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The Ultimate Question

ultimate-question

Book review by Ron Cacioppe and Jonah Cacioppe

Imagine if you could ask one question that would tell you if your customers would buy more of your products and services or if they were going to your competitors! Looking at how revenue has increased or dropped in your different product and service lines is useful but it is a rear view mirror approach – it tells you your past, not your future. Customer surveys, by phone, face-to-face interviews, focus groups or on-line surveys are common ways to find out how customers see your products but they ask a lot of questions, take a lot of time, and are costly.

How many of us cringe when we get that phone call, are stopped in the shopping mall or get an email from the ‘customer representative’ who just wants a few minutes of our time to answer questions about our experience of company X’s product or services? Our first thought is often; “Oh yeah, a few minutes my foot, I know you’ll wind up asking 30 or 40 questions and take at least 15 minutes of my time!”   Our response is often’ “No thanks, I am busy right now!” – and that’s why the response rate to these surveys is often lower than 30%.

Fred Richheld and Rob Marley in their new book, The Ultimate Question, 2.0 suggests that there is one question that predicts better than anything else if your customers are going to continue their business with you.  This question leads to a ‘Net Promoter Score’ which indicates the amount of commitment and loyalty your customers have to your products and services. Many companies are using this ‘ultimate question’ and there is good research that supports the idea that this question captures the major information an organisation needs to gain and keep customers.

Leading organisations such as Apple, Enterprize Car Rentals, Philips, Facebook, Qantas, Progressive Insurance, and Sodexo use the NPS as a major driver for improving customer service.

The standard NPS question is; “On a scale of 1 to 10, what is the likelihood you would you recommend the produces and services of this organisation?” The scale goes from ‘Extremely likely’ (10) to ‘Not at All Likely’ (0). The Net Promoter score is calculated by taking the percentage answers of 6 or less (which represent ‘Detractors’) from the percentage of people who answer 9 and 10. These people are called ‘Promoters’ and they have been found to have considerable loyalty to the company and spend more dollars than any of your customers.  Those who score 7 or 8 are ‘Passives’ who are borderline customers, they may stay with you but may go to your competitors if the grass is greener in price, quality or service.  The Detractors are the customers whii cost you more because of their complaints. They also tell people not to buy from you because their experience wasn’t very good. The success of your business depends on how you can convert ‘Detractors’ to ‘Promoters’.

The Net Promoter Score is a summary calculation of the % of Promoters minus the % of Detractors. This summary score represents the extent that your customers promote your services and products to others and are positive about their experience with your business. A growing amount of research has shown that the higher the NPS score the greater the sales and profit of an organisation.

Norms are available which can tell an organisation how they stand relative to others in their industry. Leading companies score between 70 to 80.  Average scores for industry leaders is between 20 to 40.  Below 20 indicates your NPS isn’t very good.

The NPS question is usually done close to the purchase so that it captures a current customer experience. An open ended question usually follows the first question which is: “And what was the reason for your rating?”  This results in the customer giving specific information about why they like or don’t like your product and what you might do to improve their experience.

Increasing or decreasing your NPS score over time will predict the success or failure of your business fairly accurately.  Improving the NPS requires more than just calculating the score.  Managers have to show high commitment to using the feedback from the NPS by supporting and recognizing those that increase their section’s NPS.  They have to own their section’s feedback and follow-up and talk to their customers rather than leave it to outside marketing agencies. They need to analyse customer comments and follow through on useful customer’s suggestions.

Enterprize Rental Cars in the United States has used the NPS for several years and attributes its exceptional revenue and profit growth to this.  iiNet and Synergy in Western Australia are using the Net Promoter Score for both its retail and for its energy market businesses.

The NPS process is simple and straight forward, and while it may not give you deep understanding about everything your customer is thinking and feeling, it can tell you whether you customer will be coming back to your front door regularly or not and why.


Jonah Cacioppe

Jonah holds a BA from Curtin University and an MSA from Sydney University. He is a Director of Integral Development and has been involved in the design, administration and running of leadership and management programs over the last 12 years.

Ron Cacioppe

Ron Cacioppe is the Managing Director of Integral Development and holds a BSc, an MBA and a PhD. He has taught in the Graduate School of Management at Macquarie University, Curtin University and the University of Western Australia.

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