Review courtesy of www.LoyaltyMagazine.Com

What is the answer to the ultimate question?

by Liam McLoughlin

Authors Richard Owen and Laura Brooks have set themselves an ambitious remit as they aim to provide businesses with this knowledge in "Answering the Ultimate Question: How Net Promoter Can Transform Your Business"

The Ultimate Question for businesses, first outlined by Fred Reichheld's 2006 book of the same name, is "How likely is it that you would recommend this company to a friend or colleague?" He directly linked a company's success in addressing this issue to its profitability. Reichheld challenged the conventional wisdom of customer loyalty by identifying the concepts of 'good profits' (that boost a company's growth long term) and 'bad profits' (gained in the short term at the expense of customer loyalty).

Now Owen and Brooks (who work for Satmetrix and collaborated with Reichheld on the Net Promoter concept outlined in his book) have set out how to codify the process of enhancing customer experience via the Net Promoter Score (NPS). NPS is a customer loyalty measure that aims to simplify the objective of creating more Promoters and fewer Detractors of a company and thus drive growth of the business.

Customers are surveyed and rated on a scale of one to ten on how likely they are to recommend the company. The concept's proponents say it is a lot easier for employees to understand and act on than more complex satisfaction measures that are often used.

Since Reichheld's book came out hundreds of companies have implemented the NPS concept to drive loyalty and profitability. Despite this, the concept has come in for criticism from some for over-simplifying its approach to customer loyalty. Critics claim the "Likleyhood to recommend" question is no more effective as a measure than traditional loyalty-measuring metrics such as level of customer satisfaction.

The authors explain, based on a variety of real case studies, how to actually embed Net Promoter discipline in all types of organisations. They say that one of the main reasons they wrote the book is due to the over-focus some companies have put on the NPS metric with not enough attention paid to the organisation and its culture and how this can be genuinely changed.

The book is intended as a practical guide to implementing Net Promoter.

Reichheld's book outlined the original NPS concept, while Owen and Brooks' work looks to use examples of how companies have effectively (and not so effectively) implemented it since then.

They defend the concept from its detractors by claiming that, as with CRM, it is not a matter of just implementing the process but of how committed the company is to understanding it and making it work in more than a superficial way.

One core aspect that must be adopted to achieve success, they say, is that of "Customer-centric DNA." This involves culture change and having strong leadership to reinforce the importance to the company of really embracing customer loyalty and experience. Understanding who your customers are, how you are going to measure them and what customer touchpoints are most important for the company. Laura Brooks says that the companies that achieve success with NPS have a three to five year plan and also have trustworthy data that has been collected from the right people in the correct way - not manipulating customers into giving a good satisfaction score.

On the basis of these concepts and data, action and innovation should then take place. Richard Owen says that innovation is one of the most exciting and challenging areas due to the inter-connectedness of the modern world. In the past if someone was dissatisfied with a company they wrote a letter to the MD. Now they can post it in minutes on a blog where it can be seen by millions of people. Companies cannot control their customers so much, which is a bit scary for them, but can also present a real opportunity for the more responsive and innovative.

If marketers don't learn how to act effectively in this real-time environment then their customers will start leading the way for them. The authors are critical of the "sterile" idea of customer focus groups that are a safe environment that companies can control, and that mean they can often not communicate efficiently to get honest feedback from some of their most important and profitable customers.

The book outlines case studies of how NPS can be effectively implemented. It praises software provider Symantec for its strong executive leadership in deploying the system. CEO John Thompson concentrated on this leadership in trying to understand its customers over a variety of touchpoints. The company has recently carried out internal employee surveys to ascertain how workers can relate more effectively to customers and what are the organisational barriers to things they can do differently.

UK cable company Virgin Media was being seriously damaged by churn and had a poor reputation for customer service. It has achieved success by getting frontline employees engaged and changing the way they engage with customers. They have bought in to the idea of creating Promoters with a major beneficial effect on the company's performance.

Lego also utilised Net Promoter to work out how to get its young customers to become loyal to the company and provide ideas for new products. This was done through the creation of an online community with children contributing ideas, and the most tangible outcome was the Star Destroyer. This was the most complicated product the company had ever produced, but they took the risk on the basis of the feedback they had from the online community, and it subsequently became a huge financial success.

General Electric and Proctor and Gamble are two other high profile users of Net Promoter.

So does this book provide the answer to the Ultimate Question?

Not quite, but then the NPS concept is only a few years old and lessons are still being learned from field implementations. The book does play an effective part in continuing the dialogue and in pointing out some of the reasons why certain NPS rollouts have been more successful than others.