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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Giving Senior Executives More Insight from NPS


blue_bulb1.jpg  The Net Promoter website describes the Net Promoter Score (NPS) as providing “the single most reliable indicator of a company’s ability to grow.”  There has been an on-going debate about how true this statement is and the real value of NPS, particularly for senior executives.  To better understand some of what the debate is about, check out this post at Marketing ROI and the posted comments.

I have been using NPS with clients for a couple of years now, and I’m not convinced yet that it is the best indicator of a company’s ability to grow.  The real work is figuring out what drives the likelihood to recommend for each business, and then measuring the actual recommendation behavior and corresponding purchase behavior of customers.  That is more than a blog post, so on to what you can do right now to get more value out of your NPS work…

As a quick review, NPS is calculated by first asking the following question with a 0 to 10 point answer scale:

“How likely is it that you would recommend (Company X) to a friend or colleague?”

Then you take the percentage of customers who are promoters (10’s & 9’s) and subtract the percentage who are detractors (6’s – 0’s):

% of Promoters – % of Detractors = Net Promoter Score (NPS)

To get additional customer insight, I also pair it with the following question:

“What was the most important factor that influenced your score above?”

What I like to present to senior executives is a summary of the answers to this question from the detractors.  Yes, they also get to see the comments from promoters, but they are already aware of this perspective.  There is often more value found in reading the detractors’ comments.  This tells executives what customers don’t like about their business or products and services.  This feedback contains the real voice of the customer, and often they are pretty blunt comments.  We all like to know what we do well, and we need to keep doing those things; but real insight, and real growth often comes from improving what is really wrong with a business.

What counts in customer satisfaction?


survey1.jpg  According to the 2007 Retailer Customer Satisfaction Survey what customers look for in a retailer comes down to three things – value, service, and shopping experience. The study breaks these down into cost, employee helpfulness, quality of the merchandise sold, return policies, cleanliness and ease of finding merchandise (“the six qualities”).

The survey indicates that customers value the shopping experience (“employee helpfulness,” “store cleanliness” and “ease of finding merchandise”) above all else with a key contributor to that being “employee helpfulness.” The study also attempted to correlate ACSI satisfaction scores with Net Promoter scores (NPS). There has been a lot of discussion about the usefulness of these two measures. You can see an excellent post on this topic on Ron Shevlin’s blog.

I would expect a different and much higher level of “employee helpfulness” when I shop at Nordstrom when compared to Macy’s. Interestingly, they had the same ACSI score, but Nordstrom’s NPS was 81 while Macy’s was 18! A quick look at the data showed the greatest gap in the six qualities listed above for these two stores to be in “employee helpfulness.” This affirms two of my beliefs. First, that having a “satisfied” customer doesn’t mean that they will return or recommend you to others. Second, that no single measure really predicts the health of your customer relationships. It’s better to understand the drivers of customer satisfaction, and what will cause a customer to recommend you (and actually do it) than just a single question to measure either of these.