All companies seek to grow. And growth—profitable, sustainable organic growth—occurs most often when customers and employees love doing business with a company and sing its praises to neighbors, friends, and colleagues.
Most leaders want customers to be happy; the challenge is how to know what customers are feeling and how to establish accountability for the customer experience.
Conventional customer satisfaction surveys often don't work for this purpose, because the results aren't directly linked to financial outcomes or customer behaviors and don't make it back to the front line fast enough and in sufficient detail to drive behavior change. Some years ago, Fred Reichheld and a Bain team launched a research project to determine whether a radically simple approach would prove more fruitful. Working with data supplied by Satmetrix, they tested a variety of questions to see how well the answers correlated with customer behavior. They were searching for the best one-question indicator of customer lifetime value.
As it turned out, one question worked best for most mature, competitive industries:
How likely are you to recommend Company X to a friend or colleague?
High scores on this question correlated strongly with repurchases, referrals, and other customer behaviors that contribute to a company's growth. In 11 of the 14 industry case studies that the team compiled, no other question was as powerful in predicting behavior. In two of the remaining three cases, other questions won out, but the likelihood-to-recommend question was so close to the top that it could serve as a proxy for the leaders.
The likelihood-to-recommend question, of course, is the "Ultimate Question" and the basis for calculating a company’s Net Promoter Score. Now that it has been well over a decade since the score was first introduced, thousands of companies, including two-thirds of the Fortune 1000, are calculating their scores.
But, a calculation is not enough. There's another critical question we discovered as we learned more: "Why?" Asking a customer to tell us in their own words why they gave a score is what helps us understand how we can take action and continuously improve. We also found that going from calculation to improvement required a system, and, so the Net Promoter System was born.