Fred Reichheld is the inventor of the net promotor score (NPS). “Winning on Purpose: The Unbeatable Strategy of Loving Customers” book is about NPS 3.0. With a link to purpose, customer delight and the Golden Rule (Love thy neighbour as thyself). Is your company enriching the life of your customers? Are you brightening the days of their customers?
Most companies
Most companies overpay (or underprice) for new customers and underinvest in (or overcharge and underloved) loyal customers. The resulting churn is the enemy of efficiency and explains why so many firms struggle to achieve sustainable, profitable growth.
We tolerate bad service
Let’s be truthful. One reason why customers get such bad service today is that they tolerate it. Companies are wasting precious moments of our time on earth. We deserve better, and we can find it by searching out the suppliers earning the most enthusiastic recommendations from friends and family. And my advice to business leaders: make sure you are building that kind of company.
The seed of destruction is internal
When executives become arrogant, intoxicated by success, and committed to the undisciplined pursuit of more, you are in trouble. The primary enemies of sustained success are not external threats, such as new competitors armed with breakthrough technologies. Instead, the real enemies often arise from within, the heinous four horsemen: greed, arrogance, complacency, and entitlement. It is time for something new. It is time for customer capitalism. Old-fashioned capitalism puts a company’s employees in a precarious position. The drumbeat of financial reporting—and accountabilities tied to financials—can easily drown out the call to do the right thing for customers and colleagues.
Customer capitalism
Financial capitalism is giving way to a new era of customer capitalism in which corporate purpose is to enrich the lives of customers and in which the leader’s primary responsibility is to help employees live that purpose and thus lead great lives. That turbocharge your loyalty growth engine, accelerating you past the competition, using the most efficient and sustainable fuel ever invented: happy customers coming back for more and referring their friends.
It is not about you
It is not about investors, organisation structure, control systems, profit and governance. It goes beyond customer-centric. Targeting the maximisation of shareholder returns, especially short-term returns, leads to mediocrity and decline. Process standardisation and bureaucratic management is a recipe for undifferentiated commodity offerings—which delight neither customers, employees, nor investors. Happy customers
Kindness, generosity, and love
It is about elevating customer happiness as the primary purpose of a company. Focussing on kindness, generosity, and love. Delivering experiences so remarkable that they feel loved, so much so that they tell others about. You have to wow customers. You have to move them from merely sated to truly elated.
The Golden Rule
Imagine how the Golden Rule could serve as a practical tool for guiding daily life in any setting. More and more companies that want to generate loyalty among customers and employees follow that rule, and research shows that most NPS leading firms are Golden Rule exemplars.
Love
Love is patient, love is kind. It does not envy, it does not boast, it is not proud. It does not dishonour others, it is not self-seeking, it is not easily angered, it keeps no record of wrongs. Love is the secret ingredient. Loving customers is an unbeatable strategy that wins for investors. Love is the state of caring so much for a person that most of your own happiness from the relationship derives from increasing that person’s happiness and well-being. Love yields superior retention/repeat purchases, expanded share of wallet, new customers via referrals, and lower costs resulting in higher profits.
Customer-first
Customers come first. Not the employees. The problem is that many of the things that make employees happy—are the very things that make customers unhappy. And truth be told, those things make employees happy only in the short term and fail to engender the kind of loyalty that employers need. People work hard for a paycheque, they work harder for a good boss, and they work hardest for a meaningful purpose.
A healthy place to work
The argument that customer and employee happiness are inextricably intertwined and are linked to organisational success seems self-evident. However, take a look at one of those “Great Place to Work” lists. They rarely mention delivering great customer experiences as a central criterion underpinning workplace rankings. What makes a company a great place to work is when it puts workers to do great things for customers—again, building lives of meaning and purpose. It needs to be a healthy place to work for everyone.
Net Promoter Score
NPS divides those outcomes into three categories: Promoters (smiles), Passives (meh), and Detractors (frowns). We launched Net Promoter using a survey based on one scoring question (likelihood to recommend). When people recommend a product or service, they are effectively cobranding their own reputation with the recommended company. Net Promoter posits that the primary purpose worthy of passion, and the one that consistently wins, centres on enriching customer lives.
Good profits
Good people will not enthusiastically recommend a company that they know pollutes the environment, abuses its employees, or mistreats its vendors. Bad profits are giving businesses a bad name; they result from exploiting customers and thus weaken support for capitalism. Good profits are earned by creating promoters.
Word of mouth
An enthusiastic recommendation reflects more than the quality or value of a brand; it probes into the heart and soul of a business and its core purpose, reflecting important truths regarding how we feel about an organisation’s governance, its impact on the community, the environment, and social justice. Perhaps that is why German industrial giant Siemens now reports NPS as an explicit Environmental, Social, and Corporate Governance (ESG) sustainability metric. NPS as oral Compass. Net Purpose Score anyone?
10%
Only 10% of business leaders believe that the primary purpose of their company is to enrich the lives of their customers. That 10% integrate their products and services into your daily lives and thus depend on (and contribute to) your continued prosperity. They treat their employees with dignity and respect.
Lessons
- A company can’t be great without embracing a great purpose.
- Rank things that would most delight customers or fix things that most bothered customers over money.
- Check how much teams members agreed with a single statement: I feel valued, motivated, and inspired (80% of the variation in team member happiness could be explained by that statement).
- Make the primary duty of our senior leaders is to help our frontline teams achieve success for their clients.
- Create small teams. Twelve is similar to the size of a US Army Special Forces tactical team.
- Give empathy training.
- Beware of commissions.
- Only honour the milestones and achievements that the company truly values.
- Capture and discuss all the feedback.
- Do not tolerate bad actors. That includes abusive customers.
- Be remarkable.
- Tap into the brains of your frontline employees and their customers.
- First impressions count.
- Build culture-reinforcing systems.
- Obsess with persistence.
- The stories of your clients are the story of your organisation.
- Create a culture book
- Leaders set the example
- Without humility, there is little hope for true servant leadership, a prerequisite for earning loyalty.
The new metrics
- Earned Growth Rate. Earned Growth Rate (EGR) measures the underlying revenue growth generated by existing customers coming back for more and bringing their friends.
- Net revenue retention (NRR) is the percentage of recurring revenue retained from existing customers in a defined period.
You can tell that customers feel the love when they are loyal, as evidenced by repeat purchases, increased purchases, increased share of wallet (or category), respectful treatment of employees, constructive feedback, and, most especially, recommendations to friends, family, and colleagues.
It is all about principles
Great (CX) organisations are built on great principles. One of the most effective (and ancient) systems for promulgating guiding principles involves infusing them with symbolism and then disseminating them through routines and rituals. Creating the culture. It takes an ecosystem to make the Golden Rule work. Only strong and prosperous communities with strong cultures are capable of nurturing relationships that bring the Golden Rule to its full potential.
Amazon
The book refers to Amazon´s 14 principles. Read “Working Backwards” and their ambition to be earth’s most customer-centric company and earth’s best employer and earth’s safest place to work. It is not rocket science.
The Net Promoter (Customer Capitalist) Manifesto
1. Embrace an unbeatable purpose.
2. Lead with love.
3. Inspire teams.
4. Unleash NPS-caliber feedback flows.
5. Nurture relentless learning.
6. Quantify earned growth economics.
7. Regularly redefine the remarkable.
Make bots love your customer
Cloud-based computing, technology giants, smartphone apps, digital innovations, big-data analytics, and AI are merging with pandemic-induced changes in lifestyle patterns and priorities for both customers and employees. These are driving tectonic shifts in how companies can better love (or abuse) customers. Despite the best corporate intentions, the shift to a digital world brings new risks. Leaders must ask themselves a fundamental question: How can we ensure that our bots love our customers? Leaders must be clear that their organisation exists to enrich customer lives and exercise painstaking care to ensure that this mission becomes integrated into the digital front line.
Make AI love your customers
Data and decision models ultimately power the digital front lines. They are only as good as the data that goes into them. Second, a model needs clear constraints and an even clearer objective function—in other words, a single dimension that the model should optimise. In other words NPS. We should strive for loving AI in which the ultimate objective of AI is—you guessed it—to enrich customers’ lives. Until we have perfected a way to incorporate the Golden Rule into the machine’s decision matrix, how can a company ensure that customers will feel the love, so they come back for more and bring their friends?
Happiness is essential
The author thinks the Net Promoter Score will become more relevant. The opinions are divided. People will definitely become more relevant. Machines can never understand or replace human love, and the unbeatable strategy of loving customers will always depend on us humans. You should read “Scary Smart”.. Happy is essential for the survival of humanity.
