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The Ultimate Question

By Fred Reichheld

Jane Sunley finds out how asking 'the ultimate question' can benefit the bottom line This book was recommended to me as essential reading for anyone in a service industry who is interested in growing his or her business. I have to admit that I sighed when it arrived, for it looks like yet another 'American business book', of the sort that line the shelves in airport newsagents.

I like this book though, it gives one very simple solution to an age-old problem: how to really measure customer satisfaction. The solution might sound as though it's swathed in jargon but I think it makes good sense and is easy for anyone to do.

Your profit and loss account might look extremely healthy but you can't really tell how sustainable your profits will be. Reichheld's idea is based on the need to work out whether the profits you earn are 'good' or 'bad' profits. Are they generated by customers who love what you do for them and love doing business with you or are they generated by customers who feel stuck with you and would really rather not be (and will get out as soon as they can)? Or are they somewhere in-between?

The book looks at the 'Net Promoter Score' or NPS. It's quite simple though and involves asking all your customers 'The Ultimate Question': 'How likely would you be to recommend us to a friend or colleague?' They reply on a one to ten scale, with one being extremely unlikely and ten being extremely likely. This will give you three categories of customer:

Those who reply with nine or ten: 'Promoters' - loyal enthusiasts who keep doing business with you and encourage others to do likewise.

Those with replies between eight and three: 'Passives', satisfied but unenthusiastic in varying degrees, who could be wooed by your competition

Those who reply with one or two: 'Detractors', unhappy customers who feel trapped in a bad relationship.

By using Reichheld's calculation (a simple one) you can work out your 'NPS'. Amazon and the food wholesaler CostCo, operate at NPS scores of 73% and 79%, for example. Some companies have negative scores ie they create more detractors than they do promoters, not where you'd want to be! There are lots of examples and much more detail on all of this within 'The Ultimate Question'.

Read the book and look at your 'NPS' to track your progress in terms of creating sustainable 'good' profits. A great way to create and improve customer loyalty and track your progress in 2008!

25 January 2008