What Key Skills do Entrepreneurs Have?

Entrepreneurial-minded people (and the ideas they generate) are extremely valuable to an organization. A research firm recently conducted a multi-variable analysis of a group of serial entrepreneurs and identified five personal skills that clearly make them unique. "Personal skills" — often classified as "soft skills" — develop slowly over time, and they were used by the researchers to help identify what job-related activities a person has developed. They primarily looked at people who started multiple businesses and experienced both success and failure.

After assessing the subjects on their personal skills and comparing their performance against a control group, researchers found a certain set of skills were the most predictive of an entrepreneurial mindset. In fact, by examining these five distinct personal skills alone, they were able to predict with over 90 percent accuracy people who would become serial entrepreneurs.

The quality serial entrepreneurs displayed above others was persuasion, or the ability to convince others to change the way they think, believe or behave. Persuasion for this study was defined as the ability to persuade others to join the mission. In the study, this was uncovered by ranking on a scale of 1 to 6 prompts such as: "I have been recognized for my ability to get others to say yes," or "I have a reputation for delivering powerful presentations." Unquestionably entrepreneurs need to excel at persuasion, whether to recruit a team or get buy-in from investors and stakeholders.

Perhaps also unsurprisingly, leadership is also one of the five areas where entrepreneurs excelled. In this study, good leaders were defined as having a compelling vision for the future, i.e., surveyors who highly ranked prompts such as: "In the past, people have taken risks to support my vision, mission or goals," or "I have been criticized for being too competitive." Serial entrepreneurs ranked both of these prompts highly. For people with an entrepreneurial mind-set, their strength of vision is usually tied to a product or service that provides solutions to challenges, even when the general public is not aware the challenge exists.

Entrepreneurial-minded people also display personal accountability. The researchers defined personal accountability as demonstrating initiative, self-confidence, resiliency and a willingness to take responsibility for personal actions. Subjects with strong personal accountability highly ranked prompts such as: "I have been recognized for achieving results when others could not," or "I have been criticized for holding people accountable for their actions." As evidenced by these prompts, people who are personally accountable look at obstacles as a part of the process and, rather than give up, they are energized by them. From this we can gather, individuals who blame others for their failures display a significant lack of personal accountability and will most likely stall in any entrepreneurial effort.

Goal orientation is another critical skill for entrepreneurial-minded people. In the study, goal orientation was defined as energetically focusing efforts on meeting a goal, mission, or objective (which closely paired with leadership, as it is described above). More entrepreneurs generally agreed with the statements: "I am known for overcoming significant obstacles to reach goals," or "I am most productive when working closely with others to achieve goals." As mentioned above, it's important that entrepreneurs have a strong sense of what their goal is, because their product or service depends on it. Identifying and advocating for the goal allows them to influence others and gain their support.

The final identifying skill is a mastery of interpersonal skills, the glue that holds the other four skills together. They include effectively communicating, building rapport, and relating well to all people, from all backgrounds and communication styles. In the study, people who excelled here agreed with: "My ability to get along with people has been a key to my greatest accomplishments," or "I am known for my ability to calm people who are emotionally upset." Without interpersonal skills, an entrepreneur would be limited to relating only to those who share their exact communication style, thus restricting her ability to convey their vision and goals.

In contrast to ephemeral notions that entrepreneurial success comes as a result of perfect timing meeting brilliant ideas in a cosmic moment of alignment, this research indicates successful entrepreneurs are successful for a reason — that many of them display certain personal skills. And while this research identifies these skills, it should be pointed out these five attributes are not inherent. They can be learned and developed, especially early in life, and further honed throughout an entrepreneur's career.

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The six core skills needed to be a great marketer

The best marketers have a handful of core attributes and skills at their disposal.

Here is my list, born from experience and forged from interactions with the minority of marketers I regard as proficient, and the majority who fall short.

Let's start with a basic but key criterion. They have to be comfortable spending time with and listening to consumers. A significant proportion of marketers cannot find the time or the humility to spend time in the market. They are happy briefing research agencies and reviewing the results, but miss the fundamental starting point for any great marketer: get out of your office and spend time in the places and spaces where your consumers experience the product, no matter how senior or 'important' you consider yourself.

Next, behavioural segmentation. Too many marketers think segments are people who have similar demographic characteristics. Rubbish. Segments are groups of consumers who want the same things - the fact that they might share an age range, gender or postcode is relevant only after we first use our market research to show specific clusters of shared needs. Segments built from survey data, with good behavioural names and a tight portrait to capture their identity, is a hallmark of a good marketer. The usual '18-35 male' crap indicates the opposite.

Then comes targeting. A good marketer has made the leap of faith and accepted that fewer target consumers will deliver a better overall result. Usually, that means stepping back from the segmentation and only going after 10% or 20% of the potential market. Tight target segments mean the marketing has a chance to succeed. Too many marketers lose faith at this stage and end up targeting pretty much everyone.

Which leads nicely to the next feature of a great marketer: being entirely comfortable devoting time and marketing money to excluding the wrong kinds of consumers from your brand. Most marketers, when asked, still don't know the difference between marketing and sales. Marketing is as much about stopping the wrong people buying a product as ensuring that the right ones do. Usually, the majority of potential consumers in any market will cost you money if you serve them. A good marketer knows this and uses his or her skills to ensure they are avoided.

Next: positioning. A great marketer can create perceptual maps and uses them to derive a clear, tight, three-word positioning for their brand. No wheels or triangles here, just a clear articulation of what the brand stands for. If ever there was a question that sorts the wheat from the chaff, it's: 'What is your positioning?' Too often this is met with a stream of generic crap about integrity and innovation or a ridiculously over-complex, six-slide presentation that attempts to capture the 'essence' of the brand. A good marketer answers with a confident smile and few words.

Lastly, brand tracking. Think about what you need in place to successfully conduct this. You have to have a clear positioning statement, know that ultimately brands exist in the consumer's consciousness, and commit 5%-10% of your marketing budget to research to collect this data on a continual basis.

How did you do?

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Extraordinary Bosses and their Core Beliefs

I’ve been working with a new client recently and I couldn’t help notice how, compared to the average boss, their management style was so extraordinarily effective.

It got me thinking about all the different traits that my more ‘successful’ managers had demonstrated over the years, and what I could learn from them. When I boiled it all down, I found that the best managers have a fundamentally different understanding of the workplace, company and team dynamics and they tend towards the following eight core beliefs:


1. Business is an ecosystem, not a battlefield

Average bosses see business as a conflict between companies, departments and groups. They build huge armies of "troops" to order about, demonize competitors as "enemies," and treat customers as "territory" to be conquered.

Extraordinary bosses see business as a symbiosis where the most diverse firm is most likely to survive and thrive. They naturally create teams that adapt easily and can quickly form partnerships with other companies, customers ... and even competitors.


2. A company is a community, not a machine

Average bosses consider their company to be a machine with employees as cogs. They create rigid structures with rigid rules and then try to maintain control by "pulling levers" and "steering the ship."

Extraordinary bosses see their company as a collection of individual hopes and dreams, all connected to a higher purpose. They inspire employees to dedicate themselves to the success of their peers and therefore to the community - and company - at large.


3. Management is service, not control

Average bosses want employees to do exactly what they're told. They're hyper-aware of anything that smacks of insubordination and create environments where individual initiative is squelched by the "wait and see what the boss says" mentality.

Extraordinary bosses set a general direction and then commit themselves to obtaining the resources that their employees need to get the job done. They push decision making downward, allowing teams to form their own rules and intervening only in emergencies.


4. My employees are my peers, not my children

Average bosses see employees as inferior, immature beings who simply can't be trusted if not overseen by a patriarchal management. Employees take their cues from this attitude, expend energy on looking busy and covering their behinds.

Extraordinary bosses treat every employee as if he or she were the most important person in the firm. Excellence is expected everywhere, from the loading bay to the boardroom. As a result, employees at all levels take charge of their own destinies.


5. Motivation comes from vision, not from fear

Average bosses see fear - of getting fired, of ridicule, of loss of privilege - as a crucial way to motivate people. As a result, employees and managers become paralyzed and unable to make risky decisions.

Extraordinary bosses inspire people to see a better future and how they'll be a part of it. As a result, employees work harder because they believe in the organisation's goals, truly enjoy what they're doing and know that they'll share in the rewards.


6. Change equals growth, not pain

Average bosses see change as both complicated and threatening, something to be endured only when a firm is in desperate shape. They subconsciously torpedo change ... until it's too late.

Extraordinary bosses see change as an inevitable part of life. While they don't value change for its own sake, they know that success is only possible if employees and organization embrace new ideas and new ways of doing business.


7. Technology offers empowerment, not automation

Average bosses adhere to the old IT-centric view that technology is a way to strengthen management control and increase predictability. They install centralized computer systems that dehumanize and antagonize employees.

Extraordinary bosses see technology as a way to free human beings to be creative and to build better relationships. They adapt their back-office systems to the tools, like smartphones and tablets, which people actually want to use.


8. Work should be fun, not mere toil

Average bosses buy into the notion that work is, at best, a necessary evil. They fully expect employees to resent having to work, and therefore tend to subconsciously define themselves as oppressors and their employees as victims. Everyone then behaves accordingly.

Extraordinary bosses see work as something that should be inherently enjoyable–and believe therefore that the most important job of manager is, as far as possible, to put people in jobs that can and will make them truly happy.


If you're lucky enough to have a boss that shares these core beliefs, stick around you'll learn loads.

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Uh-oh, Budget-Setting Time's Coming !

Some marketers let their finance people set their budget and faff about with tactical stuff until mid-September, when they are issued with the expectations for 2015.
So, for example, the head of finance might instruct their marketers that next year they're expected to grow top-line revenues by 7% and achieve sales of £8m. They are also told that their marketing budget for the year ahead will be £320k based on the 4% advertising-to-sales ratios that the company uses to derive marketing budgets.
It can look deceptively logical until you look at where these numbers come from. As one of my favourite clients likes to put it – they all derive from the SOOMA Database – SOOMA standing for Straight Out Of My Arse.
The 7 per cent growth rate isn’t based on strategy or research. It comes from arbitrary growth expectations that your board or global team have applied to your business, irrespective of the fact that they have seen no data and probably not even visited your market in years.
The 4 per cent ratio of revenue to marketing spend is doubly stupid. First, because it is another completely arbitrary number (why not 10 per cent, or 2 per cent?) that senior managers deem acceptable. Second, because this ratio is applied after the £8m revenue expectation has already been set, it is clearly derived from a belief that marketing is not an investment that can increase revenues but rather a cost that we must pay each year, irrespective of sales.
The serious point about all this is that when a company sets a budget for 2015 this way, all strategy dies. Any serious marketer will realise that if the numbers and the investment levels are already in place long before they have even looked at research or strategy for the year ahead, he or she is literally pointless. The joke is on any and every marketer that accepts these bullshit budgets and works within their parameters for a whole year of their life.
It does not have to be this way. The smart way to build a marketing budget does not start top-down with the senior finance team but rather begins bottom-up with the marketing department.
The financial plan for a calendar year will always be set between September and October, so it’s crucial that marketers don’t wait for a moronic number but rather start working on their proposed 2015 strategy now.
That might sound early, because it is. But if you don’t get the strategy in before the budgets are set in September, you will be lost in stupid-land like everybody else.
A smart marketer collects research in July and August. They build and populate their segmentation. They decide on their targets for 2015 and then, crucially, decide on their objectives for each segment. Here you will note that I am not talking about the flaccid, open-ended objectives that populate most firms. You know the type – “Improve brand sentiment among young adults”. I am talking about SMART objectives you can hang your hat on and pay bonuses on – “Increase brand preference among the ‘Out to Lunch’ segment from 29 per cent to 65 per cent by 1 December 2015”.
Once you set a real objective, you can work out what it’s worth. Annualise the figure for 2015 and go and brief your agencies. Share the objectives with them and ask them to come back with tactics and associated costs. Put all that together and you have a bottom-up, strategic budget to propose to top management. You can propose how much money you need and how much money you can generate in the year ahead.
Or you can sit about monitoring how many followers you have on Twitter for another four months until some guy from finance looks at a line chart for 10 minutes and tells you what to achieve.
If you need any help or advice getting your marketing budget straight for your next meeting with the FD, give us a call on 0208 241 3730 or email us at info@luciditylondon.com

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Bossing It - How to Make a Good Impression in your First Week

For all leaders stepping into a new role or into their boss’ shoes, whether for a week when they are on holiday or for the next 20 years, making the right impression is crucial. People will be watching closely, ready to pass judgement, looking out for signs of long-term success or failure.

Whether you try to make a big impact or just aim for ‘steady as she goes’ will depend on your personal leadership ambitions. In my experience of working with leaders across a variety of sectors and organisational sizes, I consistently find that leaders who make a rapid and effective impact in their role and set the course ahead for smoother waters concentrate on getting two factors right: creating clarity and setting standards. As a result, both their team collectively and the individuals within it know where the organisation is going, what they are expected to contribute and why, and to what level.

Even in adverse and unpleasant working conditions, research suggests that teams with high levels of clarity and standards are more effective and productive than those without. Leaders faced with a new team often make the mistake of trying to focus on creating team harmony as their first task, but the result will be just that – a harmonious, but not necessarily productive, team.

Leaders should prioritise getting to know their team so that they can understand which leadership styles they need to draw upon to create an environment that brings out the best in their people and achieves their company’s vision. For example, a directive leadership style – ‘directives, not directions’ – has proven to be effective in times of crisis, but if the style continues during convalescence, employees may begin to look to competitors for a different style of leadership.

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The No 1 Reason Talented Young Employees Quit Their Jobs

The biggest reason young, talented workers leave for new jobs? They’re not learning enough.

Employers often complain that their young workers jump ship quickly. A study published this summer in the Harvard Business Review confirmed that young top performers - the workers that organizations would most like to stick around - are leaving in droves.

Researchers found that high achievers, who are 30 years old on average with great school and work credentials, are leaving their employers after an average of 28 months. Furthermore, three-quarters admit to sending out CV’s, contacting recruitment firms and interviewing for jobs at least once a year during their first employment. And 95% said they regularly watch for potential employers.

Multiple studies find that today’s younger workers have absolutely no intention of sticking around if they don’t feel like they’re learning, growing and being valued. Beth Carver, a consultant who has 12 years’ experience researching exit interviews, finds that a loss of training opportunities and a lack of mentors in the workplace are two of the biggest reasons why young workers leave.

“Companies need to recognize that young workers are very mobile,” Carver said. “They have to understand that they want a personal and clearly articulated career path." With their social media skills and easy access to job postings on the internet, they don’t have to work hard at all to find new opportunities. Carver said. “Sometimes changing jobs is about money,” her exit interview research reveals. ‘Sometimes it’s because the job isn’t what they thought it was going to be. More often, they weren’t getting the personal attention, the mentoring, the coaching and the training they wanted.”

Learning new skills is what people want and expect from work these days, and employers who would like to hire and retain the best talent would be wise to create an environment in which learning is fostered.

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How it Works: Segmentation

Segmentation is the process of slicing a market for a particular product or service into a number of different segments. The segments are usually based on factors such as demographics, beliefs or the occasion of use of the product. One segment of the market for video cameras, for instance, might be the group of people who have new-born babies. Another could be the group of people visiting relatives who live abroad.

In their book “Breakthrough Imperatives”, Mark Gottfredson and Steven Schaubert say:

"The goal of customer segmentation analysis is to identify the most attractive segments of a company’s customer base (existing or potential) by comparing the segments’ size, growth and profitability."

The idea of segmentation has spread beyond its consumer origins. Human-resources departments now talk about segmenting their “customers”—that is, the different groups of employees within their own organisation. In a bank, for example, three such segments might be retail bank tellers, investment bank advisers and money-market traders.

Once different segments of a market have been identified, suppliers to that market can target their advertising and promotional efforts more accurately and more profitably. Different segments can be reached through the most appropriate channel: parents of new-borns through ante-natal clinics, for instance, and foreign travellers through airlines’ websites.

Each market segment represents a group of potential customers with common characteristics. In consumer markets, segmentation is usually based on the following:

• Demographic factors. Gender, age, family size, and so on.

• Geography. In most countries there are marked differences in the consumer preferences of different regions. The consumption of wine in the north of England, for example, is very different from that in the south.

• Social factors. One classic segmentation is by income and occupation, but this is proving to be less and less useful. There are a lot of extremely wealthy people who do not spend much, and vice versa. So the focus is shifting to lifestyle. In recent years, marketers have become more interested in categorising consumers as “generation Xers” or “the millennial generation” rather than by the size of their bank accounts. Consumers are thought to have more in common with people from the same generation than with any other grouping.

Industrial markets have been notoriously more difficult to segment than consumer markets. Firms find it hard to decide which factors are most useful for categorising their corporate clients. Should it be size, industry sector, or geography? Computer-maker Hewlett-Packard segmented its big industrial customers into five categories based on the value of their purchases and the complexity of their IT systems.

Segmentation was in part a reaction against the mass-marketing tactics sparked off by Henry Ford when he said that customers could buy his Model T car “in any colour as long as it’s black”. Many of its classifications, however, have proved to be of little use. Baby boomers have been found to have little more in common than their defining characteristic: a birthdate in the years following the second world war. John Forsyth, a consultant, wrote in McKinsey Quarterly in 1999:
Unfortunately, easy cases permitting marketers to establish meaningful differences among groups of customers and then to identify them—a phenomenon we call “actionable segmentation”— are rare.

The internet promises to provide new opportunities for segmentation. It offers continuous opportunities to capture information about customer behaviour. Consumers identify themselves and their characteristics by their electronic participation in particular interest groups, and by their general online behaviour.

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Want Brand Authenticity? Be Authentic.

We don't know the name of the first brand. What we do know is that up a grassy mountainside a few millennia ago, a big Norse farmer was getting a bit annoyed about having his cows stolen. In a fit of Viking desperation, he started to burn his initials into his cows to stop them being nicked. Brandr, the Norse word for fire, became our operative verb. An industry that would dominate marketing was born not from the desire to differentiate or connect with consumers, but from the simple need to mark ownership and origin.

Unfortunately, a great number of British marketers operate under the mistaken impression that brands are built purely around consumers. This is partly true, but brands must also represent their origins. A brand is not a malleable product that can be moved willy-nilly around a perceptual map to follow consumer needs and drive sales. Brands are anchored in provenance, founders and heritage.

The Citroen C5 work is a case in point. A blond male whizzes around Germany in his car to the strains of Wagner. A German-accented voiceover describes the car as 'unmistakably German' before revealing it is a Citroen made in France. It's a smashing ad that agency Euro RSCG should take pride in. But it is entirely inappropriate for the brand, and Citroen should hang its head in shame.

This ad will drive awareness in the short term, but over the long term it will damage the brand associations of Citroen and leave it in no man's land. If consumers want German-made, there are several exceptional, authentically German brands. It is a message lost on Citroen's UK marketers - the way to build brand is to focus on Citroen, not your competitors.

An equally worrying picture is emerging at Diageo. Its leading gin brand, Gordon's, has responded to losses to stores' own-label products by spending the past year hitching its brand to celebrity chef Gordon Ramsay. The campaign shows a close-up of the chef's face next to the gin, accompanied by a bold statement in true Ramsay style. The inference is that this is his gin and comes with all the personality one expects from such a provenance.

Except, of course, it isn't Ramsay's gin at all. It's Alexander Gordon's gin, and was invented 200 years before Ramsay was born. There is enormous brand equity here. Gordon's has survived and prospered because it has something that makes it special. Diageo's challenge is to find out what this something is, define it and offer a contemporary execution of it. Don't just give up on a quarter of a millennium of heritage and hire a chef who is simultaneously endorsing about 400 other products, has nothing to do with your gin and will soon dim in the public consciousness.

Again, no shame should be attached to its agency, Bartle Bogle Hegarty, for creating these ads. It is an ad agency and, while most agencies will tell you that they are in the business of brands, they are, of course, in the completely different business of advertising. Ramsay will generate short-term awareness and arrest the brand's losses, but over the long term Diageo is eroding one of its most valuable brands with an inappropriate, short-term fix that will cause long-term damage to its brand equity.

Consumer-insight companies say consumers have started seeking 'authenticity'. That's rubbish. They always wanted it. Most consumers are a lot smarter and more genuine than the marketers who target them. They want brands burned with the mark of their founders, not artificially engineered by agencies. They want to know who made this brand, where and why. It's time for marketers to get back to the authentic meaning of brand.

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How Your Business Could Be Using Social Media - But Probably Isn't

Entrepreneurs, business owners and marketers can do a lot with the social media tools that have emerged over the past 5 years. To help you get started, here's a few ideas about what you could do, with some example of exactly how some organisations are maximising the return on their effort.

How your business could use social media by Guy Steele-Perkins

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The Mark of a Great Leader

Years ago, when most organizations were based on the hierarchical business model of the Industrial Age, great leaders were those who were unemotional, rational, even mechanistic. Those days are gone. Today's leader, especially one who is in charge of a dynamic, global organization, finds himself or herself in desperate need of one key trait — self-awareness.

An organization's success today depends on such a variety of talents and skills that no one leader could possibly be gifted in simultaneously. There are technological issues, global issues, financial issues, human resource issues, leadership issues, employee issues, legal issues, and more. A leader who is self-aware enough to know that he or she is not adept at everything is one who has taken the first step toward being a great leader.

This sort of personal mastery entails having a heightened understanding of one's own behavior, motivators, and competencies — and having "emotional intelligence" — to monitor and manage one's emotional responses in a variety of situations. This variety of situations is not limited to the home office, or the boardroom. It is of a global nature, across cultures which are very different and can be difficult to navigate, especially for those who are not comfortable, knowledgeable, or willing to admit their individual strengths and weaknesses. Everyone has a shortcoming or two — leaders who are willing to admit these, who strive to improve, and who seek out a consulting team to fill in the gaps will 1) encourage followers to do the same and 2) make room for others whose talents lie where theirs don't.

Have you ever worked with a micro-manager? This is someone who thinks he or she needs to be involved in everything that happens within the company. These leaders are closing out the talents of others by not divesting themselves from the day-to-day problem-solving activities of the company. Great leaders let go of the day-to-day, problem-solving activities of the company. Rather, they choose to maximize strategic and relationship-building efforts. These contribute to the forward momentum of the company rather than causing a "bottleneck" at the leader's desk. No one person should do it all — and if they are self-aware, most people will realize that they really aren't capable nor knowledgeable enough to do it all.

Do you recognize the difference between what you need to do versus what you should pass along to your team? Does your boss?

Following is a short list of things you can do to achieve self-awareness and personal mastery in leadership.

- Monitor your performance. Note areas in which you excel and need improvement. Communicate these to your team.
- Realize that failures and mistakes are just one step on the road to success.
- Recognize that being aware of the impact that your behavior has on other people is a critical leadership skill.
- Remember that when criticism is difficult to accept, there is probably some truth to it.
- And, finally, learn to give yourself and others credit for improving.

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Just Be Quiet and Listen

I once worked for a client running a marketing training programme for its key brand managers.

Day one was all about market orientation. In the morning we talked about the barriers between a company and its customers and how, as marketers, we must remove them to build market orientation. In the afternoon I sprang a surprise. We had arranged for focus groups to be recruited at a facility nearby and the marketers had to plan, conduct and analyse some of these and report their results the next day.

It was great on paper, but we ran into a snag. The research company we had hired to run the groups was not keen on the idea of having brand managers with no formal training running their own focus-group sessions. It suggested we should use its professional moderators instead.

Worse was to follow; the head of marketing at the client company agreed. So, rather than illustrating how easy and valuable it was to listen directly to consumers, we demonstrated the exact opposite. My brand managers ended up briefing a researcher and then watching the results from behind one-way glass. Just when you think you have met the prime directive of marketing and got a marketer face to face with customers, another barrier springs up to separate them.

The idea of professional focus-group moderators is a joke. I must have sat through more than 100 groups and the only ones I have ever seen ruined by the moderator were handled by the 'professionals', not by a brand manager keen to run his or her own groups.

One of the first things MA students learn on a research-methods course is the power of the human-research instrument in qualitative research. While we may need computer analysis to make sense of quantitative data, we can rely on a far more complex system for qual data - the mind. We all possess the fundamental ability to make sense of meaning, so anyone can make sense of a focus group, as long as they can learn to shut up and use the skills God gave us.

Even if professional moderators were superior to brand managers, I would still recommend that the manager runs the groups. Any meagre advantage of experience is greatly outweighed by being directly in touch with your customers. Sadly, in many cases, the real reason we have professional moderators is that many marketers do not have the time to run or attend focus groups. Shame on them. There is nothing more important than interacting directly and often with customers.

There is a tragic inverse relationship in most UK firms between decision-making power and degree of customer orientation. As senior marketers get promoted, their ability to influence strategy grows while their knowledge of the customer base declines. Too many of them spend their days issuing orders, and not enough time listening to customers.

Thirty years ago, Charles Saatchi used to judge the quality of his agency's creative work with one of two words: 's**t' or 'brilliant'. The same can be said for many of today's marketers, but it can be very difficult to ascertain which is which in the complex world of marketing.

One of the easiest ways to separate the excellent from the effluent is to pose a simple question: when was the last time you met with customers, shut up and listened? It is our prime directive. Long before we get to build brand or commission communications or segment markets, first we have to listen to customers. So I ask again, when was the last time you personally listened?

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Net Promoter Score

If you are a good marketer you've already heard of the Net Promoter Score (NPS).

If you are a very good one, you know what your NPS is. If you have no idea what I am talking about, read the 30 seconds at the bottom, and then meet me at paragraph two.

NPS is a rather bold little calculation. Its inventor, Fred Reichheld, argues that a single question and its resulting score is the only metric you need to measure satisfaction. He also claims a correlation between a high NPS and future revenue growth.

And the metric has taken off. Online forums have sprung up, full of managers keen to discuss it. High-profile chief executives have publicly praised NPS and added it to their management systems. Even finance people have taken note, with several institutional investors asking for the score as part of their due diligence. But two audiences are genuinely unhappy with NPS.

The first is market research firms, which make their money from long-winded analyses of the market that are so complex they require lots of researchers to explain the findings to befuddled clients.

Clearly, one number that your mother-in-law could compute is a direct threat to market researchers and their business. As a result, many have been hell-bent on showing up NPS as being not all that it is cracked up to be. Even Nigel Hollis, one of the biggest and fairest brains at Millward Brown, concluded: 'The jury is still out. We need to see more compelling proof that NPS actually does lead business performance before we adopt it as the sole benchmark of success.'

The group even more appalled by the apparent over-simplicity and over-exposure of NPS are marketing professors - particularly those who study customer satisfaction. Publicly outraged that sloppy statistical methods and clear research bias were being accepted at face value, privately they were probably pissed off that their complex statistical analyses, which have had next to no impact on real marketers, were being superseded by a single score and percentage from an ex-management consultant who did not even have a PhD. Reichheld enraged them further by admitting his lack of interest in statistics. He calls his method 'common sense' and claims the business leaders he targets have 'little interest in advanced statistical methods'.

The top peer-reviewed marketing journals have published a slew of anti-NPS research in recent months. Most notable was the publication in July in The Journal of Marketing of a statistical analysis of Norwegian customer data. The paper, 'A Longitudinal Examination of Net Promoter and Firm Revenue Growth', shows that NPS fares no better than other measures of service satisfaction in predicting business growth. The paper tetchily concludes: 'We find no support for the claim that Net Promoter is the single most reliable indicator of a company's ability to grow.'

Who is right? Usually I conclude that everyone is completely mistaken. But, in this rare case, everyone is right. Market researchers and academics are correct to question the lazy analysis and over-selling of NPS. But I still side with Reichheld. It may not be all it's cracked up to be, but I have seen more non-marketing executives - managers with real power - quote NPS in the past 12 months than all the other marketing concepts put together. This concept is making senior people think about where the money comes from. Not balance sheets, products or sales, but what really drives the business: the customers.

And anything that gets managers to think about customers and their needs is a step in the right direction. Even if that step is a little sloppy and its effectiveness exaggerated.


About the Net Promoter Score

The concept was developed by Fred Reichheld, a consultant, strategist and author on loyalty. His books include The Loyalty Effect, Loyalty Rules! and The Ultimate Question.

Introduced in December 2003, Net Promoter is a metric derived from survey responses to a 'how likely are you to recommend ...' question. Respondents who provide a rating of nine-10 are 'promoters'; those who give ratings of six or lower are 'detractors'. The NPS is found by subtracting the proportion of detractors from the proportion of promoters.

Reichheld's research among 4000 companies showed NPS to be 100% accurate in indicating whether a firm would grow (more consumers championed its service or product) or shrink (more were denigrating it).

NPS has been adopted by companies including Microsoft and American Express; many report their score to investors.

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