15. Reichheld, Ultimate Question (20 October 2006)

The most effective way to measure customer satisfaction and simultaneously prime a business for growth is to ask clients whether they would positively refer the company: on a scale of 0-10. The percent of scores of 5 and below is subtracted from the percentage of 9s and 10s. This determines the ‘net promoter score’, which indicates the likelihood of well-satisfied customers recruiting new customers. Revenues from customers who rate the business poorly are ‘bad profits’ because they come at the expense of the relationship (i.e., future revenues). Discusses ways of accurately measuring NPS (as at Enterprise Car Rental) and why satisfaction surveys are overloaded and opaque. More interesting is a six-sector grid (high-low profits, detractor-neutral-promoter) on p117. The business priorities are: 1) maintain the core (high promoters), 2) redress high detractors, 3) raise profits from low promoters, 4) move neutrals to promoters. The thesis jibes with one of Hagel’s trio of business types (i.e., network, product development, or customer service), but didn’t need to be a book.