Reichheld’s Great Reassessment: Focus on Promoters

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Mar 22, 2004
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By John Hennessy

If you’ve spent any time working on loyalty, you’ve encountered the work of Frederick Reichheld. If you haven’t kept up on Reichheld, he’s changed.

In a Feb. 1 article in Direct magazine, Reichheld, whom the Economist once ordained “the high priest of loyalty,” refers to his past work as “powerful but useless.”
In a stunning reappraisal of his own loyalty theories, Reichheld has adopted a simpler discipline in an effort to correlate loyalty to growth, and to give organizations something
clear that they can act on.

There are two questions that beg asking here. The first: What should our method be, if any, to account for loyalty? This is important because, according to Reichheld, loyalty
leaders are growing at twice the rate of their competitors.

The second (just basic curiosity): What would it take for most of us to change our thinking on a subject central to our career?

Reichheld’s change came about due to the inability of his early work on loyalty to predict growth. In his revised approach, Reichheld focuses on “promoters” — those willing
to recommend your company to a friend or colleague, and their relationship to “detractors” — your lowest tier shoppers as measured by their willingness to recommend you. He believes
this approach helps companies understand core growth.

Viewing shoppers based on their willingness to recommend you to others changes the tactics you use. Copycat strategies are immediately eliminated from consideration. One-time
hits become less seductive. Programs that differentiate you by delivering ongoing, superior service and value are where your company’s efforts should be spent. Weekly or daily
review of Reichheld’s simple metric will let you know quickly if your efforts are winning or losing the game.

Moderator’s Comment: What do you think of Reichheld’s new advice to focus on “promoters” and their relationship to
“detractors”? Do you believe this approach to loyalty measurement could help you improve your sales growth?

In Reichheld’s new vernacular, I’m a Reichheld “promoter”. His new approach has me recommending that others look closely at his latest work on loyalty measurement.
Beyond the implications on tracking and improving loyalty, it’s refreshing that this work is the result of his willingness to continually question assumptions and change.

John
Hennessy – Moderator

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