The room is still full for the last session for today. To end the day, we are hearing from Fred Reichheld, with his talk on Loyalty and Net Promoter. Fred makes the point - relationships worthy of loyalty should be a top priority - but that in most business it is still a joke. This is why Fred has stated that he is no longer the high priest of loyalty but is now the godfather of growth.
Loyalty leaders are growing at 2.6x their competitor averages.
But Fred stated that by investing in loyalty, you get big financial returns. Enterprise Car Rental has achieved the number one slot in the car rental industry by focusing on loyalty. Southwest Airlines, Costco, Chick-fil-a are all loyalty leaders with loyal customers and employees. These guys are treating people in a way that earns their loyalty
The secret of building loyal relationships? Fred quotes Colleen Barrett of Southwest Airlines "Practicing the Golden Rule is integral to everything we do. As it happens, the natural result of 'Golden Rule behavior' is customer loyalty and employee retention."
Bad profits, while providing short term gains, do not lead to long term growth. Fred blames the CFO for focusing on the numbers and not the customer experience. Accountants can't distinguish good profits vs. bad profits nor are they concerned with the golden rule.
So, the way to grow - build promoters! They generate the growth and profits. So how do you do that? Listen to them. Companies who track referrals see the value of building customers that will recommend you. For TurboTax, promoters are worth 80% more then the average customer and detractors are worth 36% less then average. And TurboTax has been listening: when customers told them they did not like rebates, they acted. The result: their Net Promoter score has gone from 46% in 2003 to 60% in 2005 and market share in the same period from 70% to 79%.
Fred also talked about the history of Net Promoter and why the 0-10 scale (something about it being invented by the caveman). But the bottom line is that the Golden Rule does drive growth and there are many business examples that prove the point.