reaching, and on the surface, we can see that long term engagement with your less frequent or light spending buyers could prove more valuable than you once believed. Over time, they may even scale up to the top 20%, even if just for a short period of time.

Next time you are thinking of ways to improve sales, take a hard look at the buying patterns of your customers. Look for those who may have dropped out of the 20%, or have always been just a bit outside. That pool will be much bigger than you previously believed and could be the source of your greatest gains to come.

Please share this post with someone who still believes in the 80/20 rule!


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Mavriko Marketing is a business consultancy that helps companies Make Their Move™ with better strategy, digital marketing and design. If you’d like to improve your bottom line, contact us today!

Business Strategy Part 1: Fundamentals

Business strategy is a difficult endeavor for many seasoned pros, let alone small business owners and startups. The details associated with crafting productive strategy require careful consideration, experienced shepherds and diligent attention to the right components. 


Many companies confuse brand strategy with business strategy, as the brand is the typical touchpoint of the business. Brand strategy is just as complex and important as an overarching business design, but it can at best serve as a band aid for a rudimentary business strategy.


You must first must uncover how your business will win in the long term before figuring out how your brand will come to life and engage your audience.


Business strategy ultimately boils down to creating unique and superior value for your customers, delivered differently than your competition.

One may communicate this through an intriguing brand or marketing plan, but the value needs to be delivered across the entirety of the value chain to drive ultimate performance.


Strategy is a very deep topic to explore, so it's helpful to first review the essential components that comprise a quality strategic plan. 


For a company to craft a winning business strategy, they must:

  • Set Measurable Goals

  • Establish Qualities of Distinction

  • Avoid Copying Competitors

  • Create Unique Value 

  • Choose & Ignore Customers Wisely

  • Accept & Make Trade-Offs

  • Focus Attention

  • Align Divisions

  • Execute Skillfully

  • Innovate With Care

  • Multiply Smart Choices

  • Become Flexibly Firm

  • Choose Proper Metrics

  • Exhibit Patience & Persistence

  • Ignore False Trends


That's a significant list to attend to for a burgeoning business, let alone a fortune 500 company. No wonder it often gets set aside for the sake of simply trying to make "the best" product possible.


Great products are surprisingly easy for customers to come by and replace, hence why smart strategy is not only an offensive tool, but a good defense against new entries into the market.


Perhaps this is a good place to pause for now. More to come!

In the meantime, what are your thoughts or questions as they relate to strategy?





How to Build Better Business Plans by Challenging Assumptions

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Whether negotiating a partnership, forecasting the results of a new project, or pitching investors on your startup; you most likely calculated the intended outcome by layering in facts and assumptions that allow you to make a guess about the future.

This is a core element of any new strategic endeavor or plan, which unfortunately can be quite perilous if not done correctly. Much of the time, the peril lies within your assumptions, not with your inherent ideas.

In most instances where intelligent parties are involved, a carefully crafted prediction of the future is formulated with multiple assumptions that must prove true to obtain the desired results.


The end game becomes crafting a 'story that sells' instead of rigorously evaluating the assumptions in order to develop a model of the future that is as certain as possible.

Startups are major culprits of this because of their uncertain future, lack of a viable business model, participation in an ecosystem that embraces uncertainty, “pivoting” and constant adjustment. This is fine in the earliest days, but if you have raised money with assumptions that you did not fully vet, you might be in for a rude awakening at your next investor meeting.


Forecasts are often presented with a “best case/worst case” scenario in mind, but more times than not, this “worst case” is a “low end” prognosis crafted to increase the likelihood of approval or acceptance. The fear in genuinely revealing the “worst case” is that you might never actually get approval to move forward with your plans, the funding to make it to market, or the partnership you seek. Unfortunately, this might be the most positive outcome!


Here is the crux of the problem: 


Many times people exploit their assumptions to tell a positive story without conducting the rigorous work needed to determine their accuracy, let alone their likelihood. This leads to miscalculations, errors, omissions and sunk costs that can take years to recoup, if ever.

Worst of all, they do this because it’s often endorsed, overlooked or rewarded!


A better way to plan:

First, admit that your projections may indeed be inaccurate, hence the need to test your assumptions. When leadership acknowledges and supports this process, team members are less inclined to falsify the prognosis, and a more rigorous examination can take place in plain view.


Then, ask yourself or your team: “Given our projections, what are the most important assumptions that must prove true for us to be successful, and how will we track them”? List these assumptions in order of importance, with the most important/uncertain at the top.


Once you have this list, you can then find ways to economically and rapidly test them for validation. Invariably, you will gain confidence through this process, as you either affirm or refute your assumptions. This knowledge can then be interlaced into your strategy with forecasts that gain greater assurance and transparency. Buy-in from third parties becomes easier when the story is told not simply with assumptions identified, but with those assumptions tested.


It comes down to the willingness to ask the right questions, the patience to investigate your variables, and ultimately answering the simple question, “What must be true for this to work”.


The next time you need to develop a vision for the future, first examine your assumptions. You might not be able to precisely predict the outcome, but you’ll come a heck of a lot closer to success.


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Mavriko Marketing is a business consultancy that helps companies Make Their Move™ with better strategy, digital marketing and design. If you’d like to improve your bottom line, contact us today!