Hello there! Our awesome intern Preeti is back to bring you her unbiased review of a very unique book: The Ultimate Question 2.0 – How Net Promoter Companies Thrive in a Customer Driven World, authored by Fred Reichheld (from Bain and Co.).
Fred’s first book, The Ultimate Question, published in 2006, talked about a business environment that has become more social. Even as recently as 2006, the concept of measurement, management and their impact on philanthropy was not considered a key tool to business development – that’s why The Ultimate Question 2.0 was published.
Want to find out what the Ultimate Question is? You may already know it, but might not know what’s behind it – so enjoy the write-up!
WHY READ IT?
The Net Promoter Score is a customer loyalty metric originally formulated by Fred Reichheld, Bain & Company, and Satmetrix in 2003. Fred Reichheld published a 300 page book on the NPS (Net Promoter Score) called –The Ultimate Question 2.0. No, it’s not a video game – NPS is a proven way to predict consumer corporate growth and profits, and many organizations believe that the customer satisfaction approach is even more relevant to development and social change than it is to business.
Because customers are key to bringing about this change, customer satisfaction metrics helps to see the true story. This 300-page book is all about surveys and NPS; if you are looking for something more than that, then you won’t find it here. What you will find, however, is a truckload of case studies giving you comparative analysis, real stories, surveys, research, and techniques adopted by some really renowned companies – including many successes, but also huge failures.
So what is the Net Promoter Score? Well, one of the keys is that organizations that survey usually ask the wrong questions (for example – ‘were you satisfied?’ or ‘would you buy again?’) First, it’s important to ask the right questions, such as the ‘ultimate question’ – how likely it is that consumers would recommend Organization X to a friend or colleague on a scale of 0–10?
Respondents are then divided into Promoters (score of 9–10; loyal enthusiasts who will keep buying and refer others, fueling growth); Passives (score of 7–8; satisfied but unenthusiastic; vulnerable to competitive offerings); and Detractors (score 0–6; unhappy constituents who can damage your brand and impede growth through negative word-of-mouth).
Your NPS is the percentage of customers who are Promoters minus the percentage who are Detractors. Once a business knows where its constituents sit on this scale, it can take steps to increase Promoters and decrease Detractors.
NPS also talks in detail about bad and good profits. Interesting, right? But how does NPS define bad profits? It’s those made from practices that increase short-term profits but antagonize customers. Good profits, in contrast, are those where customers enjoy such high quality experience or customer service that they recognize the value in the relationship and become promoters.
By way of a cliche example – most people don’t care that an Apple MacBook Pro costs more than other laptops, as long as they know that it will have everything that they need, that the service quality is fabulous, and that the aesthetics are pleasing. Customers may say they want a cheaper laptop, but they won’t necessarily recommend it.
INTERESTING BOOK INSIGHTS
I mentioned earlier that this book is a 300-page article on NPS. It’s a good, well-written book with great insights that has facilitated growth and customer loyalty in companies around the world.
One of the things I liked is that NPS is an actionable type of measurement which over time has proven its metal. It has no complication at all. With data providing the score, reasons for the score, and customer comments all received in real time, it can provide valuable information to the company. This immediately creates room to enhance the customer experience. Actionable data helps a company resolve issues faster, especially in today’s market beaming with customers as connected as millennials are.
The goal for NPS is about the future. Fred very strongly emphasizes this in his book. NPS gives the power to companies to turn its customers into predictable revenue generating machines, which might be scary to assess as a start but is a dream for every company.
NPS is simple to understand. All NPS surveys are short and sweet. Easy to comprehend, providing high response rates and insights into loyalty scores, root causes, comments, preferences, and grievances at any point along the customer’s experience journey – as long as the company has the right tools. It surely helps avoid cumbersome and complicated market research tools. In fact – you’ve probably seen NPS pop up more and more when you are blasted with surveys.
To give you an idea of its influence and impact in the market, here is a list (pretty impressive, if you ask us) of companies in various industries who use NPS:
Air Transportation: Delta Air Lines, JetBlue, Qantas, Southwest Airlines, Travelocity, Volaris
Retail: 24 Hour Fitness, Apple, Avis Europe, Best Buy, CarMax, Cencosud, Chick-fil-a, CVS Caremark, eBay, Enterprise Rent-a-Car, Expedia, Guitar Center, Hertz, Home Depot, Inchcape, Intercontinental Hotels, John Lewis, Macy’s, Moosejaw, Myer, Neiman Marcus, Phanfare, Porsche, Safelite Auto Glass, Virgin Active, Zane Cycles, Zappos, Zipcar and more.
Industrial Goods & Services: ABB, Aggreko, Alcoa, Atlas Copco, Archstone, AvisBudget, BorgWarner, Centrica / British Gas, Con-way, Cypress Semiconductors, De La Rue, Deutsche Post World Net, Direct Energy, Dupont, e.On, Franklin Covey, GE, General Motors, Holcim, Honeywell, Jabil and more.
Financial Services: AIA, Allianz, American Express, Aon, Asgard Wealth Sol, Aviva, AXA, Banco Galicia, Bank of Melbourne, BMO Financial Services, Bupa International, Charles Schwab, Citigroup, CMR, Commerce Bank, Eastern Fin. FL Credit Union, Experian, Fidelity Investments, Fireman’s Fund (Allianz), Grange Insurance, HSBC, IAG NZ, Idaho Central Credit Union, ING, JPMorgan Chase & Co, Lloyds, Lockheed Federal Credit Union, Macquarie Bank, Mellon Investor Services, MetLife, Metro Bank PLC
Media: Avid Technology, BBC, DirecTV, E.W. Scripps Co., LexisNexis, PR Newswire, Scripps, Thomson Reuters
Another interesting data point is the top 10 NPS leaders across these companies are:
USAA – Insurance = 80%, USAA – Banking = 79%, Costco = 78%, Apple – iPad = 77%, Apple – Laptop = 77%, Dillard’s 75%, Nordstrom = 74%, Apple – iPhone = 73%, Amazon = 68%, Southwest Airlines = 67%
Why is this important to know? Because it’s now the most widely used measurement tool in the marketplace. There are other management fads like CRM, Lean, TQM, and ABC that are very productive, popular and good. So – ultimately, what is different about NPS (pun intended)?
It is easy, logical, and something companies large and small can implement themselves. All these other three-letter programs require lots of time, dollars, and use of expensive consultants. However, having said this, it is important to know that these are proven tools – relying on only the NPS for accuracy isn’t the best option.
OVERALL SUMMARY & CONCLUSION
This is my personal recommendation: NPS is an excellent tool, as long as after reading this book you use the Net Promoter Score as one of the metrics to assess customer or employee satisfaction and not the only way.
Yes, I know it’s very popular and is simple and easy to measure. However, to rely on NPS as the only measure of something as important as customer satisfaction is a major mistake. You would never find a company that relies on a single measure of financial performance to assess its health. Similarly, relying on a single measure of other aspects of performance is not wise.
The book is logical, easy to follow, presents compelling evidence on NPS and does have some juicy stories on some of the top named companies in the industry. It’s a long read on surveys, but of excellent use if you are planning to work for Bain or are in a leadership team that is focusing on shifting the culture of customer feedback in your organization.
Get your copy of The Ultimate Question 2.0 today.