Fred Reicheld and Rob brand sincere loyalty. "Sincere Loyalty" From private methods to management technology. From private methods to management methodology

04.12.2019

Each post has its own history. Not so long ago, colleagues from the publishing house "Mann, Ivanov and Ferber" suggested that I write a review of the book " sincere loyalty» Fred Reicheld and Rob Markey. This is how the real stuff came about.

The history of Sincere Loyalty and the famous NPS Net Support Index dates back to 2003, when Fred Reicheld's article "The Only Number You Should Raise" was published in the Harvard Business Review. The author states: “If you are looking for growth, you are unlikely to get much valuable information from comprehensive measures of customer satisfaction or retention.

You just need to know what your customers are telling their friends about you.” The publication was the result of a multi-year study in which thousands of buyers took part. First, with the help of a 20-question “loyalty test”, a survey was conducted of individual customers of companies representing 6 industries. Then, the purchase histories of each respondent were analyzed. In addition, the participants in the study were asked to list all the times they recommended certain companies to their acquaintances.

The experts hoped to identify at least one question that could predict buying behavior which affects sales growth. Only one of the 20 questions showed a reliable statistical correlation with repeat purchases or referrals: “What is the likelihood that you recommend a company<…>your friends or colleagues? The difference between active "promoters" who recommend the company to their friends, and "detractors" who generate negative ratings, is called the "net support index" - NPS.

In 2006, the work of Fred Reicheld, experts at Bain & Company, and NPS committed organizations was summarized in the book The Key Question: How to Deliver Good Profits and True Growth. In 2011, the second, supplemented edition of the book was published, published in Russian under the title “Sincere Loyalty. The key to winning customers for life." This is the prehistory of the publication, which served as a necessary preface to the review.

Customer loyalty: Amazon - 16,000, Google - 42,000,000

Walt Disney: "Do your job so well that people will want to come back and bring their friends.”

Customer loyalty is a hot topic. This was confirmed by recent research by Forrester Research: 93% of marketers participating in the survey named "customer experience" as one of the company's key strategic priorities, and 28% as the most important priority for 2012. 75% of organizations strive to differentiate themselves by improving customer relationships.

“Customer loyalty” is not by chance at the top of the list of priorities. Research data shows that loyal customers are a key asset of the company.

Organizations that prioritize "customer experience" outperform competitors by 60% in terms of profitability (Gartner Group).
Every 5 years, companies lose 45-50% of customers (2/3 due to quality of service), a 5% increase in loyalty leads to an increase in profitability by 25-85% (HBR).
The investment required to acquire a new customer is 5 times the cost to retain an existing customer (Lee Resources).

Despite the high priority of the task of increasing “customer loyalty”, today few organizations have achieved success in solving it:

Currently, only 26% of companies use a detailed strategy to improve the "purchasing experience" (Econsultancy).
80% of organizations rate the level of their own customer service as "excellent". Only 8% of customers share their point of view (Bain & Company).
According to the Customer Experience Survey, only 37% of brands earned a “good” or “excellent” rating from their customers (Forrester).

What prevents you from using the potential of existing customers with maximum effect? Issues of "consumer satisfaction", "shopping experience", "customer loyalty", "customer service" are covered in thousands of publications. In response to the “customer loyalty” query, Amazon.com offers more than 16,000 books, Yandex gives out 6,000,000 pages, Google.com - 42,000,000.

It would seem that the solution is simple: to adopt experience successful companies and leading experts - and follow the advice of Walt Disney. However, with all the richness of the best practices accumulated by the business culture, until recently, “customer loyalty” was based mainly on private methods that do not claim to be a reliable management methodology.

From private methods to management methodology

Fred Reicheld's Net Promoter Score (NPS) approach is simple and easy to use. In terms of its importance for business, the “young” concept of NPS is not inferior to such well-known approaches as the balanced scorecard (BSC), quality management system (TQM), Lean(Lean Production), Six Sigma (Six Sigma).

In the author's words, "Just as a company's equity reflects the difference between financial assets and liabilities, "net support" measures the difference between the "assets and liabilities" that your customers are. With a single question, three categories of customers can be distinguished: loyal, enthusiastic promoters; satisfied passive customers devoid of enthusiasm; and dissatisfied detractors, sowing negative impressions. The Net Support Index (NPS) is calculated simply: P - D = NPS, where P and D are the percentage of promoters and detractors.

NPS has the key characteristics of a management technology:

the concept is based on a universal model that reflects the behavior of different categories of customers and its economic consequences for the company;
methodology is based on the use of a simple, reliable, intuitive metric (“promoters - passive clients— detractors»);
the system associated with the "loyalty economy" allows you to focus on real growth drivers and predict the company's financial success;
an approach that uses feedback to identify and correct "bottlenecks" has not only analytical, but also managerial value;
NPS can be replicated, as evidenced by the results of many companies from a variety of industries who have successfully implemented the system.

The NPS methodology is rapidly gaining the interest of the business community and is being actively adopted by companies. Of course, the introduction of a "net support index" in itself does not guarantee an increase in the customer retention rate and the influx of new customers recruited by loyal promoters. The implementation of the approach requires significant efforts from the management of organizations.

Fred Reicheld warns that NPS-enabled companies “need leaders who bring new values into the organization and realize them through their own actions, decisions and words. Senior leaders must demonstrate their commitment to increasing customer and employee loyalty – and demand the same from others.”

Key Question 2.0: How to be successful withNPS

The literal translation of the title of the bestselling book by Fred Reicheld and Rob Markey is "Key Question 2.0: How do companies using a "clean support" system thrive in a customer-driven world." The title fully reflects the content of the book. The authors offer dozens of testimonials to the success of NPS organizations: Allianz, Apple Retail, Enterprise Rent-A-Car, Logitech, Philips, Progressive, Rackspace, Southwest Airlines, Verizon Wireless, Zappos, and more.

Many of the stories are told in the first person - from the mouths of top managers of well-known NPS companies. Proponents of the "clean support system" make no secret of their own findings and mistakes. Vitality and practicality are the undoubted virtues of the book. However, the book is not a typical description of "success stories of great companies" or a collection of "invaluable recommendations."

The bestseller by Fred Reicheld and Rob Markey is more of a living practical guide or academic tutorial. Simplicity and clarity of approach, clarity and argumentation of presentation, a large number of instructive cases, the extreme openness of the authors allow readers to get answers to the “key question 2.0” and, if desired, independently master the NPS methodology.

Already today Russian companies Adopt NPS - "Net Support System". For executives looking to turn existing customers into evangelistic promoters and outperform competitors through high levels of customer loyalty, Fred Reicheld and Rob Markey's bestselling book, Heartfelt Loyalty, is a solid guide to action.

And a source of inspiration.

Fred Reichheld with Rob Markey

The Ultimate Question 2.0:

How Net Promoter Companies Thrive in a Customer-Driven World

Scientific translation editor Irina Chichmeli

All rights reserved. No part of the electronic version of this book may be reproduced in any form or by any means, including by posting on the Internet or corporate networks, for private and public use without the written permission of the copyright owner.

Legal support of the publishing house is provided by law firm"Vegas Lex"

This book is well complemented by:

Carl Sewell

Igor Mann

Andy Sernowitz

Foreword by the publication partner

Here is a book that can answer many questions about how and why to manage customer loyalty. You will find out why the correct growth of the company is possible only by increasing the loyalty of its customers, think about what kind of people are needed for this growth.

At the same time, this book will make you think about how to involve every employee in the process of creating promoters, how to make loyalty as a strategy a reality at all levels of the organization, how to reward leaders, and what to do with those who do not share the company's aspirations for loyalty leadership. And the more you dive into the world of loyalty, the more questions will arise.

For six years now, we at Life Financial Group have been on the path of creating complete system loyalty management, the elements of which are described in the book. And with each new step, we face new challenges that need to be answered. We have already found some of the answers: for example, NPS has become a key indicator for us, with which we compare all our branches and businesses. We chose the cost/income ratio as the second indicator for comparison, because loyalty that does not bring profit to the company in the long run leads to bankruptcy. At the same time, to emphasize the importance of customer loyalty, we have gone to extreme lengths: branches with below-average NPS in the group are eliminated from the competition, regardless of their cost-to-income ratio. Last year the team was the winner of our championship in in full force went to the carnival in Rio de Janeiro. Therefore, the motivation to win in all departments is very strong.

Another point that caught my attention in this book is the issue of employee loyalty. I fully share the author's opinion that it is impossible to succeed in creating promoters and achieving the correct growth of the company without the right employees - like-minded people who share the values of the company and are ready to make every effort to achieve its goals. But there are not so many "right" people - according to our estimates, about 10% of the country's population. How to find them and attract them to work in the company?

For ourselves, we decided that The best way for this purpose - assessment centers, which we already conduct in 113 cities of Russia. This is how we can already at the selection stage understand whether the candidate who came to us will really be an employee creating promoters. Or, despite excellent professional performance, he is likely to increase the number of detractors, thereby negatively affecting the long-term profit of the company.

I also agree with Mr. Reicheld that it is not about wait for instant wins by starting to build a customer loyalty management system. Of course, there will be “quick wins,” especially if you manage to involve employees who are in direct contact with customers in loyalty management. But tangible results leading to improvement financial indicators, you will receive only when a special culture is created at all levels of the company, built on customer-centric values, and a special organization management system that allows you to identify, implement and scale best practics customer loyalty management. At our company, we call it an integrated operating system, and it allows us not only to track the results of NPS measurement in each department, but also to take real actions aimed at increasing customer and employee loyalty based on this data.

For us, as for the author of this book, “NPS is a business philosophy, a system operating methods and commitment of leaders, not just another way to measure customer satisfaction.”. I salute all those who adopt this philosophy as a strategic direction of development, and wish them patience and success on the difficult, but the only right path - the path of building a business based on loyalty.

Sergei Leontiev,

President of Life Financial Group

To my wife Karen with love and devotion

Foreword

This book tells you how companies can start on the path to growth the right way—growth that happens because customers and employees love what the company does. And they sincerely recommend it to their relatives and friends. This is the only type of growth that can be sustained for a long time. Acquisitions, aggressive pricing strategies, extension product lines, new marketing campaigns and many other tools included in the toolkit of the head of the company can give quick results in short term. If these steps do not result in satisfied customers, growth will be short-lived. The same applies to market share. Dominant position in the market is often provided by companies competitive advantage. However, if this potential is not used to make customers smile, then neither this advantage nor dominance will last long.

At present, this concept takes on a special meaning against the backdrop of the "quiet revolution" that is sweeping the business world. This revolution, like many others that are shaking the modern world order, draws strength and acceleration from the development of social media tools. Customers and employees post on blogs and Twitter and share their experiences in real time. This information flow surpasses in its volumes the carefully prepared advertising and PR departments. Power is shifting from the hands of corporations to those who buy their products or services and those who work for them.

To emerge victorious from this revolution, business leaders need to find ways to motivate their employees to keep their customers satisfied. Most leaders want to keep customers happy the question is how to understand exactly how customers feel, and how to determine a responsibility for their impressions. Traditional satisfaction surveys are not suitable for this. They contain too many questions, they encourage analysis, not action. Financial statements are also not good. As we shall see, standard accounting fails to distinguish between “good returns”—that is, they enable growth—from “bad” returns that hinder growth.

Scientific editor of the translation Irina Chichmeli

No part of this book may be reproduced in any form without the written permission of the copyright holders.

* * *

To my wife Karen with love and devotion

Foreword

This book tells you how companies can start on the path to growth the right way—growth that happens because customers and employees love what the company does. And they sincerely recommend it to their relatives and friends. This is the only type of growth that can be sustained for a long time. Acquisitions, aggressive pricing strategies, product line expansions, new marketing campaigns, and many other tools in a CEO's toolkit can produce quick results in the short term. If these steps do not result in satisfied customers, growth will be short-lived. The same applies to market share. A dominant market position often provides a company with a competitive advantage. However, if this potential is not used to make customers smile, then neither this advantage nor dominance will last long.

The book offers absolutely new approach. It consists in the fact that companies ask only one - the main - question constantly, systematically and on time.

Based on the answers to it, a company can divide its customers into those who love it, those who hate it, and those who are indifferent. She can use a simple and easy to understand metric, the Net Promoter Score®, which shows how well she has excelled in customer relationship building. This index can be tracked on a weekly basis, just as each company tracks its financial results.

After that, the company can start the real work: “closing the loop” with customers, listening to them, fixing problems that create dissatisfaction or negativity, and, on the contrary, create interactions that lead to greater satisfaction. It can involve every employee in finding ways to implement true customer centricity. 1
Customer-centricity is a higher level of company development compared to customer-centricity. Note. ed.

in his daily work. Just as today's managers use financial statements to make sure they and their teams are meeting their profit targets, they can use the net support index to make sure they're meeting customer relationship goals. This system helps companies win the "silent revolution".

The companies that pioneered the use of this system have already learned this lesson and a few steps outperform their competitors. These companies range from small private enterprises to Silicon Valley superstars to global giants like General Electric. ("It best score customer relationship that I have ever seen. I don’t understand why each of you doesn’t want to try it!” exclaimed the CEO 2
Hereinafter the head of the company. Note. ed.

General Electric Jeff Immelt at a meeting of top managers). Differing from each other in many ways, these companies have one important quality that unites them: they take seriously the "golden rule", which says: "Treat others the way you want to be treated." These companies want their customers to be so satisfied with the way they are treated that they would love to come back and bring their friends and colleagues. In addition, while the examples presented in this book are drawn from the business world, organizations of all kinds—schools, hospitals, charities, and even state institutions can put these ideas into practice. At non-profit organizations there are also clients or constituents, they also need to satisfy the people they serve, and they too can greatly benefit from a management system based on timely and regular receipt of feedback from their clients.

We hope that together we can create a community of people who believe that every company and organization sincerely wants to improve the lives of those they interact with and build relationships based on loyalty, and believe that in order for a company to have the opportunity for long-term prosperity and greatness it needs to measure its performance in this area as carefully as it measures its profits.

Introduction

From Assessment to System

It always seemed to me that success in business and in life should depend on the impact on the people with whom fate brings you together - on whether you improve their lives or worsen them. Financial accounting, for all its importance, completely ignores this fundamental idea. So a few years ago, I created a way to measure how well an organization treats the people it influences—that is, how well it creates relationships worthy of loyalty. I called this the Net Promoter® Index, or NPS. 3
This trademarked term is owned by Satmetrix Systems, Bain & Company and Fred Reicheld. By issuing this status, we had two goals: to promote universal and uniform use of the word "NPS" and to protect the term from misappropriation of rights to it.

Thousands of innovative companies including Apple, Allianz, American Express, Zappos, Intuit, Philips, GE, eBay, Rackspace, Facebook, LEGO, Southwest Airlines and JetBlue Airways have adopted NPS. Most of them first used it to track the loyalty, engagement, and enthusiasm of their customers. They liked that NPS was easy to understand. They also liked it because it helped everyone focus on the same goal of treating customers so that they would become loyal promoters, and leading to the actions needed to achieve that goal. They also liked the versatility of this tool, the ability to adapt it to the needs of a particular company. Over time, companies have refined and expanded this indicator. They began to use it to create employee engagement and loyalty. They discovered new ways to extend the impact of this indicator not only to the measurement of loyalty, but also to change in the organization. Companies shared ideas with each other and refined the mechanisms for applying NPS, taking into account the characteristics of their work, based on each other's experience. In the face of an extraordinary creative intellectual explosion, NPS quickly transformed into something more than just a metric. Despite the fact that this branch of knowledge is still young, it has become a management system, a way of doing business. And the abbreviation NPS itself began to mean system(from the English system), and not just an index (from the English score).

Now let's see what results this system has brought. Here's what company leaders say about it:

NPS stimulated our thinking and allowed the organization to focus on the customer. In the 1970s and 1980s, TQM revolutionized the cost of quality assurance in manufacturing. NPS is of comparable importance nowadays.

Gerard Kleisterli, CEO of Philips

The NPS system was perfect for Apple. It is firmly rooted in the DNA of our retail stores.

Ron Johnson, Senior Vice President and Founder of Apple Retail

NPS has completely changed our world. It has become an integral part of our workflow and culture. Now this system can no longer be removed from them, even if such an attempt is made.

Junien Labrousse, Executive Vice President and Chief Product and Technology Strategist, Logitech

NPS is a litmus test that allows us to understand how our lives correspond to our core values. This is the first app I look at when I boot up my computer every morning.

Walt Bettinger, CEO of Charles Schwab

NPS is the most powerful tool we have ever implemented. And the reason is that it encourages action.

Dan Henson, former director of marketing at General Electric

We use NPS every day to make sure we exceed the expectations of our customers and employees.

Tony Shay, CEO Zappos, author of Delivering Happiness4
Shay T. Delivering Happiness. Moscow: Mann, Ivanov i Ferber, 2010.

What is this book about
According to Fred Reicheld, success in business and in life depends on whether the company makes people's lives better or worse. Acquisitions, aggressive pricing strategies, product line expansions, cross-selling strategies, new marketing campaigns, and many other tools in an executive's toolkit can produce quick results in the short term. If at the same time satisfied customers do not appear, then the company's growth will be short-lived.

Who is this book for?
This book is for anyone who influences their shareholders, investors or clients in one way or another.

Why we decided to publish this book
The theme of loyalty is close and familiar to us.

Our first book was Customers for Life. In the same book, business loyalty guru Fred Reicheld recommends a methodology that is based on examining a key question vital to the future of any company: "Will they recommend it to their friends?" By asking this question to your customers, you can determine which of them contribute to the growth of the number of your customers, and whose loyalty is short-lived and who will gladly defect to your competitors.

Book chip
A company can divide its customers into those who love it, those who hate it, and those who don't care about it. To do this, she should use a simple and understandable indicator - the Net Promoter Score, which shows how she has succeeded in building relationships with clients. This index can be tracked on a weekly basis, in much the same way that every company already tracks its financial results.
Today, this indicator is used in such famous companies like Apple, Allianz, American Express, Zappos, Intuit, Philips, GE, eBay, Rackshare, Facebook, LEGO, Southwest Airlines and JetBlue Airways.

From the author
"If you really care about the company's impact on the lives of your customers, you won't even be tempted to focus on just a metric. You'll start using the metric as a push, as an incentive, as a reminder that your organization can get better. You'll start hiring people who as the head of the department put it retail sales Apple Ron Johnson, "think about the feelings of the client, not just about his pocket." Creating more promoters and reducing the number of detractors will require redirecting strategic investments and changing processes. This will be done not to increase profits (although it will increase), but because it is right. Will the company then begin to expand the use of NPS to evaluate the behavior and attitudes of other stakeholders? employees, major investors, suppliers and other business partners - and providing insight into how you can win their loyalty. Organizations affect the lives of many people, and you need to know what your company's impact is, wherever and however it affects them.
The ideas behind the NPS system are so simple and intuitive that top managers may decide that it will be just as easy to implement. Those companies that have adopted NPS have learned that it takes a lot of time and effort to create reliable and valid metrics to interpret data and create "closing the loop" processes that actually drive change. NPS affects all processes of an organization including finance, operations, marketing, product design, human resources and Information Technology. It permeates all levels of the organization: from the CEO, the board of directors, to the front-line employees. NPS challenges established ways of working, priorities, and decision-making processes. Although simple, it requires active support from top management. Without this support, companies are likely to lose their passion, experience confusion, reluctance to adopt new ways of working, and a host of other pitfalls. Support and perseverance from the company's management team is essential."

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What is this book about

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Who is this book for?
This book is for anyone who influences their shareholders, investors or clients in one way or another.

Why we decided to publish this book
The theme of loyalty is close and familiar to us.

Book chip
A company can divide its customers into those who love it, those who hate it, and those who don't care about it. To do this, she should use a simple and understandable indicator - the Net Promoter Score, which shows how she has succeeded in building relationships with clients. This index can be tracked on a weekly basis, in much the same way that every company already tracks its financial results.
Today, this metric is used by well-known companies such as Apple, Allianz, American Express, Zappos, Intuit, Philips, GE, eBay, Rackshare, Facebook, LEGO, Southwest Airlines, and JetBlue Airways.

From the author
"If you really care about the company's impact on the lives of your customers, you won't even be tempted to focus on just a metric. You'll start using the metric as a push, as an incentive, as a reminder that your organization can get better. You'll start hiring people who , as Apple's head of retail sales Ron Johnson puts it, "think about the customer's feelings, not just their pocket." To create more promoters and reduce the number of detractors, you will have to redirect strategic investments and change processes. This will not be done to increase profits ( although it will increase), but because it is the right thing to do.The company will then begin to expand the use of the NPS, assessing the behavior and attitudes of other stakeholders - employees, key investors, suppliers and other business partners - with it, and providing an understanding of how to win them over. Loyalty - Organizations affect the lives of many people and you need to know what your company's impact is, wherever and how it affects them.
The ideas behind the NPS system are so simple and intuitive that top managers may decide that it will be just as easy to implement. Those companies that have adopted NPS have learned that it takes a lot of time and effort to create reliable and valid metrics to interpret data and create "closing the loop" processes that actually drive change. NPS affects all processes in an organization, including finance, operations, marketing, product design, human resources, and information technology. It permeates all levels of the organization: from the CEO, the board of directors, to the front-line employees. NPS challenges established ways of working, priorities, and decision-making processes. Although simple, it requires active support from top management. Without this support, companies are likely to lose their passion, experience confusion, reluctance to adopt new ways of working, and a host of other pitfalls. Support and perseverance from the company's management team is essential."
2nd edition.

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