Book Review – “Answering the Ultimate Question”


260692_cover.inddSince I have written in the past about Net Promoter Score (NPS) the publishers of this most recent book sent me a copy and it’s about time I posted my review.

There has been much criticism of NPS as a single measure of loyalty.  With most of the criticism centered around the disbelief that a single metric can be reliable, and the inability of others to reproduce the results from the original book.  With this recent work it looks as though the authors are more on the path of using NPS as a process for building a customer-centric business than as a single indicator of ability to grow.  The authors state “Net Promoter is a metric and way of doing business.”  So while the book answers some questions, it still leaves others unanswered.

Pro’s:

  • It backs off from the single metric concept and offers a good framework or operating model for collecting, analyzing and acting on customer feedback.
  • It provides several good options for understanding and segmenting customers and what to do with each segment. It also offers a good methodology for driving organizational change towards becoming a more customer-centric organization.
  • It finally talks about multiple question surveys for gathering customer feedback.
  • They urge caution when using NPS to impact employee compensation.

Con’s:

  • It lists a major tenet as “linkage to financial outcomes” but doesn’t discuss or show how to really do that.  How does one prove that an improvement in financial performance is due to an increase in NPS?  They state that it does, but don’t show how to prove it.
  • Their discussion around correlation, regression, and relative impact analysis without a detailed example is a major fault.  They tell you why it’s important, but it really falls short on implementation.
  • Much of their discussion around customer-centricity is not all that new.

So if you are struggling with how to start on the path towards a customer-centric culture it’s a good read.  If your still hoping that asking one question will get you a loyal customer base, keep hoping my friends. It’s just not that easy.

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What Divorce and Customer Loss Have In Common


Stop Believing What Your Customers Tell You

A recent article on Marketing Sherpa demonstrated the difference between what companies (vendors) believe are the reasons customers leave, and the real reasons customers leave.  While companies cite pricing as the top reason, customers say they really leave because of customer service.

Why the Difference?

The article sights two great reasons for this difference.  First, since it’s usually sales reps that report the loss, it’s easier to report price as the issue since it’s beyond their control.  Second, it’s easier for customers to claim price as the issue as it’s harder to dispute and doesn’t cast blame on sales.

Divorce and Customer Loss

I can’t find the exact study, but when asked why a couple is divorcing, an often cited reason is financial stress.  When researchers dove deeper with the individuals to get to the real reason for the divorce it’s usually not financial.  It’s just that it’s easier to say that, it’s less embarrassing than stating infidelity or abuse as the reason.  Same thing is happening here.  It’s just easier to use price as the excuse.

It’s hard for a customer to tell you straight-up that it is poor service that pushed them to leave.  It’s hard because that kind of information may lead to confrontation, defensiveness, or hurt feelings with the sales rep.  These are all experiences the customer doesn’t want to pile on top of their existing frustration with your company.

More Proof

As a customer researcher, I am often able to show companies that their beliefs around customer loss are just not real.  By conducting customer satisfaction interviews in the B2B space I have often showed clients that service and support were significant issues for clients. It can come as a shock since the company previously believed they had no problem with their sales and support staff.

In working with credit unions and member (customer) loss, you will find that many members will cite “moved out of area” as a primary reason for leaving the credit union.  Now I know the housing crunch is brutal, but there really are not that many people moving out of the service area of the credit union.  It’s just easier to give that reason when you are face-to-face with the teller when you go in to close your account.

Good News, Bad News

As the article states, the good news is that customers are less likely to leave because of price.  Also, excellent customer service can lead to stronger customer loyalty and a price premium for your company.  The bad news – if you don’t really know what your customers think of your customer service you may be headed for a trial separation or a divorce…

News Flash – Customer Loyalty Discussed on CNBC


Yes, believe it or not, the topic of ‘customer loyalty’ made it as the feature of a segment on the business and financial news network CNBC.  The question was whether or not it makes sense for companies to invest in customer loyalty, and if it does, do companies that invest in customer loyalty make better investments.  Click here to see the segment – but hurry, I’m not sure how long the segment will be available:

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The interview included Jim Kane (The Brookside Group), Les Satlow (Cabot Money Management) and Vince Farrell (Scotsman Capital Management), and was led by Michelle Caruso-Cabrera.  The essence of the piece was that it does make sense to invest in customer loyalty, but investors will first look for strong operational performance and growth in market share before looking to assess a company’s customer loyalty.

The following companies were mentioned for having good customer loyalty – Amazon, Apple, Google, FM Global, Merck, Philips Medical, RIM, Texas Instruments, and Toyota.

My concern with the segment is that they never really took the time define customer loyalty and how an investor would measure it along with operational performance and market share.  Maybe they will do that next time …

Here’s to hoping that more segments relating to customer loyalty, and customer relationships in general make it to the bigtime in 2008 – Happy New Year!