Wednesday, March 08, 2006

Satisfied doesn't cut it

Harvard Business School's (HBS) Working Knowledge reviewed the new book The Ultimate Question: Driving Good Profits and True Growth. The author, loyalty expert Fred Reichheld, argues that satisfied customers are not sufficient for business success and that instead companies should aim to turn customers into promoters.

While the book focuses on a measurement system Reichheld calls the Net Promoter Score, the excerpt HBS features is worth a read as it describes how businesses have gone about building lasting (and profitable) relationships with customers. What's most interesting is that a number of the companies profiled such as Chick-fil-A and HomeBanc Mortgage Corporation spent very little on advertising to generate business. So how did they grow? The found success by paying and treating their employees exceptionally well and by providing outstanding service on a consistent basis, which meant lots of repeat business and referrals. These examples are good reminders that great marketing means great service, which doesn't require flashy ads and big promotion budgets.

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