Saturday, 16 February 2008

LEMONADE.COM AND THE NETPROMOTER SCORE

Businesses want us to promote their products. We are social animals. We move together, eat together, and share good news when we hear it. There is a herd instinct, but recreating it, or igniting it is difficult, but very rewarding if you can. In 2003, Frederick Reichheld of Bain and Co wrote a piece for the Harvard Business Review based on the power of a single question to drive business growth. The question is "How likely is it that you would recommend us to a friend or colleague?" The answers are divided into those that are Promoters, Passives, and Detractors, and a net score is calculated. This is the NetPromoter score. This score - in Reichheld's research - is the single strongest predictor of corporate growth, and has been adopted by many organisations, including GE as their main metric.

There are in fact whole communities based on this idea. Check out this NetPromoter community. When I was focussed on working on direct marketing this research proved to be an interesting intellectual distraction but using it was much more difficult. However, now with the social web, viral, and social networking sites this starts to become much more interesting.

One site in particular, harnessing the Netpromoter concept, is Lemonade.com, which allows you to add your favourite products to a lemonade stand, and when people purchase you get paid for it. They have also created applications for bloggers and Facebook. This is the beginning of an exciting new phenomenon, when consumers start to profit from their advocacy, or as Lemonade.com says "ecommerce for everyone". In addition to its site, it has built an app for Facebook, with which the viral potential of some products could be phenomenal, and perhaps more importantly trackable.

In previous eras of marketing, we could start contagions through word-of-mouth, member-get-member and other techniques, but what we could not do is accurately track the pathways it followed through the social graph. The more we can track, the more we can prove, the more we can do. This idea further reaffirms the strength of social networks, and their interconnectedness in driving business. Put simply the more people talk positively about your brand in their social graph the more your company grows. Now we can move this from a mean Net Promoter score to an individual score. As a pioneer in loyalty marketing, I am sure Riechheld will be pleased with lemonade.com's efforts.

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