Why do companies go out of business even though they rate decent customer satisfaction scores on surveys? Maybe somebody's not asking the right survey questions.Instead of a barrage of queries, researchers need to pose the "ultimate question" in a regular, systematic and timely fashion to get a true measure of success and growth-the Net Promoter Score (NPS).

The NPS idea was developed by loyalty business model expert Fred Reichheld of Bain & Co. and is discussed in his book The Ultimate Question: Driving Good Profits and True Growth.

Reichheld says the "ultimate question," which needs to be asked soon after a transaction, is: "How likely would you be to recommend us to a friend or colleague?"

That question allows companies to track 'promoters' and 'detractors' and provides a benchmark of performance through customers' eyes. The answer's useful even if it's negative, because then the company knows it needs to improve.


The NPS score divides customers into three groups-promoters, passives and detractors.

Promoters rate the company as a 9 or 10 on a 1-10 scale. They're a growth engine for the company-grassroots marketers recommending the firm to colleagues, family, friends and anyone in their circle. Promoters are so loyal and happy they not only return but also increase their purchases when they come back. They increase sales with little or no extra costs.

Passives rate the company 7 or 8. They aren't overwhelmed and aren't likely to make recommendations.

Detractors rate the company between 0 and 6. They tell people not to do business with the firm but also hold the keys to improving the business. They know what to fix. Detractors have had such a negative experience they cut back their purchases, switch to the competition or warn others to stay away.

A detractor can wreak havoc with established and potential customers. Studies show that it takes 10 positive comments to balance a negative one.

So, what's a company to do? Businesses can tie all three types of customers to an NPS by asking the ultimate question: "How likely are you to recommend us to others on a scale of 1-10?" And follow up with a second question: "May we call you back to follow up?"

Determine the percentage of customers who are promoters and the percentage who are detractors. Then subtract the number of detractors from the promoters. That's the Net Promoter Score.

In the insurance business, San Antonio-based United Services Automobile Association (USAA) and Allianz Life Insurance Co., Minneapolis, are leading the charge in NPS. A successful Net Promoter strategy can provide key organizational benefits, including increased customer retention, more new customer acquisition, increased market penetration and a lower cost of sale.

Existing customers can be a carrier's best source of new and additional product sales, renewal of policies and recommendations to family and friends that increase an organization's overall sales-through an indirect sales approach-a satisfied customer.


NPS includes assessment and implementation in five areas:

1. Metrics. An insurer needs to understand the metrics proven to link to growth. The NPS strategy helps everyone in the organization gain a clear picture of the current score and how that has to change for growth. With a 12-point improvement in NPS, companies have seen revenue increase 50%.

2. Management. Organizational and divisional management need to set the standard by exemplifying the roles and activities that instill customer focus, passion and values. Everyone in the company needs to follow core processes for this strategy to work.

3. Pay. Tie all initiatives, processes, incentives and metrics to the core philosophy of the NPS strategy. Likewise, tie compensation, promotions and perks to NPS.

4. Core business processes. Think of the company's intersection with a customer as an "event," like filing a claim or making an onsite evaluation of a loss. Policyholder's events include a new policy, an additional policy, changing in policy or claim. At those main points of contact in the business process, companies need to insert and implement the NPS strategy. NPS needs to be executed by the people who have the direct ability to change the customer's experience.

5. Operational systems. This includes information gathering, reporting and trigger events, such as a notification of an outreach opportunity. It also involves how the company makes changes or sets goals to increase and track performance of the NPS. Companies can track by person, department or location. Track and publicize answers to the entire organization or functional department. But-to increase the score-put the information into actionable goals immediately. The NPS helps a management team determine objectives and hold employees responsible for building great, long-term customer relationships.

Learn from follow up calls. That's where the company finds out what's needed to improve. NPS takes the guesswork out of what's important to customers and then focuses on those concerns with laser precision.

Jon McNeill is CEO of Enservio Inc., Natick, Mass.

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