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market spotlight | monthly review

With no Federal Open Market Committee meeting and little news to jar the markets, the lazy, hazy days of August seemed to lull investors into a state of lethargy. Trading was light and volatility, limited. Despite the fact that several of the indexes tracked here posted new highs during the month, weekly changes shifted up and down within a narrow range. The month’s end saw mixed results, with large caps losing whatever momentum they had gained, while technology, small caps, and international stocks posted respectable monthly gains.

Long-term bond yields also showed limited movement over the month, ending 13 basis points higher than where they started. The price of gold (COMEX) slumped, selling at $1,312.20–about $46 lower than July’s closing price of $1,357.90.

did you know?

In 2004, the financial services firm Charles Schwab was struggling. At the heart of its turnaround was the implementation of NPS. “The beauty of Net Promoter,” says CEO Walt Bettinger, “is that it helps to simplify complex issues and helps people to make the right decisions. [It] makes people ask themselves: Is this the right thing to do for our customer, and is it economically appropriate for the firm?”1



bright ideas
Loyalty and Raving Fans
How Net Promoter Scores Boost Bottom Lines

Job #1 in sales is to keep the clients you have, yet many advisors have no way of measuring their customer loyalty and are often blindsided by client defections. For example, what do Charles Schwab, American Express and Southwest Airlines have in common? All three companies were struggling in the early 2000s until they embraced the practice of measuring customer loyalty. The idea of measuring something as abstract as loyalty might sound counterintuitive. After all, we can quantify how many widgets are sold, but how do we measure the way someone feels about a company or an individual? Fred Reichheld, a customer loyalty expert, cracked the code with his influential research on Net Promoter Scores® (NPS).

Developed by Satmetrix, Bain & Company, and Reichheld, the NPS concept was first popularized through Reichheld’s book The Ultimate Question. In a little over a decade, the loyalty measurement tool has been adopted by more than two-thirds of Fortune 1000 companies.1

As American Express executive Jim Bush said about his company prior to administering NPS in a Bloomberg interview, “our service had become one of a back-office cost center, focused on reducing expenses and executing transactions. We were effective and efficient…but we were missing an opportunity to establish bonds with [our customers] and build more meaningful relationships.”2 In just three years, American Express saw a significant increase in customer satisfaction scores, greater efficiency and service margins, and 50 percent lower employee attrition in its US service centers.

NPS for Advisors

An NPS program is not relegated to Fortune 1000 companies. In fact, the system that is put in place benefits any company where customer service and customer loyalty are of primary concern to that company’s success. At Beacon, we implemented NPS earlier this year and saw immediate returns, with our Net Promoter Score increasing 50 percent from quarter to quarter.

We have seen the early returns on the system and are in the process of developing NPS for our advisors as well. We hope to launch by the end of the year or early 2017.

How NPS Works

Some surveys get lost in all the data, but the NPS concept is simple, boiling down all you need to know in one “ultimate” question and a short, open-ended follow-up.

“On a 0-to-10 scale, how likely is it that you would recommend us (or this product or service) to a friend or colleague? What is the primary reason for your score?”


Once you have your results, respondents are sorted into three categories: promoters, passives and detractors. Ultimately, we would like all of our clients to be promoters, “raving fans” who would tell everyone about our business, but that’s not realistic. At Beacon, we were thrilled to find a majority of promoters from our first survey, but where we were able to move the needle on our second survey was from the detractors, who were able to point out a few gaps in communication that we were able to quickly correct.

The 5 Key Components of NPS

A company needs to institute five components in order to maintain a successful NPS system.

1. A score keeping mechanism. For us, it’s the NPS system developed by Bain & Company, but there are others out there as well. The key is finding an objective methodology to measure loyalty.

2. A closed-loop process. At the heart of the NPS is the feedback you receive from the clients.

3. Root-cause analysis. It’s important to understand the feedback and see if a negative response was an isolated incident or if the problem is something fundamental to your business plan.

4. Action. Because of the system in place, you are able to follow up with the respondent and answer any issues they have with your service.

5. Commitment and Communication. The NPS doesn’t work unless you have a commitment organizationally. The system works because the people within your organization understand the commitment that is being made and the external clients understand that their questions and concerns are being heard and acted on.

Everybody in this business wants loyal customers. Everybody wants raving fans. Everybody believes in those things, but to actually have a system in place that can objectively measure that loyalty is, simply put, a game changer.

For more sales tips and ideas for your financial practice, contact us a 866.424.4825 or email Dan Baccarini to let us know how we can be of help!




beacon news

Are interest rates going up? Click here to check out Chris Cook’s insights in a recent article from Grow.


For Advisor Use Only, Not To Be Used With Clients

Beacon Capital Management, Inc. is a registered investment adviser with the Securities and Exchange Commission.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and unless otherwise stated, are not guaranteed.  Past performance is not indicative of future performance.

Additional information about Beacon Capital Management is also available on the SEC’s website at under CRD number 120641. Beacon Capital Management only transacts business in states where it is properly registered, notice filed, or excluded or exempted from registration or notice filing requirements.

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