|
'The Ultimate Question' by Fred Reichheld 'Driving good profits and true growth' Synopsis CEOs regularly announce ambitious growth targets, then fail to achieve them. The reason? Their growing addiction to bad profits. These corporate steroids boost short-term earnings but alienate customers. They undermine growth by creating legions of detractors - customers who complain loudly about the company and switch to competitors at the earliest opportunity. Based on extensive research, "The Ultimate Question" shows how companies can rigorously measure Net Promoter statistics, help managers improve them, and create communities of passionate advocates that stimulate innovation. Vivid stories from leading-edge organizations illustrate the ideas in practice. Practical and compelling, this is the one book - and the one tool - no growth-minded leader can afford to miss. Reichheld's basic premise in 'The Ultimate Question' is that customers can be divided into three groupings: Promoters: loyal enthusiasts who keep buying and urge their friends to do the same Passives: satisfied but unenthusiastic customers who can easily be wooed by the competition Detractors: unhappy customers trapped in a bad relationship Promoters generate profit and sustainable growth. Detractors damage your reputation by spreading stories of their views of your failings, and turn to the competition at the earliest possible opportunity. It is possible to constantly measure your performance and your progress by a simple equation based on one simple question: 'How likely is it that you would recommend us to a friend or colleague?' Those scoring 9 or 10 on a 0-10 scale are your promoters Those scoring 7 or 8 are passives Those scoring 0-6 are your detractors A company or service running at perfect efficiency would convert 100% of their customers into promoters. The worst possible would convert 100% into detractors. The best way to guage performance and progress is to take the percentage of customers who are promoters (P) and subtract the number who are detractors (D) to arrive at a Net Promoter Score (NPS) The equation is: P-D=NPS Performance can then be tracked over time, and can be applied to any individual commercial service or event. Reichheld's evidence suggests that a company or service who can open up a 12 point NPS gap on a competitor can double their growth rate against that competitor. Instead of relying on notoriously ineffective and often complicated customer surveys, use NPS to measure customer relationships as religiously as you measure profits. It also enables you to hold people accountable for treating customers in the right way. 'Top' companies studied by Reichheld deliver an NPS of 50-80, still leaving much room for improvement. The average NPS score is 5-10. Many firms have negative NPS. The second crucial question is then to ask why, and to review responses on a regular basis, taking action to address your failings. Consistent application of this process will drive significant improvements in your operations. Fred Reichheld, a Fellow at Bain & Company, is the bestselling author of The Loyalty Effect (1996) and Loyalty Rules (2001). His consulting work and research have focussed on helping clients achieve superior results through improvements in customer, employee and partner loyalty. In the 2003 edition of Consulting Magazine Reichheld was included on the list of the world's top 25 consultants' |