MN Fruit & Vegetable IPM News - Vol. 1, No. 8

How many of your customers would recommend you to a friend or colleague?
People will come to your place of business with a series of expectations about service and product quality. They will leave with perceptions of service and product quality. If there is a big gap between what people expected and what they got there is a quality problem from that consumer’s perspective. Often these thoughts are not consciously conceived. When you go to a place of business you probably have the expectation that if you need help someone will be pleasantly responsive to your needs. Quality gap studies have been done and the results are fascinating and stress the need for knowledgeable and responsive sales people (note reference section). These studies probe deeper into the reasons for customer satisfaction or dissatisfaction. The problem is that customer satisfaction ratings are not a good predictor of people’s behavior. They might be happy and not be coming back for good reasons. They might be unhappy and coming back for good reasons. The real goal is identifying, cultivating and growing the loyal customer segment of your business. These are the people whose behavioral patterns link tightly with your business.

Is there a simple way to get at the real issue? Is there a question that you could ask your customers, the answer of which would correlate to profits and growth?

Recent research suggests that there is (Reichheld 2003). “How likely is it that you would recommend our company to a friend or colleague?” When customers recommend you, they are putting their reputations on the line. This is a risk they take only if they are intensely loyal.

One way to do this is to ask your customers the above question. Based on a 0 to 10 rating customers can be grouped into the following categories: 1. “promoters” 9 -10 rating - extremely likely to recommend, 2. “passively satisfied” 7 - 8 rating, and 3. “detractors” 0 – 6 rating - extremely unlikely to recommend. Subtract the percentage of detractors from the percentage of promoters. For example, Southwest Airlines has a net promoter score >50 and its growth rate reflects this high score. Most of the other airlines cluster back around 10. This question was found to be effective across many different industries. The real question is, “Could this be an effective tool in your business?”

The simplicity of the system is a big plus. People are tired of being surveyed. A short survey is welcomed by the customer because it not only acknowledges interest and caring but also shows respect for their precious time. The results can be analyzed quickly and acted upon.

How might this translate into a real world example? My local hardware guy was telling me how he wanted to charge a customer to shake his paint can because the customer had purchased the paint somewhere else. The customer became angry and claimed that he was a $1,500 a year customer and should not be charged. His customer card showed $50 of purchases. The questions that come to mind are: 1. can this person be turned into a loyal customer and if yes I would be happy to shake his paint can, 2. should I shake the can to perhaps move him out of the detractor category, or 3. there is no way this person will ever be a loyal customer and let him go (with the thought that this person may be more of a promoter as a detractor given the chutzpa involved in buying paint one place and asking to have it shaken for nothing in another).

References and Recommended Reading
Reichheld, F. 2003. The One Number You Need to Grow. Harvard Business Review. Dec. pp. 1-11.

Hudson, J.T., Behe, B.K., Ponder, H.G., and Barrick, W.E. 1997. Consumer Perceptions and Expectations of Garden Center Product and Service Quality. J. Environ. Hort. 15: 12-15.

Barton, S.S. and Behe, B.K. 1998. The Role of Service and Product Quality in Meeting Customer Expectations, SNA Research Conference. Vol. 43: 477-480.

Behe,B. Barton, S. Brooker,J. Hall, C. McNiel, R. Turner, S. and Safley, C. 1999. Relationship of Dollars Spent in the Garden Center and Perceptions of Product and Service Quality, SNA Research Conference. Vol. 44: 542-545.

Editor’s Note: Karl Foord, Ph.D., MBA, has considerable experience with horticultural crop production and marketing. This is part 3 of a series of Karl’s articles on marketing and business management that we believe will be useful to many of our readers, particularly fresh market growers. Please questions, or suggestions for future articles, to Karl at: foord001@umn.edu

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ACKNOWLEDGEMENTS

Co-Editors: Bill Hutchison, Department of Entomology, University of Minnesota, hutch002@umn.edu
Jeanne Ciborowski, Minnesota Department of Agriculture, Ag. Resources Division,jeanne.ciborowski@state.mn.us
Suzanne Wold-Burkness, Department of Entomology, University of Minnesota, woldx018@umn.edu

The Newsletter is published weekly from May through August, cooperatively, by the Minnesota Department of Agriculture (MDA) and the University of Minnesota (U of MN). Reports are posted on the U of MN and MDA web sites on Fridays. If you have suggestions and/or comments, please send your contributions by 4 p.m., Tuesday to Jeanne Ciborowski, 651-297-3217, jeanne.ciborowski@state.mn.us , MDA, 90 W. Plato Blvd., St. Paul, MN 55107-2094. You can access the Newsletter at the U of MN web site in htm. format at: www.vegedge.umn.edu/MNFruit&VegNews/mnindex.htm and at the MDA web site in pdf. format at: www.mda.state.mn.us/biocon/fruitreports/default.htm

Partial funding for this publication is provided through partnership agreements with the Minnesota Fruit and Vegetable Growers Association and the United States Department of Agriculture – Risk Management Agency (RMA) and the RMA Community Outreach and Assistance Partnership Program. These institutions are equal opportunity providers.

DISCLAIMER

References to products in this publication is not intended to be an endorsement to the exclusion of others which may have similar uses. Any person using products listed in this publication assumes full responsibility for their use in accordance with current manufacturer directions.

Last Revised June 25, 2004.
The University, including the Minnesota Extension Service, is an equal opportunity educator and employer. ©1999-2004 Minnesota Extension Service, University of Minnesota. All rights reserved. Contact copyright@extension.umn.edu for information on reproduction or use of this material.