Net Promoter Segmentation

This column will introduce a customer segmentation approach that links loyalty measurement to profitability. Net Promoter segmentation is being used by companies such as General Electric, Sony, and Dell to understand how customer experience impacts loyalty and profitability. It fits perfectly within an ag retail situation. Prior to reviewing Net Promoter segmentation, lets look at two other approaches you are already familiar with. 

Behavior segmentation groups customers and prospects according to their needs and responses to a marketing campaign. In ag, labels such as “Traditional” or “Progressive” are often used. Behavior segmentation was developed in large consumer companies where each segment is hundreds or thousands of people. It has a fit in ag retailing with the caution that retailers also need to explore the needs of individual customers through a skilled salesperson rather than assuming you know customer based on how they answered a few survey questions. 

Value segmentation divides your customers into groups based on their Potential Value (i.e., what they buy in the market), or their Current Value (what they buy from you). The segments can be as simple as dividing customers into quartiles or thirds. Either way the most valuable customers go to the top of the pile and the least valuable go to the bottom. Value segmentation is helpful in prioritizing your customer focus i.e., “who do I call on first or next?” 

Finding The Value

Although value segmentation is straightforward, it doesn’t tell you anything about a customer’s needs or issues they might have with you. The first diagram is a representation of Value segmentation where individual customers are stacked according to profitability. Not much else is known except their growth rate which is shown by the size of the bubble.

Intuitively, we know each customer is unique and likely requires a customized sales approach. A good salesperson needs to develop the correct contact strategy for each customer or prospect to make segmentation effective. Wouldn’t  it be helpful if your segmentation approach provided precise information on each customer that would help your sales staff target their needs, and increase loyalty?

Net Promoter segmentation identifies issues for each customer that link to loyalty. In Net Promoter segmentation, customers and prospects are divided into three easy to understand groups called Promoters, Passives, and Detractors. Promoters are highly engaged with your company, and are very willing to recommend you to another grower. On a 0 to 10 scale on the “willing to recommend” question in our Customer Experience Monitor, they answer 9 or 10. As the name implies, Passives are not engaged with your company. They may be satisfied, but they are not loyal. You might recognize these customers as ones who would do business with a competitor for a slightly better price or other reason. They answer 7 or 8 on our willing to recommend question in the Experience Monitor. Typically, they give you a lower share of business than Promoters. Their issues must be identified and addressed before progress can be made.

The third Net Promoter segment are called Detractors. Detractors are actively not engaged with your company.  Detractors are unwilling to recommend you based on their personal experiences or reports they have heard from other detractors. Their negative word of mouth counteracts some of the positive benefits from Promoters. On the willing to recommend question, they answer 0 to 6. 

In Net Promoter segmentation, the willingness of each customer or prospect to recommend you to another grower (hence their identification as Promoters, Passives, and Detractors) is linked to how they rate your performance during the sales cycle. To set up a Net Promoter program, you would begin to ask customers to give you input on your performance at various touch points along the sales cycle. Based on this input, and the strength of their recommendations, customers are placed into one of the Net Promoter Segments. This incredibly actionable segmentation helps you understand how customers and prospects think about you and your business, and lets you make adjustments in areas customers value most.

Let’s go back to your customers. I suggest you segment customers in a spreadsheet according to profitability or potential. That’s the Value segmentation diagram above. Net Promoter segmentation moves each of your customers along the “X axis” based on whether they are a Promoter, Passive, or De-tractor to you. The second diagram shows the exact same customers placed according to their value on the Y axis, but now we have identified each customer as either a Promoter, Passive, or Detractor. Once again, the bubble size represents growth rate. Note how customers with equal value on the Y axis appear very different when the “willing to recommend” score is included.

Net Promoter Segmentation lets you see customer value and their perception of your performance on drivers of loyalty at the same time. Once you segment customers this way, you will see them from a very actionable perspective. If you knew one of your best customers was not willing to recommend you, and what his reasons were, would you reach out and work with him to correct the problem? Net Promoter is the most actionable tool I have seen to help align your business with customer needs.

I’ll discuss how innovative companies are linking customer perception of performance to their willingness to recommend in a later column. My purpose here was to introduce Net Promoter. It helps you become more customer centric by looking at your business the way customers see it.

Leave a Reply

Management Stories

ManagementARA 2016 Report and Crop Mix for 2017
December 9, 2016
Editors Paul Schrimpf and Eric Sfiligoj talk about the recent Agricultural Retailers Association meeting and the projected acreage mix for Read More
Crop InputsARA 2016: 5 Developments Worth Monitoring Into 2017
December 6, 2016
You can pretty much set your watch to it (do people even still wear watches? I know I do…but I’m Read More
ManagementCorn and soy planting update; Takeaways from Climate Corp. CEO interview
December 2, 2016
AgriBusiness Global Editor Dave Frabotta Joins Paul Schrimpf for a discussion of global corn and soybean planting trends, and a Read More
ManagementAg Industry Comes Together To Address Climate Change
December 1, 2016
Addressing climate change — and more specifically, decreasing greenhouse gas emissions from agriculture — can only be achieved through collective Read More
Trending Articles
R4023 Sprayer, John Deere
CropLife 100Ag Retail Equipment Report: The Green Party Continues
December 7, 2016
In the annual race for sales in the ag retail equipment marketplace, the color schemes for participants are a little Read More
Mike Stern
Precision AgClimate Corp. CEO Talks Retailer Support For Digital Ag
December 1, 2016
CropLife Magazine’s sister publication, AgriBusiness Global, recently sat down with Mike Stern, CEO of The Climate Corp., following the Monsanto subsidiary’s Read More
Precision AgTrimble Debuts End-to-End FMIS Platform
November 28, 2016
October’s inaugural PrecisionAg Vision Conference left this author with many thoughts and things to ponder in the coming months. Probably Read More
CHS Primeland
CropLife 100The 2016 CropLife 100 Report: Reviewing The Many Bulls And Bears Impacting This Year’s Marketplace
November 28, 2016
For virtually all of 2016, the nation was wholly focused on the big Presidential election. Some folks aligned themselves with Read More
Monsanto sign
Crop InputsMissouri Governor Meets With Bayer CEO To Discuss Monsanto Merger
November 21, 2016
Missouri Gov. Jay Nixon visited Bayer AG global headquarters in Leverkusen, Germany, on November 18 to discuss the proposed Bayer-Monsanto Read More
STS16 2017
SprayersHagie Manufacturing Releases 2017 STS16 Sprayer To Market
November 16, 2016
Hagie Manufacturing LLC’s largest full season applicator is now available with enhancements for the 2017 model year. Hagie is officially Read More
Latest News
ManagementARA 2016 Report and Crop Mix for 2017
December 9, 2016
Editors Paul Schrimpf and Eric Sfiligoj talk about the recent Agricultural Retailers Association meeting and the projected acreage mix for Read More
AgriSync
Matt Hopkins17 Agriculture Apps That Will Help You Farm Smarter In …
December 9, 2016
Ag professionals are working smarter, not harder, than ever before. Smart farming technologies have enabled them to reduce costs, maximize Read More
Ryan Bartlett
Crop InputsCompass Minerals Appoints Vice President, Innovation An…
December 8, 2016
Ryan Bartlett, Ph.D., has joined Compass Minerals as vice president, innovation and product development. Dr. Bartlett will be responsible for Read More
HerbicidesHerbicides 2017: New Cropping Systems Set For Debut
December 7, 2016
Herbicide-resistant weed are inching ever-closer to a potentially frightening saturation point here in the U.S. Heading into 2016, USDA planting Read More
CropLife 100Wilbur-Ellis Acquires Michigan Ag Retailer
December 7, 2016
Wilbur-Ellis’ Agribusiness, a recognized leader in precision agriculture technology and the distribution and marketing of plant protection, seed and nutritional Read More
Fertilizer storage The Andersons
CropLife 1002016 Fertilizer Report: Another Really Rough Year For A…
December 7, 2016
In many ways, the fertilizer category cannot seem to catch a break. During the early part of the 2010s decade, Read More
R4023 Sprayer, John Deere
CropLife 100Ag Retail Equipment Report: The Green Party Continues
December 7, 2016
In the annual race for sales in the ag retail equipment marketplace, the color schemes for participants are a little Read More
Winter wheat
HerbicidesTalinor Herbicide Approved For Wheat And Barley
December 7, 2016
Talinor herbicide from Syngenta has received federal registration from the U.S. EPA, giving wheat and barley growers a new option Read More
Forage Sorghum
UncategorizedMilestone Achievement Continues For Dow AgroSciences, A…
December 7, 2016
New and innovative forage products are on the horizon driven by continued collaboration between Dow AgroSciences, a wholly owned subsidiary Read More
Palmer pigweed seedhead in cotton
HerbicidesNew WSSA Factsheet Explores Weed Seeds And Their Longev…
December 7, 2016
Did you know some weed seeds can lie dormant in the soil for more than a century and then sprout Read More
Crop InputsARA 2016: 5 Developments Worth Monitoring Into 2017
December 6, 2016
You can pretty much set your watch to it (do people even still wear watches? I know I do…but I’m Read More
Tim McCardle, ARA Chairman
CropLife 100BRANDT COO Named ARA Chairman
December 5, 2016
BRANDT EVP and Chief Operating Officer Tim McArdle has been named chairman of the Agricultural Retailers Association (ARA) during a Read More
Crop InputsWilbur-Ellis Receives ResponsibleAg Certification At Mo…
December 5, 2016
Wilbur-Ellis Co., a recognized leader in precision agriculture technology and the distribution of crop protection products, announces the ResponsibleAg certification Read More
Young Corn Closeup
Eric SfiligojThe Read On 2017 For Agricultural Fortunes Is Anybody’s…
December 5, 2016
As I (and others) have written in recent months, the nation has just experienced one of the most offbeat election Read More
Acceleron B-300 seed coating
Crop InputsThe BioAg Alliance Launches New Yield-Boosting Microbia…
December 5, 2016
As part of their commitment to develop and commercialize innovative microbial solutions for farmers through The BioAg Alliance, Monsanto Co. Read More
ManagementCorn and soy planting update; Takeaways from Climate Co…
December 2, 2016
AgriBusiness Global Editor Dave Frabotta Joins Paul Schrimpf for a discussion of global corn and soybean planting trends, and a Read More
Radish cover crop taproot
Crop InputsSoil Health Institute, Datu Research Receive Grant To E…
December 1, 2016
The Soil Health Institute (SHI) and Datu Research have announced a $626,000 grant from the Walton Family Foundation to quantify the Read More
Mike Stern
Precision AgClimate Corp. CEO Talks Retailer Support For Digital Ag
December 1, 2016
CropLife Magazine’s sister publication, AgriBusiness Global, recently sat down with Mike Stern, CEO of The Climate Corp., following the Monsanto subsidiary’s Read More