15 of 15 people found the following review helpful
on May 15, 2007
The Ultimate Question is compelling to read. Alright, so I listened to it. Then I went out and bought five more copies for the senior people on my team. This question (and the supporting elements) have already begun to ripple out and have an impact upon our organization. Would you refer us to your friend or family member? It places accountability upon the person being asked at a completely different level. Talk about amping it up.
The second, and in many way more important element, is tracking this effort with the same level of dilligence and seriousness of your accounting or financials. Actually making this a metric you track with results that work their way toward forecasted revenue is huge. It justifies the effort of trying to track it in the first place.
And of course at the end of the day we get to delight our customers which is why most of us started our businesses in the first place. We're learning what we can do better and reacting to it more quickly...probably because we respect the NPS system more than we ever did our customer satisfaction surveys.
I can only imagine how our organization and our work product will be over the long term.
An excellent cornerstone element!
9 of 9 people found the following review helpful
on November 26, 2007
This is the best book I have ever seen in terms of providing the simplest way to measure the satisfaction level of a customer. Not only does the ultimate question provide that, it also is quick/easy for clients to complete. That is also important. There is lots of data to support the effectiveness of the ultimate question, which adds to its credibility. I have successfully used this methodology in our business and have received good feedback.
122 of 160 people found the following review helpful
on May 7, 2006
Frederick Reichheld's latest effort to enlighten CEOs and other business leaders is at its best mildly entertaining, but at its worst it is misleading and could result is some very costly and wrong decisions by potential users.
There are several critical weaknesses of this work-I will only mention a few.
First, there are many contradictions, reversals and logical inconsistencies throughout the book. Examples abound and can be discovered by anyone who spends a modicum of time with the book. Among the biggest is the reinterpretation of the satisfaction measure used by Enterprise Rental Car as a measure of net promoters (p.63). This is very confusing because earlier in the book the reader is led to believe that one needs to measure "recommendation" not "satisfaction" because Mr. Reichheld alleges that satisfaction is unrelated to revenue or profit growth. So why does the satisfaction measure works for Enterprise? More astounding Mr. Reichheld continually uses the Enterprise case throughout the book as justification for using the NPS measure.
Second, the entire premise of the Net Promoter approach is unsupported by third party peer-reviewed research articles in psychology, marketing research, or social science journals. All of the support provided in the book is based upon Mr. Reichheld's claims of research conducted by the firms he works with (Bain and Satmetrix) none of which has been reported in the aforementioned scientific publishing outlets. In fairness, the Net Promoter idea was originally promoted in a Harvard Business Review article, but HBR is not a research journal and its articles are not peer reviewed. Publication in HBR is somewhat equivalent to publication in Business Week or Fortune, and certainly does not qualify as scientific review.
Third, Mr. Reichheld confuses cause and effect with correlation. Recommendation is an effect not a cause. It occurs because something else (like a satisfactory experience) causes it to occur. Yet throughout the book, Mr. Reichheld continuously claims that recommendation's correlation with sales growth proves that it is a driver of growth. Correlation is simply a measure of association that says nothing about cause and effect. Consider the correlation between the number of churches in a community and beer sales. They are probably correlated but does one cause the other? More likely there is a third factor that is causing both to move together-like population growth. The same is true of the Net Promoter measure-it is likely being caused by something else-like satisfaction. Its correlation with sales growth is spurious and is not causal. If one examines the evidence provided by Mr. Reichheld in Appendix A this confusion of cause and effect is even more apparent-in every case shown, the time periods for the sales data predates the time periods when the Net Promoter Scores were collected. So what is causing what?
Fourth, the recommendation measure advocated by Mr. Reichheld is not a measure of "word-of-mouth" despite his claims to the contrary. Anyone who spends a nanosecond reading the question can see an obvious flaw in the interpretation of the measure. Reichheld's recommendation scale is basically a "unidirectional" scale-the scale is bounded by a positive (+) position (the "extremely likely" label) and a neutral (0) position (the "not at all" label) not a negative position. Nevertheless he interprets the scale as though it was actually measuring recommendation in a bi-directional manner by assuming that those who answer 0-6 are "detractors" who will spread negative "word-of-mouth" comments to others-but do they? Perhaps some of the respondents are detractors who answer at the lower end of the scale because there is nowhere else for them to answer, but it is also likely that some are truly advocates, just not extreme advocates. Mr. Reichheld claims this is a logical interpretation of what respondents mean-but is it true?
One final point concerns the claimed accuracy of the Net Promoter measure. In his classification of respondents Mr. Reichheld basically rescales an 11 point scale (0-10) into a three point scale (-1, 0, +1). By doing this the information content of the measure is reduced. The net effect of this, as any elementary statistics student can tell you, is that your confidence intervals are increased and your statistical power is reduced dramatically. This means that if the hapless reader of this book were to use the Net Promoter measure to assess the true value of their customer base they would be unable to detect any changes that would occur in an accurate way. For instance for a sample of about 750 customers, a user of the Net Promoter measure would be able to detect a %5 increase less than 10% of the time. A decision maker contemplating million dollar investments would do better by flipping a coin than relying upon a measure with these kinds of properties.
7 of 7 people found the following review helpful
This surprising book offers a powerful message based on common sense: Companies that treat their customers ethically and honestly will build a dedicated client base, and thus grow steadily and earn "good profits." The opposite lesson is that companies that take advantage of their customers through predatory pricing or shoddy products earn "bad profits" while building an army of disenchanted buyers who tell their friends to stay away. Fred Reichheld makes his point in black and white: Rip off your customers at your peril. He amply illustrates his message with powerful case studies, and includes details about using the "ultimate" question - "How likely is it that you would recommend this business to a friend or colleague?" - and the resulting "Net Promotor Score" to identify your best customers. We commend this book to service or product providers who want to achieve solid growth by nurturing their core consumers.
7 of 7 people found the following review helpful
on April 24, 2007
The key to this book's central idea is that you can REPLACE a large handful of other questions with this single question, so people will actually give you feedback. With a longer set of questions, you only get answers from people who enjoy filling out questionnaires! With this single powerful metric, you can watch your company go toward or away from customers. I plan on aiming part of my business in this exciting direction.
6 of 6 people found the following review helpful
on January 23, 2007
If it was author Fred Reichheld's intention to generate discussion and debate around the benefits of customer loyalty then this book has proven to be the ideal way to achieve that.
Look at the variety and range of perspectives offered by the reviews and articles this book has generated and the emotions attached.
So, if you want to understand the hype you have just got to read the book and make your own judgment. But it really depends on what perspective you bring to the opening pages.
I `buy in' to the argument that loyalty is great for business, so I found the book easy to read and understand and incredibly helpful. The argument is well crafted and supported, and with enough `detail' and case studies to support and reinforce my point of view. The underlying concept being that every organisation has both `detractors' and `promoters' and the objective of every company should be to grow the number of promoters whilst eliminating detractors. Those organisations with many more promoters than detractors tend to be more successful than others.
But many simply don't buy into the underlying premise that building customer loyalty is achievable, even desirable, in today's business environment. I'm not sure that this book will change their perspectives. Much of the data could be described by some, as `soft', `open to misinterpretation' even questionable but it is certainly an intriguing proposition.
Then of course, there is the whole concept that by merely asking one question - The Ultimate Question - will give you a useful insight into the health of your company. Is it really that simple?
Make your own judgment. For me though, The Net Promoter Score is a useful measure that has application in most industries and could be a terrific lead indicator. Would I `bet the farm' on this as the only measure? I don't think so!
Do I want to know the ratio of my company's Promoters to Detractors? You bet.
7 of 7 people found the following review helpful
on November 12, 2007
This is the first career/business development type book that truly kept me interested from cover-to-cover. Reading it will define your Jerry Maguire moment and you wonder how your business got the point it has without this being on the forefront of everyone's minds. How do companies truly "grow". Follow this book.
14 of 17 people found the following review helpful
The comic Steven Wright used to say, sell to the stupid rich because they have the money and they do not know how to copy your ideas. While that sage advice makes for good comedy its hard to measure and implement as strategy.
The Ultimate Question -- a follow-up to Reichheld's book on Customer Loyalty is a clear statement of a readily implementable concept for those looking to become more customer centric. The premise is simple, your company will grow if your customers are so satisfied that they will recommend your service to others. Now that is common sense, but what Reichheld has done is to create a definitive metric to measure and therefore help manage this source of organic growth.
The book is well structured and includes some detailed case discussions about companies that are using this concept to create growth in their core business. I call these case discussions rather than case studies because the cases focus more on what is working rather than the challenges of implementing these concepts.
One weak point about the book is that it works very hard to brand Net Promoter Score (NPS) and "The Ultimate Question." This gives the book a marketing flavor with repetition and some hype around these concepts and terms. In addition to this, the book is a soft infomercial for Bain Consulting and Satmetrix who are the companies involved in bringing this to market. This is unfortunate as it gives the ideas a glaze of marketing glitz. This is the primary reason why the book is not a 5 start recommendation.
Part 1: Why the ultimate question works?
The three chapters here discuss the challenges associated with generating growth in your core business and the difference between good and bad revenue. Good revenue is from customers who will use your services year after year, expand their relationship over time and recommend you to others. Bad revenue is from customers who view your as a transaction, something to be bought once and they will move on for a better deal.
The fact that good vs. bad is not an issue of market segmentation, but more a function of how you sell and serve customers is a big insight that many executives overlook.
Finally, the first part discusses the New Promoter Score and why it is a simple and powerful way to understand where you stand.
Part 2: How to measure responses?
This section starts with a discussion of how Enterprise Car Rental has used the NPS concept to drive their business. This is a good case that shows how NPS influences every part of the organization and its operation. The rest of the second part discusses how you address NPS from a measurement and execution standpoint.
Part 3: Becoming good enough to grow
This part puts the ideas behind NPS into action by discussing the strategic, organizational and client service initiatives for growth. Unfortunately this section falls a little flat in terms of providing insight and new ideas. The direction here is largely focused on doing traditional segmentation and service design, employee rewards and organization structures. The old adage of hire good people, align rewards, measure and manage are true but I was hoping for more.
5 of 5 people found the following review helpful
on January 11, 2007
Fred Reichheld in his book, The Ultimate Question, makes the claim that there are good profits and bad profits, and organizations, for too long, have been chasing the bad profits. Bad profits result from cost cutting and attempts to squeeze the last dollar out of customers. Good profits come from growth in the form of a new business recommendation or additional purchases from current clients. The problem is there's no real way to differentiate; companies feel pressure to make profit, whether good or bad. Reichheld feels there is a better way.
Reichheld says that the way to good profits is by increasing overall customer loyalty, but until now there hasn't been a good way to measure this. Traditional customer satisfation and retention surveys have shown little to no coorelation to actual customer behaviors. So while companies pay lip service to these surveys they'll always act on what they can measure - accounting numbers. These numbers are accepted because they follow the Generally Accepted Accounting Pricinples (GAAP). Reichheld proposes a standardized system for measuring loyalty with the Net Promoter Score (NPS) and the Ultimate Question.
While experimenting with above customer loyalty surveys, Reichheld found that no answer really coorelated with customer action, except one, the Ultimate Question.
"How likely is it that you would recommend this company to a friend or colleague?"
Use a scale of 0-10 to grade against and you'll have a clear picture of your business. Anyone answering 0-6 is labeled a detractor, someone who is probably bad mouthing your business and creating the greatest amount of headaches. Anyone answering, 7-8, is nuetral, neither hurting nor promoting your business. People responding 9-10 are your promoters, and best source of recurring and new business. Take the percentage of promoters minus the percentage of detractors and you have your Net Promoter Score (NPS). A simple formula:
P - D = NPS
Reichheld goes on to prove that companies with a high NPS are able to leapfrog the competition even when the odds are stacked against them. He discusses how to implement the system and combat some of the problems that arise, using real world examples of companies like Enterprise and Intuit.
The Ultimate Question is an extremely powerful concept and a book I would recommend to any decision maker looking to grow their organization. If his concept catches on, businesses will have a tool to point to as an alternative to strict financial numbers. Reichheld offers a way to grow our businesses through good profits and stop attacking customers when chasing bad profits.
10 of 12 people found the following review helpful
on July 18, 2006
In The Ultimate Question, loyalty expert Fred Reichheld says that the best way to raise profits and generate business growth is to ask customers `Would you recommend us to a friend or colleague?' He suggests that asking this question can give companies of all kinds a precise understanding of the experience its customers have when dealing with it.
The answer to Reichheld's ultimate question manifests itself in the form of a Net Promoter® Score (NPS), a concept co-developed with Satmetrix Systems, which reveals to a company how much its customers like doing business with it. He says it demonstrates to companies how true, positive growth can be achieved by making your customers love doing business with you so much that they tell colleagues about it. He also states that this is the only way for a company to maintain growth long term.
The book itself is easy to read and is clearly broken out into three sections discussing why the ultimate question works, how to measure if it's working, and what a company needs to do in order to be ready to really grow by implementing customer centric metrics. While there are other books out there discussing the concept of customer loyalty, The Ultimate Question goes into much greater detail on how to do this using the Net Promoter Score, a metric quickly gaining traction with companies such as GE, American Express and Four Seasons, all of which are profiled to some extent in the book.
Reichheld's belief is that the vast majority of companies don't have in place the right strategies or mindset to achieve true growth and he cites research which shows that while an extremely high percentage of senior level executives congratulate themselves on how good their customer experience is, their customers, when asked, paint a very different picture. The results show there is a 70-80% gap in the scores CEOs gave themselves, and those their customers gave them.
Reichheld's point here is a valid one - customer experience needs to be something that is addressed at every level of an organisation. It isn't enough for a CEO to simply think the company has good customer service, if in reality it isn't happening. If good customer experience is lacking within an organisation, the CEO needs to know and needs to know why, in order to turn it around.
Reichheld also states that it isn't enough to simply implement the Net Promoter Score measurement within a company. Having this metric in place will help only if the company has gone through the following process, which he calls the three D's, in order to ready itself for the results, whatever they may be:
- Design value propositions that focus on the right customers;
- Deliver these propositions end-to-end, across every employee and every department in the company; and,
- Develop the ability to deliver this proposition consistently over time and in line with the changing needs of the business.
If a company can get this right, Reichheld says it will be in a position to start transforming into a business that is continually led by the voice of its customers.
Reichheld also examines the important point of how most managers today are focused on increasing shareholder value, often at the cost of exploiting customer relationships. For example, price hikes across the board or cut backs in service or quality, all come at a significant cost to the customer and ultimately their satisfaction with the company.
Reichheld's golden rule then is simple - don't exploit your customers. His solution is also very straightforward - all companies need to do is use a `simple and trustworthy' customer feedback process that allows a business to see how many of its customers love it and how many hate it (the Net Promoter Score). This visibility then allows them to fix problems and not only retain current customers, but increase new customer levels through word of mouth, generating both profit and growth.