We talk with Rob Markey, author of The Ultimate Question 2.0, to talk about the net promoter score, and how companies are using it to collect employee feedback.
Jacob: Hello, everyone. I’m Jacob Shriar, Growth Manager at Officevibe and today I’m with Rob Markey, who’s a Partner at Bain & Company. Rob, thanks so much for being here with me.
Rob: It’s my pleasure, Jacob. It’s really great to be with you.
Jacob: Awesome. Before we dive deep and talk about what you’ve done, I’d just love to get a bit of background on you, if that’s okay. Actually, if you can, maybe you can tell our audience your involvement in the creation of the Net Promoter system. Just maybe give a bit of background on all of that.
Rob: Sure. Well, I’m a Partner at Bain & Company in New York. I joined the firm back in 1990 and really spent the majority of my career working on customer and employee loyalty with a variety of different clients in partnership with Fred Reichheld. Fred is the guy who, he wrote the book on loyalty, “The Loyalty Effect.” He wrote a great book called “Loyalty Rules.” He’s kind of a guru of loyalty and I’ve worked with him for the 24 years or so that I’ve been at Bain.
A few years ago when he wrote “The Ultimate Question,” I helped behind the scenes with big chunks of that book and then when it was time to revisit that and rethink what we had learned since “The Ultimate Question” was first published, I helped write “The Ultimate Question 2.0” and I think came to the conclusion that for the amount of work required to redo that work and incorporate some of things that we at Bain had learned was enough to justify actually putting my name on the cover alongside Fred’s.
Jacob: Nice. Very cool. If you can, if that’s okay, just in case anyone in our audience doesn’t know, I’ve written a few times about the Net Promoter Score. Actually I’ve referenced in Officevibe’s blog the book The Ultimate Question 2.0 and talked about how good it is.
But just very briefly in case anyone doesn’t know, if you can, maybe just break down what the Net Promoter Score actually is.
Rob: Sure. The Net Promoter Score is a way of understanding the advocacy that your customers are showing toward your company. It’s a very simple metric. It is based on a single question and that single question then converts into an index. The question is, “How likely would you be to recommend my product/my service/my company to a friend, a colleague, a relative?” depending on the business. Responses are recorded on a zero to 10 scale where 10 and nine are what we call “promoters”. Zero through six are what we call “detractors”, and sevens and eights are what we call “passives”.
Promoters are people who really do recommend your business. They stay longer, they buy more, they tell their friends. They do that things that create economic value. Detractors do just the opposite and passives are people who are what we call “passively satisfied”. They’re just fine with what you have to offer. They can’t necessarily think of all that much you could do to better serve them but they’re also not willing to put their own reputation on the line on your behalf, and push comes to shove, if the competitors offer something better, they’re going to jump.
The Net promoter Score actually takes the promoters, subtracts off the detractors to get a net score. The only reason we collapsed that into that net score is because empirically what we found was that companies that had a higher Net promoter Score rather than, say, average of likelihood to recommend, like 8.9 versus 7.2, companies that had a higher Net promoter Score grew faster than their competitors with lower Net promoter Scores. So, it’s just an empirical finding that when you did that math, that subtraction, that’s what yielded the strongest correlation to firm wide revenue and profit growth.
Jacob: Very, very interesting. It started out as a customer service tool but I guess some companies later on started to use it as more of an employee engagement type tool. Instead of asking their customers, “Would you recommend our product or service to your friends?” maybe asking their employees, “Would you recommend working here? Would you recommend this job to a friend?” That’s a great way to gauge do your employees really like this place or not or do they have pride in where they work.
Is that correct? And can you maybe talk a bit about some of the companies that are using it and maybe give some examples?
Rob: Well, it’s a really simple acid test. If you really love the place you work, then you’re going to be enthusiastic about it. You’re going to be energetic, creative at work, and you’re also going to want people you care about to experience the same kind of work environment that you’re experiencing. That’s why I think recommendation of place to work is actually a useful way to gauge employee engagement.
The first company that actually started to do that was Apple, and we wrote about this in “The Ultimate Question 2.0” about how we were actually surprised when Apple came to us and said, “We’re doing what we call Net promoter for people and we’re asking our retail store employees how likely they would be to recommend the retail store as a place to work so that we can get more high quality employees in the stores.” It turned out for them it was really useful to have a parallel construct, the same basic construct for customers and for employees that they could use to open up the discussion, the dialogue with their employees about what’s working, what’s not working, what can we do to make this a better work environment, what can we do to facilitate your ability to serve customers best.
Then some other companies, an airline, software company, whole number of other companies started to do the same thing. In fact, we at Bain were doing that internally as well. We sort of came to this conclusion, “Hey, there’s a need that this is filling. So, let’s dig in and understand a little bit better what is it on the employee side that is so impactful about understanding how employees are working with each other and how likely they would be to recommend this as a place to work.”
Jacob: Very, very cool and very interesting. I’d love to kind of dive a little bit deeper into let’s say a company wants to start using the Net promoter system in their company for employee engagement. I want to really breakdown best practices, what they should do and should think about, but I guess more importantly what they should not do. So if it’s cool with you, maybe let’s talk a bit about mistakes that you could easily make when you’re trying to implement this system.
Rob: Well, before we do that, Jacob, it might be useful to just articulate the difference between Net promoter Score and Net promoter system.
Rob: Because I think that — what is it now? 12 years ago, whenever it was, when we introduced the Net promoter Score, it really was focused on that, a score. I don’t think we knew how to articulate back then how that then integrated with a company’s management system to create the right conditions for culture change and for improvement on behalf of customers.
Now, we actually really aggressively differentiate between the score itself and the system that drives improvement in culture. The system requires a reliable score, a reliable metric of advocacy. That’s absolutely true. But it also requires that you systematically close the loop between employees and customers and between customers and the company.
What I mean is when you get feedback from a customer, you need to deliver that feedback directly to the employees who most need to hear it, the ones who had something to do with creating that customer’s experience, who can learn from it, who can take action to improve next time. You also need to go back to those customers and demonstrate that you did something with their feedback so that their time wasn’t wasted and so that they feel like it’s worth engaging with you on a go-forward basis.
There’s nothing more frustrating than to give somebody a lot of feedback and have them basically say, “Thank you very much. Your feedback was important to us.” It’s kind of meaningless, right? But demonstrating that you’re doing something with it, that’s another story.
Then the third thing that is required in the system is that you base everything you do in a strategy designed to grow and improve the business by earning loyalty and not managed to a score.
Those same principles apply not just to customer loyalty but also to employee loyalty. So when we use the Net promoter system with employees, one of the most crucial components of applying it is that this become a part of a regular dialogue between employees and their supervisors about how they can do a better job for customers, how they can work better together and how they can get the kind of support they need in order to have the right kind of working environment.
Net promoter for employees, the employee Net promoter system is not just a measurement. It’s not throwing away all the other stuff that you collect about employees and just boiling it down to a single metric. It’s doing that and using it as a basis for engaging employee teams in this dialogue about what you can do together to improve.
Jacob: Interesting. Sorry.
Rob: No, no. It’s a fundamental engagement of the employees and problem solving, problem identification, prioritization, problem solving that results in improvement, results in energy and enthusiasm and creativity from the employees where a simple metric replacing other metrics you already have is really just another way of measuring.
Jacob: Okay, yeah, that makes sense. I was going to ask you about that later if you would think to get rid of, let’s say, I knew of performance reviews and employee surveys and things like that but I guess you just answered my question then perfectly.
Rob: But let me actually elaborate on that because the annual employee survey is still a very useful and important tool. We wouldn’t say eliminate that. What we’re saying is if you want to engage employees, if you want them to be energetic, enthusiastic, if you want them to take ownership, then you need to put them in a position where they have, on the one hand, the freedom and some people would call it “empowerment”, but the freedom to exercise judgement, the freedom to learn and grow.
You need to put them in an environment where they can take actions independently and get feedback on how well those actions are working. Then you need to put them in an environment where they can be engaged in making improvements. So, employee Net promoter provides one of the mechanisms for that kind of employee energy and enthusiasm, which is it creates the foundation for that dialogue about how we can jointly improve our work environment.
Jacob: Okay, great. Thanks for elaborating on that. Can you maybe talk about some of the common misconceptions that come with the Net promoter system?
Rob: Number one, it’s one question and it’s all about a metric. Just not true. Neither of those are true. First, you never ask just one question. The metric itself, the Net promoter Score is based on a single question, but the system requires that you ask not just likelihood to recommend but also why and what could we do to improve.
In fact, with employees, a lot of times in a lot of environments, you have to not only ask how likely would you be to recommend this as a place to work, but you also have to ask how likely would you be to recommend our products or services to a friend or colleague who was in a position to buy what we have to sell. Because a lot of times you can have a really great place to work, a place that people because there’s a great break room and there’s free food and there’s a ping pong table and foosball and all that stuff. But the policies, the staffing levels, all the other things that are required to make this a good place for customers are missing or poorly developed.
On the other hand, you could have a place that is a horrible work environment where the bosses are mean and nasty and accusatory and where the products are insanely great, to use a particular company’s example. Neither one of those is sufficient. You have to have both a place that is great to work in and where people are proud of what they’re doing for their customers to have a sustainably great work environment.
So point one, it’s not just about one question. Point two, it’s not just about a metric in the sense that it’s really about engaging people and empowering them. So, you need all of the systems and operational mechanisms in place in order to facilitate that kind of engagement. That turns out to be significantly more complicated than just asking a single question on a survey.
The third misconception would be that there’s only one way to do this. The truth is in the time since we first invented this there absolutely are things that we’ve developed as best practices and there are standards for the feedback and for closing the loop between customers and employees and followup and so on that really must be followed if you want to be successful with the Net promoter system.
But one of the reasons that we created this as a sort of open source system is because the innovation and creativity of the companies that are employing it has advanced the state of the art. There are many, many variations on how companies implement their Net promoter system, and it’s through that variation and that variety and creativity that we have learned some of the most important lessons about how to be successful.
Jacob: Can you give a few examples of some of the different variations that companies have done? Any cool examples?
Rob: I think the first one that I mentioned already is when people started to employ the likelihood to recommend framework and Net promoter to the employee side of the equation. Another example is the development of what we now call “the huddle”. At Apple they call it “the daily download”. At the beginning of a shift, at many retailers it’s a shift meeting. At Bain, it turns out internally. We call it “the case team meeting”.
But in any case, it’s these small group meetings where the supervisor and their work team get together and they talk about how are we doing for customers, what are our biggest challenges, what is getting in the way of our success, what are the things that have contributed most to our success that we want to thank each other for, what are we each going to commit to do differently going forward. That huddle turns out to be a crucial mechanism for engagement and for improvement.
Similarly — Go ahead. You were going to ask something.
Jacob: I was just going to ask how often do you do this huddle? Is it everyday, every week?
Rob: That depends on the cadence of the business. In retail environments they tend to do it at the beginning of every shift, although some retailers do it once a week at the beginning of a shift. There are some call centers where they’ll do it once a week. There are some sales teams where they do it once a month. So, it sort of depends on the frequency of interaction, the pace of change in the environment and the flow of feedback that you’re getting from customers and about the performance of the business that enables you to respond, react and learn.
Jacob: Interesting. Let me ask you, where can people who are listening now learn more, besides reading the book “The Ultimate Question 2.0,” where do you go to learn everything you need to know about all this?
Rob: Well, all the latest and the greatest, so including things we’ve learned since we published “The Ultimate Question 2.0”, it can be found at netpromotersystem.com. At netpromotersystem.com you can find videos, you can find white papers and a series that we call the loyalty insight series where they’re sort of boiling down the components of the Net promoter system into two or four-page increments. There’s a podcast, there’s a whole host of resources there, tools for representing your Net Promoter scores using a PowerPoint plug in, all kinds of stuff like that. So that would kind of the first place that I would go if I were looking to learn more.
Jacob: Very cool. Yeah, great. Well, we’ll post a bunch of that stuff when we actually post this video up on our site. I think we’ll end it here but I honestly, Rob, I just want to thank you so much for this chat. I actually learned quite a bit that I didn’t know, especially the distinction between the score and the system itself. Great, great stuff and, yeah, we’ll definitely post a bunch of resources below this video for everyone who’s interested to check it out.
Seriously, Rob, thank you so much again and hopefully we can do this again sometime soon.
Rob: It’s my pleasure, Jacob. Anytime.
Jacob: Great. Take care.
Rob: Thank you.
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