The response to the current economic crisis in Australia is a bit bipolar. On the one hand:

  • A fast food chain had a value meal with a burger, fries, drink AND an ice cream sundae for just $4.99 which is very unusual.
  • The local coffee shop offered me a free cake with my coffee.
  • A HR recruitment agent emailed me and thanked me for referring a candidate to her even though my candidate did not get the job. This is a 1st for me as I constantly get calls from HR recruitment agents asking if I know candidates but never a thank you post event.


On the other hand a more traditional response:

  • I heard a legal firm in the city offered their lawyers a 12 month sabbatical at 25% of their current salary
  • A leading construction firm got rid of 150 out of 200 office staff
  • Pacific brands, an iconic Australian business, moved their manufacturing overseas
  • More jobs are moving to India


Strangely it’s either a feast or a famine. So to survive businesses are either cutting costs or increasing customer focus.

At such a time it’s easy for businesses to consider the short term and lose sight of the long term impact. Cutting costs and shedding staff can result in disenfranchising customers and staff over the long term. Both stakeholders will remember how they were treated during tough times.

Once this recession ends it will be costly to recruit and train new staff and difficult to win back lost customers. Customer relationships are just like personal relationships you remember which friends supported you in tough times.

On top of this we are taught that increasing customer focus costs money.

So businesses are stuck between a rock and a hard place. So what do you do to survive in this financial crisis?  Cut costs or increase your customer focus?

But what if you could do both? That is, increase customer focus and cut costs.

It seems impossible but studies by Bain & Co and Satmetrix show that NPS® loyalty leaders (brands with the highest Net Promoter Score in a category) typically grow at approximately 2 times the category average and ALSO enjoy lower operational costs.

Net Promoter Score® measures the likelihood that your customers will recommend you to others. It was co-developed by Satmetrix and loyalty expert Fred Reichheld of Bain & Company and starts by asking the most important question you could ask your customers which is “How likely are you to recommend us to a friend or colleague?” on a scale of 0 – 10 followed by the reason for the score.

A score of 9 or 10 is classified as a Promoter, 7-8 is a Passive and a 0-6 is a Detractor.  The Net promoter score is the percentage of Promoters less Detractors.


So let’s look at why these organisations grow AND have lower costs.


Growth is simple. A high NPS score means customers are more loyal, more likely to buy other product lines and recommend you to their friends and family creating a new and highly trusted sales channel.


But what about lower costs? How does that work?


Again it’s quite simple, think about what happens when an organisation is focussed on increasing promoters and reducing detractors. Detractors are those customers who typically spread negative word of mouth about a business. However, they strongly believe they have a valid reason to do so.

In best practice Net Promoter Score® implementations organisations listen very carefully to detractors and take strategic and systematic action based on their comments.

Naturally the end result is that the organisation improves and streamlines their systems, processes, products and channels making the organisation more effective and efficient.

Additionally, those customers who are promoters for your brand become a trusted sales channel, which means that loyalty leaders can easily afford to spend less on advertising and other customer acquisition costs again saving costs.

In fact, if you flip it around the additional cost that organisation’s spend on advertising can be interpreted as a tax as a result of the organisation providing bland or even unsatisfactory customer experiences. Why? Well such organisations rely more heavily on advertising to attract new customers as their existing customers may not buy from them again, let alone recommend them to others.

So if you are truly looking for a long term strategy that may put you ahead of the pack in terms of growth now and in the future AND potentially also help you reduce costs then NPS may be the answer.


Net Promoter and NPS Net Promoter Score are registered trademarks of Satmetrix Systems Inc., Bain & Company and Fred Reichheld.