A Puppy! And the Net Promoter System® Quiz – Part 4 – Your CFO is Your Ally

By popular demand and threats of lawsuits from local puppies, I have decided to give them equal time. Enjoy. And of course, it is time for the fourth in a series of true or false questions about the Net Promoter System. You can look forward to several new questions each week, for about the next four weeks. A link to the answers follows below the questions. The questions are all learning checks at the end of chapters in our book Net Promoter – Implement the System. The book has three chapters on how to ensure that NPS is a ‘reliable, trusted currency / metric’, which is why you will see three parts to the quiz questions on the topic. I recognize that some questions may be tricky to answer correctly without reading the corresponding chapter. This third set is about the financial aspects of the system and the role of your Chief Financial Officer in ensuring the leadership team trusts NPS as a metric.

Questions about NPS as a ‘Reliable, trusted currency / metric’ – Third section – Financial impact

Decide whether each of these statements is true or false. Note your answers, then click on the link to check them.

1. The cost of renewing an existing annuity contract is typically one-tenth the cost of acquiring a new customer.
2. If your overall brand NPS trend is better than that of your competitors, it is safe to assume that all parts of your business will benefit in the same way.
3. Bain experience suggests that the average time lag between a relative NPS improvement and new product revenue improvement is 18 months.
4. Since contra-revenue is not in a standard P&L statement, it should not be considered when calculating the lifetime value of a customer. (Contra-revenue includes things like discounts from standard list prices, and rebates given to resellers.)
5. To avoid bias, all customers should be considered equal in your research, no matter how much they spend with you or your competition.

Once you have decided on your answers, click here.

Feel free to disagree and debate the answers in the comments section below the answers.