Let’s say you have an Excel spreadsheet containing all of your survey responses. Each row in your spreadsheet contains a unique response. To make things easy, let’s assume that the answer to the ‘likelihood to recommend’ question is contained in Column A. Your spreadsheet should look a little bit like this example:

Sample Spreadsheet

To calculate your Net Promoter Score, simply paste the following formula into any cell (one caveat: you cannot paste this formula into the same column that contains the answer to your ‘likelihood to recommend’ question or else you will get a circular reference error.)

=ROUNDUP((100*((COUNTIF(A:A,">8")-COUNTIF(A:A,"<7"))/COUNT(A:A))),0)

NPS formula is pasted into cell B&

If the answer to your ‘likelihood to recommend’ question appears in a different column, simply change all instances of A:A the formula above to reference the appropriate column name. So, for example, if the answer to your ‘likelihood to recommend’ question is in Column E, replace all three instances of A:A with E:E as illustrated below:

=ROUNDUP((100*((COUNTIF(E:E,">8")-COUNTIF(E:E,"<7"))/COUNT(E:E))),0)

Net Promoter is a methodology for measuring customer loyalty. It was developed jointly by Fred Reichheld, Bain Consulting and Satmetrix. Net Promoter was first introduced by Reichheld in an HBR article entitled “The One Number You Need to Grow“, and was later the topic of his book “The Ultimate Question“.

At the heart of the methodology is the idea that customer loyalty can best be predicted by the answer to a single question – “How likely are you to recommend (company name) to a friend or colleague?“. Respondents answer on a scale of 0 (not at all likely) to 10 (extremely likely). Based on the response to this question, respondents are categorized as Promoters (9-10), Passives (7-8) or Detractors (0-6). A company’s Net Promoter Score is simply the percentage of Promoters minus the percentage of Detractors.

Net Promoter is unique amongst loyalty measurement systems in several respects:

• Net Promoter calls for a census-approach, advocating sending the survey out to all customers with the ultimate goal being an obscene response rate of >60%. This differs from traditional thinking, which advocates sampling the customer population.
• Net Promoter surveys tend to be very sparse. Reichheld argues that loyalty surveys should consist of just two questions – the “ultimate question”, and a single text response field to capture additional customer comments.
• Proponents of Net Promoter view it as a holistic framework. It is not just a survey – it is a set of business processes that surround the survey. “Closing the loop” with respondents and engaging the entire organization are considered vital components of a successful Net Promoter program.

There is considerable controversy around Net Promoter, much of it based on valid criticism. There is substantial data that indicated that the Ultimate Question may not, in fact, be the ultimate question when it comes to predicting customer loyalty. That said, I’ve found it to be a good-enough metric coupled with an exceptional framework that makes it easy to kickstart a customer-centric revolution within most organizations.

Further Reading

The Ultimate Question by Fred Reichheld

Answering the Ultimate Question by Richard Owen and Laura Brooks, PhD.

Too many companies are addicted to bad profits—profits that come at customers’ expense and drain the value out of customer relationships. Whenever a customer feels misled, mistreated, ignored, or coerced, then profits from that customer are bad. Bad profits come from unfair or misleading pricing. Bad profits arise when companies save money by delivering a lousy customer experience. Bad profits are about extracting value from customers, not creating value.

Bad profits often boost short-term earnings; in the long run, they burn out employees and alienate customers. They also undermine growth by creating legions of detractors—customers who sully the firm’s reputation and switch to competitors at the earliest opportunity. Bad profits choke off a company’s best opportunities for true growth, the kind of growth that is both profitable and sustainable.

When people first hear about Bad Profits, they normally nod their heads in agreement. After all, the excerpt above reads like motherhood and apple pie – of course you don’t want to boost short-term earnings at the expense of long term customer value.

But if everyone so readily agrees that Bad Profits are undesirable, why do they exist? I don’t believe that anyone starts out trying to create Bad Profits. They are often born out of good intentions coupled with misaligned priorities and a lack of accountability to the customer.

I was recently chatting with the owner of a local company that repairs office hardware such as copiers, computers and whatnot. We got to talking about customer loyalty, and he mentioned that his company was currently experiencing an exodus of customers. When I probed further, he told me the tale of how a bad profit was threatening the future of his company.

Up until about a year ago, he had three managers in his company – a Sales Manager, a Customer Service Manager who oversaw the Field Technicians, and an Office Manager. Customer loyalty was high and revenues were respectable. Then the Customer Service Manager left the company.

The Sales Manager was well respected, and since he also had employees in the field, the Field Technicians were moved underneath him. On the surface this was a sensible, well intentioned decision.

But the Sales Manager’s priorities, goals and compensation were still highly stacked towards generating additional revenue. With the absence of the Customer Service Manager to hold him accountable, it did not take long for him to begin viewing the Field Technicians as another arm of his sales force.

And so began the installation of a Bad Profit. Field Technicians were quickly required to sell additional products and services when they went on service calls. The thinking was that since they were already in front of the customers, they might as well try to sell something.

At first this appeared to be a brilliant plan. Additional sales started pouring in from the Field Technicians, and the Sales Manager looked pretty clever for a couple quarters. That is, until clients’ service contracts started expiring. Suddenly contracts that they had held for years were not being renewed. Customers began migrating to other providers because their trust, satisfaction and loyalty had been depleted in the name of bad profits. Unfortunately, the company is now so dependent on this revenue that weaning the business off of the Bad Profits will be a long and painful process that may or may not be successful.

The worst part about Bad Profits is that once your company allows them in, they are very difficult to eliminate. To prevent Bad Profits you must constantly stay on guard against misaligned priorities, question ideas that seem too good to be true, and ensure that someone in your organization has the responsibility (and the authority) to act in the best interests of your customers at all times.

Last year alone I spent over 60 nights in Marriott hotels, enough to earn my gold status for the next two years. I’ve referred countless friends and colleagues to various Marriott locations. I even set up a corporate rate for Volusion, which has resulted in well over 100 additional nights. Most hotel chains would love to have a customer like me – and the truth is that Marriott won my lifetime loyalty for the price of a bottle of water.

You see, I wasn’t always a one-hotel chain guy. I used to be equally loyal to three different chains. One night I was staying at a Courtyard by Marriott that I had stayed at twice before.  I have a regular routine that I follow – shortly after checking in, I will go to the closest store and pick up a couple bottles of water (depending on how long I am staying) to bring back to the room. This trip was no different.

However, when I returned to my room, I discovered that the room I was in did not have a mini-fridge. It wasn’t that big of a deal, and I had all but forgotten about it until I received Marriott’s post-stay customer survey.

I filled out the survey as I normally did – Marriott routinely earns high marks from me. The last question of the survey asked what they could have done to make my stay more enjoyable. I put a short comment about how I was bummed at the lack of mini-fridge because I like to keep some water in the room.

The next day, I received the following email from the General Manager of the property:

Thanks so much for taking the time to complete our survey regarding your recent stay – we appreciate your feedback.  I am glad to see that you enjoyed your stay and I just wanted to respond to your comment about not having a fridge in the room.  We have about 24 rooms that do have refrigerators (I see that you had one on your stay before this one) but if one of those rooms is not available, just ask us for one and we will be happy to put one in your room.  We value all of our guests, especially our rewards members and want to do everything we can to ensure we provide a great room and a high level of service.  I hope the next time you are in town, you will stay with us again and I will ensure you have a fridge in your room.

I was suitably impressed. However, I was really blown away the next time I stayed at that same location. During check-in the desk agent informed me that they had ensured that I had a room with a mini-fridge in it. When I arrived in my room there was a bottle of water already waiting for me with a hand written note from the hotel manager.

One of the most important components of any customer feedback program is the final step – closing the loop. It’s where you let the customer know that you have heard and understood the feedback that they provided. This Marriott GM performed one of the most effective close-the-loop activities I’ve ever seen, and all it took was a simple survey, some basic CRM functionality, and 10 minutes of the manager’s time.

Whenever someone asks about the return on investment for Customer Feedback programs, I always cite this example. The tangible benefit to Marriott has been over 200 nights (around $26,000.00) from me, my company and people I referred. Not too shabby for a $2.00 bottle of water.

I like to follow up with a simple question. “Do you have any formal authority over the way that your company hires, trains, manages and motivates its employees?” The answer is almost always no, with very few exceptions. Few even have a seat at the table when it comes to how the company manages talent.

This seems crazy to me. How can someone expect to influence the culture of their company having neither the influence nor access to impact the actual culture of the company?

It is my strong belief that any executive who is tasked with creating a customer-centric culture must have at least some level of formal authority over the way that the company manages talent.

At Volusion, we believe so strongly in this idea that we’ve actually structured the organization so that the head of Human Resources reports in to the office of the Chief Customer Officer. This has allowed us to move beyond lip service and actually put muscle behind the idea of building a customer centric culture. It has allowed us to establish “deliver WOW experiences” as one of our core values, and to apply that core value to the way we interview candidates, the way that we conduct performance reviews, the way we train employees, and the way we manage our teams.

While it may not be practical for every company to be structured in this way, that’s no excuse for the top customer executive not to have involvement and influence over the company’s HR practices. Otherwise, the goal of creating a customer-centric culture is unlikely to be achieved.

But still, there is one area where Steve has a distinct advantage. His friends and family most likely understand what it is that he does all day. Mine? Not so much.

Ross: What is Chandler Bing’s job?
Rachel: Oh! Oh gosh, it has something to do with numbers.
Monica: And processing!
Rachel: Oh, well… and he carries a briefcase!
Ross: Ten seconds. You need this or you lose the game.
Monica: It’s, um, it has something to do with transponding.
Rachel: Oh, oh, oh, he’s a transpons… transponster!
Monica: That’s not even a word!

Friends, Season 4 Episode 12

Whose fault is it that none of my friends and family know what I do all day? Easy – it’s my fault. When I describe what I do, I try to make it sound impressive instead of making it understandable – and I’m not alone in doing so.

Last year the Chief Customer Officer Council got together and defined the role of CCO as ” An executive that provides the comprehensive and authoritative view of the customer and creates corporate and customer strategy at the highest levels of the company to maximize customer acquisition, retention, and profitability”.

Did your eyes glaze over when reading that definition? I know mine did. I’m certainly not going to respond to the ubiquitous “So, what do you do?” question at a cocktail party with “I provide a comprehensive and authoritative view …” unless I’m trying to bring the conversation to an abrupt and awkward conclusion.

I’ve come to determine that, too often, in the corporate world people describe their jobs with way too much precision and technical jargon for fear that if they oversimplify, the person they are talking with won’t be suitably impressed with just how important their job is. But imagine if my mailman told people that he facilitates the transmission of tangible objects from sender to receiver – would you be impressed, or just confused?

From now on, when someone asks what it is that a CCO does, instead of hemming and hawing about maximizing customer lifetime value and analyzing qualitative feedback, I’m just going to say:

“It’s pretty simple – when a customer loves a company they stay longer, spend more, and tell all of their friends. I make sure we are doing the things it takes to maximize the customers who love us and minimize the customers who dislike us.”

I think Steve would approve.