Black Friday, Cyber Monday, and now… Turkey Thursday. Retailers increasingly look to the holiday shopping season (and the frenzied discount days) to account to boost annual sales. But, is there a cost? Yes: potentially billions in revenue.
Many retailers see their NPS–the likelihood to recommend a company, product, or service-significantly drop during November and December. A decrease in NPS–a metric for customer satisfaction–can negatively impact revenue, especially if the drop in NPS lingers further throughout the next calendar year.
Detractors of a company spend less than passives and promoters. If passives spend 50% more and promoters spend twice as much as detractors (the actual differences will of course vary by industry and brand), then if a company with an NPS of 30 were to experience a 6-point drop, it would be looking at a potential loss of revenue of around 1.8%. Let’s put that number into perspective: Wal-Mart had $447 billion in revenue in 2011. A 1.8% loss would be over $8 billion. In short: a significant drop in NPS could clearly have a grave impact on revenue, but it also shows that even smaller drops in NPS could still have dramatic effects on a business.
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