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

Crop InputsWeed Expert: Adding A Second Herbicide Not Always Easy
February 9, 2016
In my last post, I reviewed some recent research that suggests one of the best ways to delay the evolution Read More
HerbicidesWSSA Announces New, Updated Free Web Resources
February 9, 2016
Today the Weed Science Society of American (WSSA) announced that new and updated educational materials for both weed scientists and Read More
ManagementOABA Annual Conference Wraps Up In Columbus
February 5, 2016
More than 300 Ohio AgriBusiness Association (OABA) members and industry professionals were on hand to engage in collaborative learning and Read More
Chesapeake Bay
StewardshipKeeping A Watch On Water Issues
February 2, 2016
During a down cycle in the market, it’s difficult to think about investing for the long term. For retail businesses, Read More
Top 100 Articles
Elburn Cooperative
CropLife 100Elburn Cooperative Members Vote To Join CHS
December 28, 2015
With 81% of eligible producers voting, 94% cast an affirmative ballot for Elburn Cooperative, a diversified agricultural retailer based out Read More
West Central Cooperative, Jefferson, IA
CropLife 100Farmers Cooperative-West Central Merger Approved
December 21, 2015
The members of Farmers Cooperative Co. (FC), Ames, IA, and West Central Cooperative, Ralston, IA, have both approved the merger Read More
Wheat Growers Innovation Center, Bath, SD
CropLife 100Wheat Growers Opens Innovation Center
December 21, 2015
Wheat Growers’ commitment in providing its farmer-owners with the latest in technological advancements now has a one-of-a-kind focal point, as Read More
CropLife 100ARA Selects The Andersons As 2015 Retailer Of The Year
December 9, 2015
The Agricultural Retailers Association today named Maumee, OH-based The Andersons as its Retailer of the Year for 2015. The award Read More
CPS Washington Court House John Deere Sprayer
CropLife 100Application Equipment Report: It Is Easy Being Green For Top 100 Ag Retailers
December 5, 2015
On The Muppets television show, Kermit the Frog is famous for singing a song about the troubles he encounters in Read More
Fertilizer Bin
CropLife 100Fertilizer Sales: Another Down Year For Top 100 Ag Retailers
December 4, 2015
In pure number terms, the fertilizer category still dominates all crop inputs/services among CropLife 100 ag retailers. In 2015, for Read More
Latest News
Crop InputsWeed Expert: Adding A Second Herbicide Not Always Easy
February 9, 2016
In my last post, I reviewed some recent research that suggests one of the best ways to delay the evolution Read More
Crop InputsGenetic Literacy Project: Farmers Need More Herbicide C…
February 9, 2016
There are two things that I think just about every weed scientist can agree on, writes Andrew Kniss for The Read More
HerbicidesWeed Expert Warns North Dakota Growers Of Coming Herbic…
February 9, 2016
Ford Baldwin painted a bleak picture of weed control at a recent workshop here exploring the future of ag production, Read More
HerbicidesWSSA Announces New, Updated Free Web Resources
February 9, 2016
Today the Weed Science Society of American (WSSA) announced that new and updated educational materials for both weed scientists and Read More
Soybean field
FungicidesFour Arysta Fungicide Formulations Given FIFRA Approval…
February 8, 2016
Arysta LifeScience North America recently announced the issuance of Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Section 2(ee) Recommendations for Read More
FungicidesAgri-Fos Systemic Fungicide Plus Receives EPA Registrat…
February 8, 2016
Vivid Life Sciences has announced the EPA registration of Agri-Fos Systemic Fungicide Plus, a highly concentrated active ingredient phosphite fungicide, Read More
Crop InputsBayer Contests EPA’s Decision On Valuable Insecticide F…
February 5, 2016
Crop Science, a division of Bayer, has announced it has refused a request by the Environmental Protection Agency (EPA) to Read More
Wheat Field North Dakota
Seed/BiotechSyngenta Wins Seed Fraud Suit Against South Dakota Grow…
February 5, 2016
Syngenta has obtained a $25,000 settlement from Paul and John Mayclin, Mayclin Farms, Plankinton, SD, in response to their Plant Read More
ManagementOABA Annual Conference Wraps Up In Columbus
February 5, 2016
More than 300 Ohio AgriBusiness Association (OABA) members and industry professionals were on hand to engage in collaborative learning and Read More
Crop InputsBayer To Contest EPA Flubendiamide Decision
February 5, 2016
Crop Science, a division of Bayer, announced today it has refused a request by EPA to voluntarily cancel the uses Read More
Syngenta
Seed/BiotechNot So Fast: ChemChina Syngenta Takeover Could Draw Nat…
February 5, 2016
State-owned China National Chemical Corp. (ChemChina), which plans to buy Swiss seeds and pesticide maker Syngenta, will promptly start preparations Read More
Rendering of Syngenta Seedcare Institute expansion
Seed/BiotechExpansion Of Syngenta’s North America Seedcare In…
February 4, 2016
As demand for seed treatment knowledge and products grows among farmers, retailers and others in the seed industry, Syngenta is Read More
Soybean Field
Industry NewsArysta LifeScience Strengthens Sales Team
February 4, 2016
Arysta LifeScience North America recently announced three new personnel additions: Jake Cook and Peter White are Territory Sales Managers for Read More
Davor Pisk Syngenta COO
Crop InputsSyngenta COO: Why ChemChina Offer Beat Monsanto’s
February 4, 2016
Syngenta Chief Operating Officer Davor Pisk says he is confident the proposed acquisition by ChemChina will ultimately help preserve choice Read More
Young corn plants in soil
Crop InputsKoch Biological Solutions Invests In Pathway Biologic
February 4, 2016
An affiliate of Koch Biological Solutions, LLC has acquired a minority equity position in, and entered into collaboration with, Pathway Read More
Crop InputsABG: China Signs Off On Monsanto’s Roundup Ready …
February 3, 2016
Monsanto Co. on Wednesday announced it plans to launch its Roundup Ready 2 Xtend soybeans in time for the 2016 Read More
Syngenta headquarters in Basel, Switzerland
Crop Inputs6 Things To Know About The ChemChina-Syngenta Deal
February 3, 2016
After months of rumors and speculation, Syngenta has announced that ChemChina has offered to acquire the Swiss-based company. “In making Read More
FertilizerPhosphorus: Is Band Or Broadcast Application The Better…
February 3, 2016
Is band or broadcast application the better method when it comes to phosphorus? The answer to this question depends mostly Read More