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
ManagementMACA 2014: The State Of The Agricultural Industry, And Then Some
October 9, 2014
The trade association’s annual gathering featured speakers from across agriculture and beyond. Read More
StewardshipA Multi-Layered Approach To Water Quality
October 6, 2014
Illinois event highlights research and technology designed to better monitor and improve water quality — and the benefits of cooperative, coordinated effort. Read More
StewardshipMichigan Agriculture Leaders On Toledo Water Ban: We Want To Be Part Of The Conversation
August 8, 2014
Leaders of Michigan agricultural organizations said Thursday that the government should not have a “knee-jerk reaction” based on last weekend’s water ban in Toledo due to fertilizer run-off in Lake Erie. Read More
ManagementRussia Bans U.S. And EU Ag Product Imports In Ukraine Sanctions Battle
August 7, 2014
Russian President Vladimir Putin has banned the import of agricultural goods from countries that have imposed sanctions on Russia. Read More
Top 100 Articles
CropLife 100Pinnacle Agriculture Acquires Minnesota Retailer
April 14, 2015
Pinnacle Agriculture Holdings, LLC, ranked No. 6 on the CropLife 100,  has successfully acquired Liebl Ag, LLC in Ada, MN.  Read More
CropLife 100CHS, Aurora Cooperative Complete Fertilizer Storage, Grain Shuttle Loading Facility
April 13, 2015
CHS Inc., the nation’s leading cooperative and ranked No. 5 on the CropLife 100, and Aurora Cooperative (ranked No. 21) Read More
CropLife 100GROWMARK Acquires Missouri Refined Fuels Terminal
April 2, 2015
Bloomington, IL-based GROWMARK and Magellan Pipeline Co. have entered into an agreement in which GROWMARK will acquire the refined fuels Read More
CropLife 100Wilbur-Ellis Acquires South Dakota Retailer
April 2, 2015
Wilbur-Ellis Co.’s Agribusiness Division, a recognized leader in precision agriculture technology and the distribution and marketing of plant protection, seed Read More
CropLife 100The McGregor Co. Closes Smith-Kem Acquisition
April 2, 2015
The McGregor Co. — ranked No. 16 on the CropLife 100 list of largest U.S. ag retailers — has completed Read More
CropLife 100BRANDT Commemorates National Ag Day
March 20, 2015
The Illinois agriculture community gathered at BRANDT global headquarters on March 18 to celebrate National Ag Day behind this year's theme Sustaining Future Generations. Read More
Latest News
Cornfield near Sioux City Iowa
HerbicidesU.S. Regulators May Start Testing Food For Glyphosate R…
April 21, 2015
U.S. regulators may start testing food products for residues of the world’s most widely used herbicide, EPA told Reuters’ Carey Read More
FungicidesBRANDT Adds Zonix Biofungicide To Portfolio
April 21, 2015
BRANDT has added Zonix biofungicide to its rapidly expanding line of organic and sustainable products. Zonix is a contact fungicide that Read More
ManagementMissouri Experts: Spring Planting Slow Start Won’…
April 20, 2015
In the first of the agronomy teleconferences with Extension specialists, University of Missouri Extension climatologist Pat Guinan said the slow Read More
Carl Casale of CHS
Industry NewsCooperative CHS Reports Net Income Of $471.5 Million Fo…
April 20, 2015
CHS Inc., the nation’s leading farmer-owned cooperative and a global energy, grains and foods company, has announced company net income Read More
Industry NewsCHS Insurance Names New Director Of Sales
April 17, 2015
Bryan Lewis has been named director of sales for CHS Insurance, the nation’s largest agribusiness insurance broker and full-service insurance Read More
Mature Waterhemp in Corn
HerbicidesGenetic Literacy Project: There’s No Such Thing A…
April 17, 2015
Read the latest “analysis” on GMOs from Consumer Reports and you’ll “learn” that glyphosate, the chemical developed by Monsanto (its Read More
HerbicidesNew Resistance To 2,4-D Discovered In Australia
April 17, 2015
In a world-first case of herbicide resistance, researchers have confirmed that sowthistle weed in the south east of South Australia Read More
ManagementNews From RTP Company Visits and Growers Buying Older S…
April 16, 2015
Paul Schrimpf and Eric Sfiligoj discuss recent trips to the Research Triangle Park area and market seed sales trends. Read More
soybean field
StewardshipNew ASABE Standard Establishes Framework For Sustainabl…
April 16, 2015
The American Society of Agricultural and Biological Engineers (ASABE) has initiated a project to develop a new standard to establish Read More
MicronutrientsSouthern States: An Inside Look At Our Tissue Sampling …
April 15, 2015
Remember learning about the food pyramid in school? The nutritional diagram recommends the proper amount of nutrients you need on Read More
Industry NewsArysta Adds New U.S. Fungicides Marketing Manager
April 15, 2015
Arysta LifeScience North America recently hired Deneen Sebastian as its Marketing Manager for U.S. Row Crops, Fungicides. Most recently, Sebastian Read More
FungicidesVerdesian Launches Phosphite-Based Cereal Fungicide
April 14, 2015
A new, phosphite-based fungicide designed for improved suppression of deoxynivalenol (DON) in wheat and barley infected by Fusarium head blight Read More
Mature Waterhemp in Corn
HerbicidesSURVEY: Close To 90% Of Growers Battle Weed Resistance
April 14, 2015
Herbicide resistance management continues to be a priority for corn and soybean growers, and they’re working together more effectively to Read More
CropLife 100Pinnacle Agriculture Acquires Minnesota Retailer
April 14, 2015
Pinnacle Agriculture Holdings, LLC, ranked No. 6 on the CropLife 100,  has successfully acquired Liebl Ag, LLC in Ada, MN.  Read More
StewardshipFMC Corp. Joins Sustainable Agriculture Alliance
April 14, 2015
FMC Corp. has joined Field to Market: The Alliance for Sustainable Agriculture, a multi-stakeholder initiative working to define, measure and Read More
Industry NewsArysta Adds Two To Goëmar Sales Team
April 14, 2015
Arysta LifeScience North America recently announced two new additions to the Goëmar sales team: Steve Kelly, Technical Service Manager – Read More
Valley Variable Rate Irrigation
Precision AgVariable Rate Irrigation Gains Followers
April 14, 2015
Irrigation systems have had the ability to apply different amounts of water throughout a field for decades, using timers that Read More
CropLife 100CHS, Aurora Cooperative Complete Fertilizer Storage, Gr…
April 13, 2015
CHS Inc., the nation’s leading cooperative and ranked No. 5 on the CropLife 100, and Aurora Cooperative (ranked No. 21) Read More