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Frederick F. Reichheld (born 1952, Cleveland, US) is an American New York Times best-selling author, speaker and business strategist. He is best known for his research and writing on the loyalty business model and loyalty marketing. He is the creator of the Net Promoter System of management (NPS).
Reichheld graduated with a B.A. from Harvard College (1974) and an MBA from Harvard Business School (1978).[ citation needed ]
Reichheld is a Fellow of the management consultancy Bain & Company, where he has worked since 1977. In 2003, Consulting Magazine named him one of the world's top 25 consultants. [1] According to The New York Times, he "put loyalty economics on the map." The Economist magazine called him "the high priest of the loyalty cult" in 2001. [2] [ failed verification ]
His books include The Loyalty Effect (1996), Loyalty Rules! (2001), and The Ultimate Question: Driving Good Profits and True Growth (2006). He has authored articles for business publications, including eight for the Harvard Business Review . He speaks on loyalty and other business topics at management conferences and similar events. [3] His work on loyalty has been covered in The Wall Street Journal, New York Times, Financial Times, Fortune, Business Week and The Economist.
His 2011 book, The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World, was a New York Times Bestseller [4] and co-authored by long-time collaborator, Rob Markey of Bain & Company. [5] An updated and expanded version of his 2006 book, The Ultimate Question, it focuses on Net Promoter Score (NPS), a concept he developed based on his research in measuring customer satisfaction, customer retention and its link to revenue growth and profitability. [6] This metric serves as an indicator of the loyalty and advocacy customers show for a company. In this new version of the book, Reichheld renames NPS the "Net Promoter system" to emphasize elements of the approach beyond the metric.
In 2021, Reichheld published a new book entitled "Winning on Purpose", along with two co-authors Darci Darnell and Maureen Burns. Topics include Net Promoter 3.0, and Fred's latest invention, called "Earned Growth", described as an accounting-based twin for Net Promoter Score.
In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's managers on behalf of stakeholders, based on consideration of resources and an assessment of the internal and external environments in which the organization operates. Strategic management provides overall direction to an enterprise and involves specifying the organization's objectives, developing policies and plans to achieve those objectives, and then allocating resources to implement the plans. Academics and practicing managers have developed numerous models and frameworks to assist in strategic decision-making in the context of complex environments and competitive dynamics. Strategic management is not static in nature; the models can include a feedback loop to monitor execution and to inform the next round of planning.
In marketing, a coupon is a ticket or document that can be redeemed for a financial discount or rebate when purchasing a product.
Relationship marketing is a form of marketing developed from direct response marketing campaigns that emphasizes customer retention and satisfaction rather than sales transactions. It differentiates from other forms of marketing in that it recognises the long-term value of customer relationships and extends communication beyond intrusive advertising and sales promotional messages. With the growth of the Internet and mobile platforms, relationship marketing has continued to evolve as technology opens more collaborative and social communication channels such as tools for managing relationships with customers that go beyond demographics and customer service data collection. Relationship marketing extends to include inbound marketing, a combination of search optimization and strategic content, public relations, social media and application development.
The loyalty business model is a business model used in strategic management in which company resources are employed so as to increase the loyalty of customers and other stakeholders in the expectation that corporate objectives will be met or surpassed. A typical example of this type of model is: quality of product or service leads to customer satisfaction, which leads to customer loyalty, which leads to profitability.
In marketing, brand loyalty describes a consumer's positive feelings towards a brand, and their dedication to purchasing the brand's products and/or services repeatedly, regardless of deficiencies, a competitor's actions, or changes in the environment. It can also be demonstrated with other behaviors such as positive word-of-mouth advocacy. Corporate brand loyalty is where an individual buys products from the same manufacturer repeatedly and without wavering, rather than from other suppliers. Loyalty implies dedication and should not be confused with habit, its less-than-emotional engagement and commitment. Businesses whose financial and ethical values rest in large part on their brand loyalty are said to use the loyalty business model.
The Loyalty Effect is a 1996 book by Fred Reichheld of the consulting firm Bain & Company, and the book's title is also sometimes used to refer to the broader loyalty business model as a whole. Reichheld's book was exceptionally popular with marketing and customer relationship management professionals, and as such the phrase "loyalty effect" has become synonymous in some circles with the more generic concepts covered by the loyalty business model.
Customer satisfaction is a term frequently used in marketing. It is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction goals." Customers play an important role and are essential in keeping a product or service relevant; it is, therefore, in the best interest of the business to ensure customer satisfaction and build customer loyalty.
James C. "Jim" Collins is an American researcher, author, speaker and consultant focused on the subject of business management and company sustainability and growth.
Net promoter score (NPS) is a market research metric that is based on a single survey question asking respondents to rate the likelihood that they would recommend a company, product, or a service to a friend or colleague. The NPS is a proprietary instrument developed by Fred Reichheld, who owns the registered NPS trademark in conjunction with Bain & Company and Satmetrix. Its popularity and broad use have been attributed to its simplicity and transparent methodology.
Loyalty marketing is a marketing strategy in which a company focuses on growing and retaining existing customers through incentives. Branding, product marketing, and loyalty marketing all form part of the customer proposition – the subjective assessment by the customer of whether to purchase a brand or not based on the integrated combination of the value they receive from each of these marketing disciplines.
Customer retention refers to the ability of a company or product to retain its customers over some specified period. High customer retention means customers of the product or business tend to return to, continue to buy or in some other way not defect to another product or business, or to non-use entirely. Selling organizations generally attempt to reduce customer defections. Customer retention starts with the first contact an organization has with a customer and continues throughout the entire lifetime of a relationship and successful retention efforts take this entire lifecycle into account. A company's ability to attract and retain new customers is related not only to its product or services, but also to the way it services its existing customers, the value the customers actually perceive as a result of utilizing the solutions, and the reputation it creates within and across the marketplace.
The service–profit chain is the central concept in a theory of business management which links employee satisfaction to customer loyalty and profitability. It was proposed in an article in the Harvard Business Review in 1994 by James L. Heskett, W. Earl Sasser, and Leonard Schlesinger, and was later the subject of the book The Service Profit Chain – How Leading Companies Link Profit and Growth To Loyalty, Satisfaction and Value, published in 1997 by three of the same authors.
The Advocacy Index is a customer survey technique developed by VIRTUATel Ltd that is conducted over the telephone. The technique measures customer loyalty using a 3-point scale and is based on the Net Promoter Score (NPS) methodology developed by Fred Reichheld.
Customer advocacy is a specialized form of customer service in which companies focus on what is deemed to be best for the customer. It is a change in a company's culture that is supported by customer-focused customer service and marketing techniques.
Bain & Company is an American management consulting company headquartered in Boston, Massachusetts. The firm provides advice to public, private, and non-profit organizations. One of the Big Three management consultancies, Bain & Company was founded in 1973 by former Group Vice President of Boston Consulting Group Bill Bain and his colleagues, including Patrick F. Graham. In the late 1970s and early 1980s, the firm grew rapidly. Bill Bain later spun off the alternative investment business into Bain Capital in 1984 and appointed Mitt Romney as its first CEO. Bain experienced several setbacks and financial troubles from 1987 to the early 1990s. Romney and Orit Gadiesh are credited with returning the firm to profitability and growth in their sequential roles as the firm's CEO and chairman respectively.
Edward W. Conard is an American businessman, author and scholar. He is a New York Times-bestselling author of The Upside of Inequality: How Good Intentions Undermine the Middle Class and Unintended Consequences: Why Everything You've Been Told About the Economy Is Wrong; and a contributor to Oxford University Press' United States Income, Wealth, Consumption, and Inequality. Conard is an adjunct fellow at the American Enterprise Institute for Public Policy Research. Previously, he was a managing director at Bain Capital, where he worked closely with former presidential candidate Mitt Romney.
Willingness to recommend is a metric related to customer satisfaction. When a customer is satisfied with a product, he or she might recommend it to friends, relatives and colleagues. This willingness to recommend can be a powerful marketing advantage. In a survey of nearly 200 senior marketing managers, 57 percent responded that they found the "willingness to recommend" metric very useful.
Customer delight means surprising a customer by exceeding their expectations and thus creating a positive emotional reaction. This emotional reaction leads to word of mouth. Customer delight directly affects the sales and profitability of a company, as it helps to distinguish the company and its products and services from the competition. In the past customer satisfaction has been seen as a key performance indicator. Customer satisfaction measures the extent to which the expectations of a customer are met. However, it has been discovered that mere customer satisfaction does not create brand loyalty nor does it encourage positive word of mouth.
Bruce Cooil is The Dean Samuel B. and Evelyn R. Richmond Professor of Management at Vanderbilt University in the Owen Graduate School of Management. His main areas of research are statistical modelling and its application to decrease mortality and morbidity rates due to coronary heart disease and what can be done to improve the healthcare of impoverished regions like Mozambique.
Rob Markey is an American author, speaker, and business strategist. Often referred to as the Vince Lombardi of Customer Loyalty, he is perhaps best known for his research and writing on customer experience and loyalty marketing. Markey is also the co-creator of the Net Promoter System of management (NPS), along with fellow Bain & Company consultant Fred Reichheld.
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