Fred Reichheld is one of the great business thinkers and researchers of recent decades.
I say this because more than 20 years ago Reichheld invented one of the most-widely used tools in business today – the Net Promoter Score.
I use NPS in our work with clients at FiveFour. But even if you don’t know the name, I’m sure you’re familiar with it. Anytime you’ve rated your experience with a company on a scale of zero to 10, you’ve contributed to an NPS score for someone.
Today the system is used by thousands of companies around the world.
Here’s the thing, we’re doing it wrong.
That’s what you take away from reading Reichheld’s latest book, “Winning on Purpose: The Unbeatable Strategy of Loving Customers.”
In it, he explains the origins of the NPS and how most companies that are using it miss the point.
It’s not so much about the number, which ranges from negative 100 to positive 100. But how you use it, how you learn from it and how you apply the lessons to build customer loyalty.
The purpose of a business isn’t to deliver shareholder returns or make money, he argues, but to enrich the lives of customers.
The book is well-written and insightful, full of fascinating stories from Reichheld’s travels to interact with the companies are applying NPS the way it’s meant to be.
He introduces the Earned Growth Rate to measure good profit. And he weaves the role of business into a wider social philosophy of customer capitalism.
It’s not easy and it comes back to something we talk about a lot with our clients. That is, remarkable customer experiences, which breed loyalty and build lifetime value, are the product of a company culture focused on that purpose.
And it starts at the top.
“Great organizations are built on great principles,” Reichheld writes. “But these principles will not effectively govern daily decisions and priorities unless the organization’s leaders clearly understand the natural currents pushing their teams downstream so they can develop practical systems that help make it easy for teams to do the right thing and hard for them to do the wrong thing – systems that will help them swim upstream to make the world better.”
There’s a lot more to talk about in “Winning on Purpose,” so expect to hear from me about it again in the future.
In the meantime, read or listen to the book.
Also, I recommend a couple episodes of the Net Promoter System podcast, on which Reichheld was a guest. Here’s a link to the first one on Spotify, but you can find it anywhere you cast your pods. Look for episodes 192 and 193.
If you want to talk about “Winning on Purpose” and how to effectively integrate NPS into your business, send me an email or book a time to chat.
Talk soon.
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