The Ultimate Question 2.0 - Fred Reichheld, Rob Markey

In this summary of the book "The Ultimate Question 2.0", written by authors Fred Reichheld and Rob Markey, we will talk about the analysis of the NPS (Net Promoter Score) method, which calculates customer loyalty and indicates points for improvement of the experience acquired by them when using a product or service from company.

This tool has been expanded and developed to help determine whether the organization has succeeded in fulfilling its mission to improve people's lives, and promotes the dedication and commitment of employees.

Would you like to know more? So, continue reading this PocketBook and learn how to use NPS to create a customer-focused business culture!

About the book "The Ultimate Question 2.0"

The book, "The Ultimate Question 2.0", was written by the authors, Fred Reichheld and Rob Markey, and published in 2011. It represents an extension of the first edition of the same name, published in 2006.

Divided into 10 chapters, it is a reference in the study on research involving the NPS method and has in its content rules to be applied when verifying customer feedbacks, effectively.

About the authors Fred Reichheld and Rob Markey

Fred Reichheld joined Bain & Company in 1977 and became a partner in 1982. There, he played a variety of leadership roles, including as a member of the board of directors, appointment and compensation board.

In 2003, he was included in the list of the 25 most influential consultants in the world. He is recognized by The Economist newspaper as the "pope" of loyalty.

The first edition of the book "The Ultimate Question" was published in 2006 and since then he has been invited to speak at major business events around the world.

Rob Markey is a partner in the New York office of Bain & Company and is responsible for the company's marketing and customer strategy.

The author is an expert in improving customer experience and the founder and leader of the NPS Loyalty Forum, a group of executives who have achieved leadership in loyalty.

They come together and exchange information and advice on how to create a culture oriented towards customers and employees in their companies.

It is worth mentioning that Rob had an important participation in the first edition of "The Ultimate Question".

To whom is the book indicated?

The work "The Ultimate Question 2.0" is aimed at all leaders of small and large companies who want to apply tactics to delight customers.

Furthermore, it is ideal for those who believe that the intention of companies and organizations is to provide superior values and great relationships to their customers.

Main ideas of the book "The Ultimate Question 2.0"

• Growth promoted by praise from friends and colleagues is the only type of long-term sustainable growth;
• Power is changing sides: from companies to customers and employees;
• Learn to delight customers;
• Knowing how customers feel and what they have to say is essential;
• A company with a leading position in the market without the approval of customers, does not have a long duration;
• Learn to differentiate between good and bad profits;
• "Treat others as you would like to be treated".

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Overview: The Basic Principles of the Net Promoter Score

The Net Promoter Score (NPS) aims to help companies grow through profits obtained from customer satisfaction.

It serves to measure how your company is relating to consumers. The goal of this tool is to treat customers in the best way, so that they become promoters of your company.

The NPS first appeared in a Harvard Business Review article, and ended up becoming a book in 2006. Both the article and the book describe the method based on the answer to a single question:

"On a scale of 0 to 10, how likely are you to recommend us (or recommend the product / service) to a friend or colleague?"

According to authors Fred Reichheld and Rob Markey in the book "The Ultimate Question 2.0", the scale from 0 to 10 is simple and it is able to quickly measure the attitudes and the opinion of the consumers.

A well-rated NPS ensures that customers do business with you again and still recommend the services of your company to others. Happy and satisfied customers comment on their experiences and this is a great help for business growth.

Through this created scale, we were able to classify the types of customers according to the rating given by them, as follows:

• Promoters: customers give 9 or 10 marks. They recommend your company or product to others and behave like a loyal customer. They are called that because they act exactly that way, they promote your company;
• Liabilities: are those that score 7 or 8. Have apathetic behavior towards the company. They hardly make recommendations, and when they do, it is with some observation and does not have the same enthusiasm as the promoters. The goal of every company is to strive to please them and turn them into promoters;
• Detractors: are those who score 6 or lower. Group that was dissatisfied, disappointed. They end up not recommending your company.

The Importance of NPS

The NPS allows the company to know what customers think about and improve their service techniques to increase the number of promoter customers and reduce detractors.

When the NPS goes down it is a sign that something is wrong, and you should look for information about where those detrimental customers came from who do not represent good profits for your company. Once the problem is identified, it should be corrected as soon as possible.

The main idea of NPS is to make sure that positive and loyal relationships are created with the customers of your company.

Good Profits and Bad Profits

Most companies want to be internationally famous, generate profits and retain loyal customers.

The authors Fred Reichheld and Rob Markey reveal in the book, "The Ultimate Question 2.0", that there are good profits and bad profits, and a great part of the companies end up being stuck in the latter.

Bad profits

Bad profits take away the company's growth opportunities and can tarnish its image, leaving the business exposed to competitors.

You may be wondering, how can profit (which is apparently a good thing for the company) be bad?

According to authors Fred Reichheld and Rob Markey, bad profits are those earned at the expense of customer relationships, that is, when a customer feels cheated, ignored or coerced.

Bad profits also do harm when they create detrimental customers. They shake the relationship between the company and other customers. The detractors stop the growth of the business. If there are many detractors, you will have a hard time attracting new customers.

Good profits

Good profits are achieved with the collaboration of consumers, through customers who recommend the company.

Good profits are generated when the company makes customers so happy that they recommend their products and services to others.

The authors, Fred Reichheld and Rob Markey, point out in the book, "The Ultimate Question 2.0", that satisfied customers are seen as part of the company's marketing. They increase their sales and are called promoter customers.

A great example of this is Amazon. The company ends up not investing heavily in advertising, as it prefers to invest in free deliveries, lower prices than competitors and improvements in its services. This produces a high NPS and increasingly satisfied customers, which attract more and more customers.

Overview: The growth of market leaders

The right path for growth is to keep in mind that the customer is the center of the business. This generates his loyalty to your company and causes it to be directed to make more and more customers happy and that generate good profits.

Loyal customers are constantly buying, and that's what companies are looking for. In addition, they make indications, present important feedbacks and are less sensitive to prices.

Some leading companies in their sectors, like Apple and Zappos, have high NPS - exceeding 80 points on a scale that goes up to 100.

The companies considered normal, have an NPS of approximately 20 points. Research shows that the higher a company's NPS, the greater the opportunity for it to become a leader in its industry.

Overview: Generating profits with NPS

To be advantageous, NPS needs to bring about a change in attitude in the company. It must be willing to invest in building loyalty with customers.

Every company wants to improve its relationship with customers. However, better relationships are not free, and require investments.

According to authors Fred Reichheld and Rob Markey, in order to know the value of customers, companies need to separate consumers by type and compare results between detractors, liabilities and promoters.

Promoting customers have a high retention rate, less price sensitivity, recommend new customers and have higher expenses than other types of customers.

The book, "The Ultimate Question 2.0", emphasizes that promoter customers have a lot of value for companies, unlike detractors, who end up destroying business values.

Overview: Measuring what matters

Enterprise Rent-A-Car is a car rental company founded in the United States. After some time in the market, new standards of excellence in service and relationship with customers were defined.

The company has grown to become the largest in the US car rental industry and is focused on creating promising customers to generate more and more profits.

This success is attributed to the implementation of a system that monitored customer satisfaction using NPS. This resulted in a turnover increase from $ 2 billion in 1994 to $ 7 billion in 2004.

This system replaced inefficient research and made it easier for customers to segment and analyze their loyalty.

The authors Fred Reichheld and Rob Markey clarify in the book, "The Ultimate Question 2.0", that several experiments have been carried out over the years, detecting errors and perfecting them.

As a result, negative experiences were reduced from 12% to 5%. In 10 years, the company has tripled its size and watched its satisfaction rates grow through the use of NPS.

Overview: Measuring NPS

Keeping up with growth by building customer loyalty requires quick monitoring, and NPS is the perfect tool for that.

The authors Fred Reichheld and Rob Markey bring in the book, "The Ultimate Question 2.0", some principles to be followed in order to measure loyalty correctly:

• Ask the Ultimate Question and do not address other issues;
• Choose a scale and stick with it. An example is the scale from 0 to 10, which in addition to being intuitive, is the most used around the world;
• Avoid confusion between internal index (bottom to top) and external index (top to bottom or benchmark);
• Search for answers from the right customers;
• Analyze NPS data as often as you analyze financial data;
• Increase the ability to assign responsibilities with more detailed data;
• Conduct periodic audits to ensure data accuracy;
• Validate the relationship between results and behaviors.

Overview: The road to success

The NPS helps the company move towards a strategy with a focus on consumer loyalty, creating more promoter customers and decreasing detractors.

According to some companies that have adopted NPS, there are three keys to success:

1. Assume the improvement of customer loyalty, through the NPS, as a critical mission priority for the management team;
2. Link customer NPS feedback to key processes in all areas of the organization. Do not treat NPS as if it were a separate program, but associate it with the configuration of the company's daily and monthly priorities;
3. To ensure profitable and sustainable growth, the NPS must extend to all levels of the company.

The two pillars of the NPS

The NPS described in the book "The Ultimate Question 2.0" was built on two pillars: an economic one and a motivational one. Both are essential to success and help the company grow.

The economic pillar helps to understand how it is possible to invest in customer loyalty and calculate the return on that investment. For authors Fred Reichheld and Rob Markey, this pillar needs to make it clear to everyone in the company that good profits are better than bad profits.

The motivational pillar helps organizations to influence customers' lives in a positive way. With it, the company manages to improve itself more and more.

Overview: The long road ahead

Having the customer focused on the business and generating good profits ends up bringing some challenges. Therefore, authors Fred Reichheld and Rob Markey advise:

• Face internal and external resistances;
• Establish reliability in the NPS numbers;
• Make sure that customers are not dissatisfied when taking surveys;
• Take advantage of investor interest;
• Develop better economic indicators.

In dealing with these challenges, remember that NPS is primarily focused on the customer-centric company, with the purpose of improving their lives.

What do other authors say about it?

The book "Smart Collaboration", by Heidi K. Gardner, emphasizes the importance of cultivating intelligent collaboration with your employees.

Thus, there is a team formed by great professionals aligned, in order to expand their horizons, innovate, work as a team and win customer loyalty.

The Disney Institute revealed its service secrets in the book "Be Our Guest".

The work portrays that understanding the client consists of applying "guestology" (guest study), and that involves understanding the client's needs and desires, what they think their company is and their emotions.

Finally, in the book by Brazilian businessman Flávio Augusto, "Value Generation", he shows how, instead of working only for capital, it is also important to generate value for customers. By generating value in other people's lives, they will generate value for you.

Okay, but how can I apply this to my life?

• Name the right leaders and prepare them for success. According to the authors Fred Reichheld and Rob Markey, those who adapted better to NPS, obtained the best results;
• Do not lose control of the organization;
• Always have the customer as the center of the business;
• Hire and fire the right people;
• Do not save money with the company's IT department;
• Change the company's culture: ensure that all employees make the customer the center of activities.

Did you like this summary of the book "The Ultimate Question 2.0"?

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