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In my August, 2010 frenchonbrand.com, “Is Customer Delight Overkill?” (http://wp.me/pU6PC-25), I downplayed the concept of customer delight as potentially over-performing on the premise that people don’t necessarily want to be delighted, merely satisfied. My logic was that over performing in this area causes excess cost. Since then, and as a result of one of my reader’s well-informed and thoughtful comments (thanks, John H. FMB!) — and more research on the subject — I’ve moderated my position on customer delight and pass along the following convincing metric: a way to measure the impact of customer delight on word-of-mouth promotion to optimize the investment.
I realized the impact of customer delight extends far beyond the customer, after a review of W. Edwards Deming’s Profound Knowledge and Fred Reichheld’s “The Ultimate Question” (Net Promoter Score a.k.a. NPS). In this holistic approach to business, operationalizing customer delight becomes essential to its importance. Instead of viewing “delight” as overkill, I can now reconcile it with other favorable business results, such as increasing the lifetime value of a customer (promoter) beyond the customer revenue stream, and into areas such as:
- Low-cost customer acquisition via referrals (reduced marketing costs)
- Viral customer acquisition (referrals of referrals)
- Lower customer attrition (customer loyalty)
- Lower employee attrition (employee loyalty)
- Lower customer price sensitivity (perceived value)
- More nimble market response due to vibrant customer connections (innovation)
- Continuous improvement of operations through cultural alignment (operationalized brand)
- And many more
The result is sustainable growth.
To measure customer delight word-of-mouth radiance, Reichheld offers the following formula (this can be modified per individual situation). A customer survey is needed to capture the information needed to perform the calculations below (contact GroPartners for specific survey content).
Pick a benchmark date in the past (for example, the past 12 months, or last fiscal year). Then use this measurement process.
1. How many delighted customers do you have?
Find out how many of your new desirable customers were referred by other delighted customers (NPS of 9 or 10, meaning “on a scale of 1-10, how likely would you be to refer a friend or colleague to your brand?)
2. What is your average new customer worth?
Calculate (or see industry analysts’ calculations) what your average new customer is worth in dollars and cents.
3. Calculate the total value of those new delighted customers
Multiply the data from #1 (above) by #2 (above)
4. Calculate the value of positive comments
In your NPS survey, also ask respondents for positive or negative comments that support their NPS rating. If x number of positive comments generated $y in revenue (from 3 above), divide y/x to calculate the value of each positive comment
6. Calculate the value of each promoter
In your survey, find out the number of people per year to which each promoter might have commented, and multiply the average number by the value in #4 (above) to get the value of word-of-mouth per promoter. This is the “magic number” that helps optimize customer delight.
Anything can be measured. Even the power of customer delight. Now I’m a believer. How about you?
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