Net Value Score The Metric For Judging A Companys Success

A White Paper by Julia Cupman & Paul Hague

Sanchit Valecha Roll No: 128

Net Promoter Score

y Introduced by Fred Reichheld of Bain & Company y Key metric for positioning a company in the market y Used by Philips, GE, Allianz, P&G and American Express

Question: How likely would you be to recommend company X using a scale from 0 to 10, where 0 is not at all likely and 10 is extremely likely?

Perceived Value
y Value means the relationship between the perceived benefits and

price paid by customer y More useful for:

 

Gauging success of organization relative to competitors Providing guidance on achieving growth

A company with a high perceived price and relatively low perceived benefits will sit to the left-hand side of the value equivalence line (VEL), will be at a competitive disadvantage, and will lose market share. Conversely, those to the right-hand side of the VEL will win market share or be in a position where they can raise prices to capture more value.

Net Value Score

Question: How would you rate COMPANY X on the total value the company offers, compared to the total value offered by other suppliers of similar products/services?

Greater spread of response due to weighting factors

Question cannot be misconstrued by respondents

Used as a good substitute for share price

Example

Subject to a whole range of factors such as people, quality consistency, communications, competitors, time, and more. Needs to be tracked regularly (around 18 months)

Thank You