In his previous works, The Loyalty Effect and Loyalty Rules!, Reichheld examines one of the most important and yet least understood business subjects: loyalty. Now more than ever before, the success or failure of individual careers and even entire organizations has been determined by the presence (or absence) of loyalty in one form or another. Obviously, loyalty depends upon trust that must be earned over time but can quickly, sometimes permanently be lost. In this volume, Reichheld again examines various dimensions of loyalty while focusing on another especially important business issue: knowing what is most important to customers by accurately measuring the nature and extent of customers’ satisfaction. As Reichheld explains, “What this book offers...is a wholly new kind of measurement, a measurement that can focus an entire organization on improving every customer’s experience day in and day out. The process is both simple and radical. Companies need to ask just one question–the Ultimate Question–in a regular, systematic, and timely fashion.” Unlike bad profits that are earned at the expense of customer relationships, good profits are earned with customers’ enthusiastic cooperation. “A company earns good profits when it so delights its customers that they are willing to come back for more–and not only that, they tell their friends and colleagues to do business with the company.” True growth is based on good profits. It is real, verifiable, and sustainable. Reichheld cites this statistic: almost 80% of the world’s firms failed to meet a true-growth threshold of 5% a year in real terms from 1994 to 2004. Why? “The reason is that growth and short-term profits are often antithetical. Most companies can boost their short-term profits simply by following the practices just mentioned [in Chapter 10]. But no company can do that and achieve sustained growth, because its customers will resent the company and will leave at the earliest opportunity.”
Thus the importance of formulating a measurement becomes relevant. Reichheld recommends what he calls the Net Promoter Score (NPS) which he explains in Chapter 3. Both the Ultimate Question and NPS are best revealed within the context of Reichheld’s lively narrative. Here is one of Reichheld’s most valuable insights: there is a direct and practical link between NPS and profitable growth. Therefore, have customers determine your current NPS. Their responses to the Ultimate Question will suggest what must be done to increase your NPS. Moreover, by continuing to use what is indeed “a wholly new kind of measurement,” your organization (regardless of its size or nature) can then sustain profitable growth that will increase in direct proportion to an ever-improving NPS.
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