Microeconomics of Customer Relationships

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Reading: Microeconomics of Customer Relationships

Reading: Microeconomics of Customer Relationships
The follow is a critique and review of the reading of Microeconomic of Customer Relationships by Fred Reichheld. I will review the article and evaluate Mr. Reachheld. I will also apply economic theories into why and how I came to my conclusions.
Overview on the Reading
Microeconomic of Customer Relationships by Fred Reichheld is based on a simple survey based customer-relationship metric known as “net-promoter score”, or NPS. The NPS divides customers into three categories based on the simple question, “How likely is it that you would recommend us to a friend or colleague?” (Reichheld, 2006, pg.73) Customers at the high end
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There is also supply and demand to consider. When there is a high demand for a product and a limited supply, a higher priority needs to be set on the upper right because holding a high percentage of the market share when supply is low will keep customers when or if the supply is increased and you will need customer loyalty when new competitors are able to enter due to a lower cost of entry.
Conclusion
Fred Reichheld wrote an excellent article breaking down NPS and applying it to business. I had a slight disagreement over his priority placement mainly because it is flexible to the situation and I would focus on the masses rather and a select few. The article was well written and very practical with easy to understand data. References
Chen, B. (2008, November 17). Why apple won’t allow adobe flash on iphone. Retrieved from http://www.wired.com/gadgetlab/2008/11/adobe-flash-on/
Randall, D. (2011, September 19).Nflx tumbles on qwikster announcement; are netflix 's best days behind it?. Retrieved from http://www.huffingtonpost.com/2011/09/19/nflx-netflix-stock-qwikster_n_970879.html
Reichheld, F. (2006). The microeconomics of customer relationships. MITSloan Management Review, 47(2), 73-78.
Schofield, M. (2008, April 10).Satmetrix benchmarks net promoter scores in four key industry sectors. Retrieved from http://www.reuters.com/article/2008/04/10/idUS191482 10-Apr-2008
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