THE ULTIMATE QUESTION

Fred Reichheld

The one-sentence summary

Customers who are prepared to recommend your product or service are the ultimate barometer of success.

WHAT THE BOOK SAYS

  • Too many companies are addicted to bad profits. These are corporate steroids that boost short term earnings but burn out employees and alienate customers. They undermine growth by creating legions of detractors – customers who sully the firm’s reputation and switch to competitors at the earliest opportunity.
  • It is possible to turn customers into promoters by asking and tracking one simple question: Would you recommend us to a friend? From this, a Net Promoter Score (NPS) can be calculated. Increasing this by 12 points versus a competitor can double a company’s growth rate.
  • The equation is simple: P – D = NPS, where P are promoters and D are detractors. In other words, you want to have more fans than grumblers.

ELEMENTS OF THE BOOK I PARTICULARLY LIKE

  • The question is simple and based on extensive research (the author works at Bain & Co.).
  • There is compelling evidence here that loyalty is the key to profitable growth.
  • On a ten scale from extremely to not at all likely (to recommend) promoters must score 9 or 10, passives are 7 to 8, and detractors are 6 or below.
  • Promoters are beneficial because they have a higher retention rate, margin, annual spend and cost efficiency, and generate positive word of mouth.
  • This system works better than standard satisfaction surveys, which often fail because:
    • They ask too many questions
    • The wrong customers respond
    • Employees don’t know how to take corrective action
    • Too many are marketing campaigns in disguise
    • The scores can’t be linked to economics
    • There are no generally accepted standards for them
    • They confuse transactions with relationships
    • Manipulations wrecks their credibility