Later this month September, Fred Reichheld and Rob Markey are launching their new book The Ultimate Question 2.0, a sequel to the earlier bestseller that brought us the Net Promoter Score and the knowledge that “happy customers make you more money”.
As I am a hard-core promoter of NPS and I've met both gentlemen on a number of occasions, I thought this was a great opportunity to catch up and ask Rob five questions on our favourite topic. You can find the answers below.
What would – in your opinion - be the most compelling argument for a CEO to consider the introduction of NPS in his business?
This might surprise you, but I'd start by helping a CEO understand that Net Promoter isn't for everyone. If all you're looking for is a way to measure your salespeople, your phone reps or your company's service, other scores and metrics might better meet your needs.
The Net Promoter system is only of real value if you're looking for a systematic way to motivate action, to inspire your employees, to foster a customer-centric culture. Net Promoter's most powerful and distinguishing characteristic is its focus on fast-cycle closed-loop feedback, learning and action. It corresponds to the way we all learn: we take an action, we see the outcome, we draw conclusions, we repeat the cycle. The simplicity of the metric and the survey method facilitates that. Grouping customers into promoters, passives and detractors is an analytically sound way to make it easy for any employee to understand the objective. The richness and immediacy of verbatim customer comments provide powerful positive reinforcement to customer-facing employees for delivering great service and powerful and specific constructive feedback when service falls short.
The simplicity of the Net Promoter score sometimes leads to a misperception that it is all about one question and the resulting metric. But the leaders at great companies like Vanguard, American Express, Intuit, Allianz, Schwab and many others who have had great success with Net Promoter will tell you that the question and the score are just the very beginning—the catalyst. It is the full Net Promoter system that creates the right conditions for real change and improvement in a company.
So why a second book? Didn’t the first one say it all ;-) ?
Net Promoter has been evolving rapidly. What started out as an idea when Fred Reichheld introduced the concept in 2003 has developed into a full-blown business system. At the outset eight years ago, we focused our efforts on creating a simple and clear metric that was strong enough to rally the organization and that could be used to counter-balance the extreme focus on short-term financial results that dominate most public (and many private) companies.
So the first book focused a lot on the metric. It described in detail how we came upon the "likelihood to recommend" question, and how it was selected from many others that were almost (but not quite) as good. It devoted lots of energy to describing the differences between Net Promoter score and other measures and approaches to customer satisfaction. It put emphasis on how to calculate the score, how to link it to individual customer economics, etc.
But since we published The Ultimate Question, Bain has worked with dozens of great companies around the world to help them use Net Promoter to accelerate profitable, sustainable organic growth. We have supported many, many more through the NPS Loyalty Forum, which is a group of loyalty-leading senior executives who get together regularly to share information, ideas and experiences with Net Promoter. Both our own work and the shared experiences of other companies convinced Fred and me that Net Promoter had grown far beyond the elements described in the original book. It was time to articulate many of the new elements of the Net Promoter system that we now consider crucial to success. This is what The Ultimate Question 2.0 is all about—a collection of experiences and lessons learned from loyalty-leaders around the world, representing diverse industries, who have led missions for organizing their companies around customer needs. It’s no longer (just) about the score, it’s about the Net Promoter system, and the second book is about the success stories. We just had to share them.
Which would you consider the most important lesson(s) The Ultimate Question 2.0 offers to companies implementing NPS?
Wow. There are so many things we've learned that have a significant impact for NPS companies. The single most important lesson from the book is that not a single company has become a loyalty leader by measuring its way to greatness. That's not what Net Promoter is about.
Instead, one of the biggest take-aways for readers is that earning the loyalty of your customers is hard work. It is work that has no end, because competitors don't stand still and technology doesn't stop evolving. So you have to keep at it every day. And you can't earn your customers' loyalty by surveying them to death. You earn it by improving the products you deliver, the pricing you offer, the emotional connections you create, the experience of using your products or services. You earn it by treating your customers with respect and dignity and by working hard to make their lives better. Net Promoter can help you discover ways to do those things. It can help you do them more quickly and efficiently and consistently. It can help your frontline employees get excited about what they do and get creative about how they do it. But the Net Promoter score is just the very beginning, the spark, the catalyst.
Perhaps the second most important lesson we call out in the new book is that you simply can't sustain high levels of customer loyalty unless you also earn high levels of employee loyalty. And vice versa. Employee loyalty is achieved when everyone and every process in the organization is centered on constantly improving the customer experience. In turn, customer loyalty is only achieved when they are being served by motivated employees who are excited by delighting customers and improving their lives. One of the most important elements of the Net Promoter system is the creation of high quality, operational feedback and learning loops--supported by processes, technology and leadership values-- that help employees succeed at their jobs and learn to do them better. Companies like JetBlue and Apple have been among the earliest to experiment with creative approaches to tackling customer NPS and employee NPS side-by-side. They have found ways to deliver customer praise quickly and in the customers' own words directly to the employees who helped earn that praise. But it’s still relatively early in the revolution, so I think we'll see many more companies doing this in the next couple of years.
What are the traps a company introducing NPS “definitely should avoid”?
In our experience at Bain, we have often encountered three traps that all companies should try to avoid:
- Leaping too fast into incentives for NPS improvement. I can't tell you how much damage has been done by companies that leapt too quickly into incorporating customer feedback scores into frontline employee incentive pay. I am not saying that you should never include customer feedback scores or Net Promoter score in customer-facing employee incentives, but you need to do it the right way and at the right time. You need to build trust and understanding of the customer feedback among your employees and supervisors. You need to help them see it as helpful to achieving their own personal goals and the goals of the company. And you need to ensure that they have the means to take action. And even then, you might want to move cautiously. Many companies also need to get serious about discouraging "gaming" or "begging for scores."
- Lack of rigor and consistency in the measurements. We often see people "doing NPS" who are simply calculating a Net Promoter score off some other set of surveys they already conduct. They haven't put much rigor into how they get the feedback from their customers. They haven't created the operational support for fast-cycle, closed-loop feedback, learning and action. It is a real mistake to minimize the importance of the Net Promoter system’s structural elements. Too often, as well, we see companies bury the question deep in a really long piece of market research without recognizing that the approach they are taking – long surveys, failure to close the loop – erodes trust among their customers. The best NPS practitioners know that it's only in the context of the Net Promoter system that the scores make sense, become actionable, and help improve relationships with customers.
- Comparing apples and oranges. Lots of people confuse what we call "bottom-up NPS" (surveys of your own customers triggered by a transaction or as part of a periodic relationship assessment) with what we term "top-down NPS" or "competitive NPS." The difference is really important. Bottom-up NPS needs to be part of your operational, closed-loop feedback system. It's done with your own customers. They know it's you asking the questions. You need to respect their time, and you need to follow up on what they tell you. I f you aren't on a path to consistently achieving 40-60% response rates for B2C or 60-80% response rates for B2B in your bottom-up feedback processes, you have a serious problem. Top-down NPS, on the other hand, is traditional market research. You should conduct it not only among your own customers, but also among customers of your competitors who are not doing business with you. Respondents have no expectation of follow-up. They don't know that this research is sponsored by you. And it's not uncommon to get fairly low response rates to this sort of research. The purpose is to create competitive benchmarks and provide insight that can support strategy decisions and investment or resource allocation.
Too often, we see companies compare their bottom-up NPS to the top-down competitive benchmarks of companies like Apple or USAA. That's just silly.
Which is the one brand/company/hotel/… you would give a straight 10? Why?
If you’re asking if I’ve seen perfection out there, the answer is no. Anyone serious about NPS will tell you it’s a journey, potentially without end. But I would call attention to several loyalty leaders that are on the right track, including Apple, Vanguard, American Express and others that we highlight in the book. If you want to read about them, the new book will be on bookshelves on September 20th.
Net Promoter Score Methodology
The Net Promoter® Score (NPS) of a company is calculated by taking the percentage of customers who are promoters (P) and subtracting the percentage who are detractors (D), based on their response to the ‘Ultimate Question:’ “How likely is it that you would recommend this company to a friend or a colleague?” Responses are measured on a scale of 0-10; 9 and 10 are promoters, 7 and 8 are passives and 0-6 are detractors. Companies that use the score find a tight link between profitable growth and NPS. In most industries, including financial services, retail, technology and telecommunications, the NPS leader has grown at 2.6-times the rate of the competition.
Net Promoter® is a registered trademark of Satmetrix Systems, Inc., Bain & Company and Fred Reichheld