Sears: Creating Promoters. But are they "giving away the store"?

Here is an interesting Promoter story I ran across on Facebook last year. It is real, and the person is truly one of my friends.

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Frugal wows: Bain Fellow Fred Reichheld

Hundreds of companies say they are using Net Promoter Scores. Fred Reichheld, Bain and Company Fellow and author of The Ultimate Question, showed a page full of the logos of companies that have publicly talked about using NPS. "This thing has really taken off," he said. "But I don't think all of them are really using it in the way we intended. I hope you will use NPS in a responsible way, one that makes us all proud. And I hope you will push some of these other companies to do so, too."

Reichheld then introduced the two men who inspired the Net Promoter, the founders of Enterprise Rent-a-Car and Chick-fil-A. The latter, Truett Cathy, inspired Fred by pointing out the biblical proverb that a good name is worth more than gold. He set his company on a mission to make the lives of everyone they touch a little better. The Net Promoter approach, said Reichheld, is about inspiring employees to make customers' lives better.

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Abbott Labs: NPS helps them get closer to customers

Abbott Labs is in the third year of their NPS Journey. Luc Ruysen, Europe Area head of Abbott Labs, shared a few highlights at the London Net Promoter conference today.

In 2007, the leadership team learned about NPS. Later that year, they ran a service NPS pilot. By early 2008, they had become convinced the closed loop feedback approach could help them grow and improve.

The feedback they received was rich and useful. While they believed they were already very close to their B2B laboratory customers and knew most of their issues, the NPS feedback revealed dozens of hidden issues and opportunities. Many of them were rather mundane, some were profound, and a few were truly surprising.

On the mundane front were a number of minor defects. A representative example: Customers found the packing slips frustratingly difficult to remove from the outer package for examination. This is not the sort of issue the lab techs or lab directors were likely to raise with their salespeople. If they did raise it, the salesperson wasn't likely to pass the issue along. If they were inclined to pass it along, it wasn't clear with whom they should raise the issue. It turns out the fix was exceptionally easy. Changing the glue used on the packing slips made them easier to access.

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Private equity investors use NPS to drive growth and investment returns

Bain Partner Christophe De Vusser described how private equity funds are using the Net Promoter approach to maximizing the value of the companies they buy.  He spoke on June 17 at the Net Promoter conference in London. Using examples from various industries, he laid out how private equity investors drive revenue sales and translate that into market value to reap above-market investment returns.

Because there is so much private equity money chasing so few deals, because the debt markets have all but dried up, and because the equity markets are not on an inexorable climb anymore, fund investors absolutely must find profitable ways to grow revenue of the businesses they acquire. De Vusser explained that there are really only two ways to demonstrate to a future buyer of a company that they can bet on its long term profitable growth. Companies can either demonstrate sustained growth in relative market share or lay out a repeatable model for growing the business through new products or new market entry. If they can do one of these two things, the fund can earn a much bigger return on its investment. The NPS approach has helped many private equity fund teams find the path to sustained, profitable organic growth for their portfolio companies.

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Travelport: Surviving industry disruption through employee loyalty

Travelport is a company providing the information infrastructure for travel agencies. Consisting of the combination of Galileo and WorlSpan under a private equity firm's ownership, the company needed to turn around its customer relationships quickly in order to preserve and grow revenue. The travel industry has been undergoing massively disruptive structural change, with airlines selling direct to customers and overall margins in the business under long term threat.

They quickly concluded they needed to understand employee engagement, and knew that the usual top down approach to developing an action plan would not have fast enough impact in the context of the merged company's culture. So they explored NPS as a way to gather high quality verbatim feedback associated with a hard metric.

Their initial experiment, among 1,600 employees in 8 offices yielded an abysmal score, a hierarchy of issues to be addressed and really caught the attention of the company's senior leadership. The CEO (after he calmed down) loved the fact that he now had the opportunity to take action on issues the employees had identified and prioritized. This led to a full company roll out a few months later.

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