Tuesday, April 10, 2007
The people running Life Time Fitness have apparently not read Fred Reichheld's most recent book, The Ultimate Question. Otherwise they wouldn’t have appeared on page one of Saturday’s Star Tribune. In The Ultimate Question, Reichheld warns that a profit earned at the expense of customer satisfaction is a "bad profit" because it turns customers into detractors. The way Reichheld sees it, customers are either detractors who say bad things about you, promoters who say good things about you, or neutral customers who just don’t talk about you at all. In the world we live in, it only takes one serious detractor to eat up all your bad profits and plenty of good profits too.
Life Time was earning bad profits by collecting higher dues from the members of clubs acquired from another chain. One of those members, Nancy Devitt, quickly turned into a powerful detractor.
In the old world, this may not have amounted to much. In the old world customers had a weak voice and marketers had bull horns. But Ms. Devitt lives in the new world. She voiced her concerns online through blogs and news sites, put up a website, handed out fliers and managed to get her story told on page one of the Star Tribune. When I Googled “Life Time Fitness” her story came up #3.
Life Time needs members like Nancy Devitt. She was a loyal member for 30 years. She speaks her mind. She understands how to use the new media. I bet she has a lot of friends. What would she be worth to Life Time Fitness if she were a promoter?
Marketers need to account for the value of their promoters and the cost of their detractors. When they do, they can turn customers like Ms. Devitt into assets.
Is it time to audit your inventory of customers to see how may promoter assets you have against your detractor liabilities?
Life Time was earning bad profits by collecting higher dues from the members of clubs acquired from another chain. One of those members, Nancy Devitt, quickly turned into a powerful detractor.
In the old world, this may not have amounted to much. In the old world customers had a weak voice and marketers had bull horns. But Ms. Devitt lives in the new world. She voiced her concerns online through blogs and news sites, put up a website, handed out fliers and managed to get her story told on page one of the Star Tribune. When I Googled “Life Time Fitness” her story came up #3.
Life Time needs members like Nancy Devitt. She was a loyal member for 30 years. She speaks her mind. She understands how to use the new media. I bet she has a lot of friends. What would she be worth to Life Time Fitness if she were a promoter?
Marketers need to account for the value of their promoters and the cost of their detractors. When they do, they can turn customers like Ms. Devitt into assets.
Is it time to audit your inventory of customers to see how may promoter assets you have against your detractor liabilities?
posted by Wowza at
7:39 AM
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