Fred Reichheld, author of the Net Promoter book, The Ultimate Question, gave a historical review of the history of NPS. He has spent 30+ years talking about the importance of loyalty. Loyalty is a difficult term it seems for businesses to latch onto, so you are better off talking about growth. The two are almost synonymous. Loyalty leaders grow at 2.6 times that of competitors. Loyal customers do four key things that drive growth:
- Repurchase
- Buy more
- Refer
- Give feedback
Fred talked about Chick-fil-A, and how even though it breaks the *traditional* rules of economics, it is a tremendous success by focusing on what is right for customers. Enterprise is another example of building a business around treating customers well so they come back and tell their friends! Fred gave some other anecdotes about Southwest and Harley-Davidson. The Golden Rule was integral to all these successes: "treat others as you would like to be treated."
Bad profits alienate customers and demotivate employees. Fred had some hilarious stories of how he personally has been impacted by bad profits. He outlined some of Enterprise's approach to operationalizing Net Promoter, as discussed in his book. The "recommend" question probes both dimensions of loyalty - the heart and the head.
The fact that it has assets (promoters) and liabilities (detractors) brings it somewhat closer to accounting methodologies. But don't get too hooked on the question. As long as you have one that works for your industry, the key thing is being able to categorize people as promoters, detractors, and passives. Companies Fred called out that are implementing NPS well, and from the top include GE, Apple, Intuit, and Charles Schwab.
To summarize, driving loyalty takes focus from the top, including both support and participation. It also requires a lot of hard work, involving customer segmentation, training, IT capabilities, team accountability and alignment, proper rewards, and senior execs on board.
You can check out Fred's thinking at http://www.netpromoter.com/netpromoter_community/blogs/fred_reichheld.
It's always great to hear Fred speak. It also would be good to hear some new case studies from his current engagements. Thanks Fred!
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