In this blog, we will discuss the revenue-weighting model to link customer loyalty to revenue, i.e. taking into account the “weight” or earnings of each customer when it comes to satisfaction and brand loyalty.
Have you ever wondered what would happen if you merged your customer revenue with your Net Promoter Score (NPS)? We all know that a higher NPS score means higher loyalty, and higher loyalty means higher profits.
However, most companies still use a set, one-size-fits-all approach guatemala number screening when it comes to valuing their customers. This could mean that the happiest and highest spenders are treated the same as the unhappy and lowest spenders.
What is Net Promoter Score?
You've probably heard of the Net Promoter Score (NPS), and you probably understand the importance of customer loyalty.
The NPS system is a measure of customer loyalty that correlates to a business's profitability. Most companies use a Net Promoter Score question to ask customers about their level of satisfaction right after they complete their most recent transaction.
However, very few companies actually take into account different customer profiles when reporting on NPS. They are clearly missing a huge opportunity when they don't take advantage of turnover weighting. Here's an example:
Customers NPS Rating
SMEs 10
Company 2
SMEs 9
SMEs 8
Company 7
Now, let's calculate the standard NPS formula : % of promoters minus % of detractors.
Extracting the numbers from Table 1, we obtain the following:
Type of client % of customer type
Promoters 40%
Liabilities 40%
Detractors 20%
(Note: NPS is always a measure valued between -100 and +100)
How to calculate customer lifetime value using NPS?
Now, let’s use actual revenue. Imagine that the customer lifetime value (CLV) of a company is 4 times greater than the value of an SMB customer.
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