The Ultimate Question is one of those books you want every manager, CEO, VP or anyone remotely interested in making their business better to read. It really will change the way you think about customer feedback and the absolute best way to measure how you’re doing, not financially but by what your customers think about you. For decades we’ve had financial instruments to measure how a company was doing financially but never a gage on what your customers actually thought of you. The Net Promoter Score (NPS) is a method of using quantitative measurements to understand what your customers think of you in comparison to past results and even other competitors in the market place.
Here’s the Ultimate Question (and the follow up question) that will replace your traditional boring customer survey:
On a scale of one to ten, how likely is it that you would recommend us to a friend or colleague? One being “not at all” and ten being “absolutely”.
The followup question: What’s the primary reason for the score you gave us?
From asking just those two questions you get a lot more participation amongst customers and with more feedback from customers, management can use the data to make better decisions.
Here’s how it works:
The people who rate you a 9-10 are you Promoters. They love your company and talk about it any chance they get.
The people who rate you a 6-8 are neutral. They will probably buy from someone else that offers a cheaper product or service. Don’t spend a lot of time chasing this portion of your customers.
The people who rate you a 0-6 are your Detractors. These people don’t like you. They don’t have anything nice to say about your company and will spread negative word-of-mouth given the chance. You must always try to decrease the number of customers you turn into detractors.
The book is based on the concept of the “Net Promoter System” where by collecting data from asking the ultimate question you can begin to benchmark you NPS (Net Promoter Score). Here’s how you determine your NPS. Take the total percentage of customers who are promoters and minus the percentage of customers who are detractors. The remaining amount is your Net Promoter Score.
(% of your customers giving you 9-10) – (% of your customers giving you a 0-6) = Net Promoter Score
“NPS ultimately is a business philosophy, a system of operational practices, and a leadership commitment, not just another way to measure customer satisfaction.”
Some of Apples retail stores will score in the high 80’s and 90’s for their NPS, Zappos has always had a relatively high NPS as well as Enterprise Rent-a-Car. The list of organizations that use the NPS is long and for good reason. The NPS defines the purpose of customer feedback. Ultimately if your customer doesn’t want to recommend you to a friend of family member then you have failed. Using the NPS you can identify where you fail when you do and develop a systems to remedy mistakes quicker and more efficiently over time.
Reichheld talks a lot about good profits and bad profits in the book.
“While bad profits don’t show up on the books, they are easy to recognize. They’re profits earned at the expense of customer relationships.”
If you’re forcing people to pay with contracts, hidden fees, unexpected costs, over-charging, or just not providing a valuable service, you’re making bad profits. No company can make bad profits in a sustainable manner.
On the contrary, if you’re making good profits you’ll create loyal customers, and loyal customers are the best customers.
“Why do we want loyal customers? Answer: because loyal customers come back more often, buy additional products and services, refer their friends, provide valuable feedback, cost less to serve, and are less price sensitive.”
I highly recommend reading The Ultimate Question 2.0 it’ll make you think about measuring your customer service in a different way. The best book on Customer Service I’ve read. Ever.