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CREATING LONG-TERM LOYALTY RELATIONSHIPS | CHAPTER 5 129

MEASUREMENT TECHNIQUES Periodic surveys can track customer satisfaction directly and
ask additional questions to measure repurchase intention and the respondent’s likelihood or
willingness to recommend the company and brand to others. One of the nation’s largest and most
diversified new-home builders, Pulte Homes, wins more awards in J.D. Power’s annual survey than
any other by constantly measuring how well it’s doing with customers and tracking them over a
long period of time. Pulte surveys customers just after they buy their homes and again several years
later to make sure they’re still happy. 28 “Marketing Insight: Net Promoter and Customer
Satisfaction” describes why some companies believe just one well-designed question is all that is
necessary to assess customer satisfaction. 29
Companies need to monitor their competitors’ performance too. They can monitor their
customer loss rate and contact those who have stopped buying or who have switched to another sup-
plier to find out why. Finally, as described in Chapter 3, companies can hire mystery shoppers to
pose as potential buyers and report on strong and weak points experienced in buying the com-
pany’s and competitors’ products. Managers themselves can enter company and competitor sales

companies can score over 50 percent. Some firms with top NPS
scores include USAA (89 percent), Apple (77 percent), Amazon.com
(74 percent), Costco.com (73 percent), and Google (71 percent).
Reichheld is gaining believers. GE, American Express, and
Marketin
Marketing InsightInsight Microsoft among others have all adopted the NPS metric, and GE has
g
tied 20 percent of its managers’ bonuses to its NPS scores. When the
European unit of GE Healthcare scored low, follow-up research
revealed that response times to customers were a major problem. After
it overhauled its call center and put more specialists in the field,
Net Promoter and Customer GE Healthcare’s Net Promoter scores jumped 10 to 15 points.

Satisfaction BearingPoint found clients who gave it high Net Promoter scores
showed the highest revenue growth.
Many companies make measuring customer satisfaction a top priority, Reichheld says he developed NPS in response to overly
but how should they go about doing it? Bain’s Frederick Reichheld sug- complicated—and thus ineffective—customer surveys. So it’s not
gests only one customer question really matters: “How likely is it that surprising that client firms praise its simplicity and strong relation-
you would recommend this product or service to a friend or colleague?” ship to financial performance. When Intuit applied Net Promoter to its
According to Reichheld, a customer’s willingness to recommend results TurboTax product, feedback revealed dissatisfaction with the soft-
from how well the customer is treated by frontline employees, which ware’s rebate procedure. After Intuit dropped the proof-of-purchase
in turn is determined by all the functional areas that contribute to a requirement, sales jumped 6 percent.
customer’s experience. 30 Net Promoter is not without critics. One comprehensive academic
Reichheld was inspired in part by the experiences of Enterprise study of 21 firms and more than 15,000 consumers in Norway failed to
Rent-A-Car. When the company cut its customer satisfaction survey in find any superiority of Net Promoter over other metrics such as the ACSI
1998 from 18 questions to 2—one about the quality of the rental expe- measure, discussed later in this chapter.
rience and the other about the likelihood customers would rent from the
company again—it found those who gave the highest ratings to their Sources: Fred Reichheld, Ultimate Question: For Driving Good Profits and True
Growth (Cambridge, MA: Harvard Business School Press, 2006); Jena McGregor,
rental experience were three times as likely to rent again than those
“Would You Recommend Us?” BusinessWeek, January 30, 2006, pp. 94–95;
who gave the second highest rating. The firm also found that diagnostic Kathryn Kranhold, “Client-Satisfaction Tool Takes Root,” Wall Street Journal, July 10,
information managers collected from dissatisfied customers helped it 2006; Fred Reichheld, “The One Number You Need to Grow,” Harvard Business
Review, December 2003; Timothy L. Keiningham, Bruce Cooil, Tor Wallin
fine-tune its operations.
Andreassen, and Lerzan Aksoy, “A Longitudinal Examination of Net Promoter and
In a typical Net Promoter survey that follows Reichheld’s thinking, Firm Revenue Growth,” Journal of Marketing, 71 (July 2007), pp. 39–51; Neil A.
customers are asked to rate their likelihood to recommend on a 0 to Morgan and Lopo Leotte Rego, “The Value of Different Customer Satisfaction and
Loyalty Metrics in Predicting Business Performance,” Marketing Science, 25, no. 5
10-point scale. Marketers then subtract detractors (those who gave a
(September–October 2006), pp. 426–39; Timothy L. Keiningham, Lerzan Aksoy,
0 to 6) from promoters (those who gave a 9 or 10) to arrive at the Net Bruce Cooil, and Tor W. Andreassen, “Linking Customer Loyalty to Growth,” MIT
Promoter Score (NPS). Customers who rate the brand with a 7 or 8 Sloan Management Review (Summer 2008), pp. 51–57; Timothy L. Keiningham,
Lerzan Aksoy, Bruce Cooil, and Tor W. Andreassen, “Commentary on ‘The Value of
are deemed passively satisfied and are not included. A typical set of
Different Customer Satisfaction and Loyalty Metrics in Predicting Business
NPS scores falls in the 10 percent to 30 percent range, but world-class Performance,’” Marketing Science, 27, no. 3 (May–June 2008), 531–32.