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Why Customer Loyalty Beats Quarterly Earnings

Across industries, companies that prioritize customer relationships deliver outsize growth.

By Rob Markey

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Why Customer Loyalty Beats Quarterly Earnings
en

Loyalty leaders—companies at the top of their industries in Net Promoter Score® or satisfaction rankings for three or more years—grow revenues more than twice as fast as their industry peers, according to Bain research. Yet companies and investors have historically prioritized quarterly earnings over customers, pressuring managers to shortchange them in the blind pursuit of shareholder value. Now, however, this short-termism is changing, thanks to new accounting tools, fundamental shifts in the way companies organize work, and the realization among at least some investors that customers are the ultimate source of corporate value. Companies can lead the change by disclosing reliable and consistent information on customer value in their earnings releases.

Net Promoter®, Net Promoter System®, Net Promoter Score® and NPS® are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

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  • Methodology

    Growth rate is based on the most suitable sector-specific metric for determining organic growth.

    Growth multiple calculated as ratio between NPS leader weighted average growth rate and market weighted average growth rate. NPS leaders are players who are at least one standard deviation away from industry mean Net Promoter Score, except for Mobile Phone (US) which uses 0.5. Market growth rate computed on players considered in the analysis.

    Time period for each growth rate is time period with best correlation results, except for Grocery (UK) to avoid negative growth rate for UK market.

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Net Promoter®, NPS®, NPS Prism®, and the NPS-related emoticons are registered trademarks and Net Promoter Score℠ and Net Promoter System℠ are service marks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.

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