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The Ultimate Question: Driving Good Profits and True Growth

 

Author: Fred Reichheld

ISBN: 1591397839

 

Why do some companies grow so much more quickly than others? In some cases, a temporary technological breakthrough or monopoly conditions will allow one company to forge ahead of others, only for the breakaway to be swallowed up by the pack when the initial advantage disappears. Yet in other cases, one company can create an advantage which is persistent and sustainable. How can that be explained? Well, of course many thousands of pages have been expended on just this subject but those used by Fred Reichheld, from Bain & Company and author of two well-regarded books on loyalty, are better invested than most. Reichheld argues that it is in customer satisfaction and hence loyalty that the difference lies.

Those companies whose customers stay with them out of choice and desire rather than because they have to will find that their customers will be promoters of that company. Those companies whose customers stay because they have no choice, will find their customers will be detractors. People experiencing good service will tell one or two others, research suggests, while those experiencing bad service will tell an average of 12-14 people. In other words, bad news travels quicker than good news, which is an aphorism which most people will recognise as being intuitively correct. This becomes even more of a problem in the modern age when people routinely communicate via the internet and online services. Consequently, reputations can be destroyed very quickly on the basis of just a small number of negative customer experiences.

Reichheld’s central concept is to calculate the NPS – net promoter score – which subtracts the proportion of customers from those who are promoters. Depending on the industry involved, most companies tend to have low or even negative NPS results, which means that a company with a good score can rapidly expand its customer base and reap the profits accordingly.

This seems a reasonable proposition and the author builds on it by discussing first how the score can be calculated and second how it should be acted upon to make it worthwhile. Reichheld clearly has worthwhile experience of research in the business world and he puts that to good use here. He is an advocate of the simple and often approach, preferably concentrating on just a single question and backing that up with probing to find out where problems exist.

 He also stresses the importance of actually redressing any problems that customers report – indeed, there is a great deal of good sense about the issues surrounding market research and implementing its results in this book. The lessons outlined here will help a large number of firms – it is of course designed primarily for North America where there is so much scope for growth within a domestic market but the lessons are valuable in some ways for other parts of the world as well.

For readers who enjoy books about management and have time to read only three per year, then this would probably be a good choice for one of those slots. Recommended.

The above review was contributed by: John Walsh PhD:  Professor at Shinawatra International University CLICK TO VIEW  John Walsh's Reviews

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