Winning on Purpose - NPS Leaders Out Pace Good to Great Companies

In October of 2008, I wrote a blog Even in a difficult economy Customer Service can Make a Difference! My car wash customer was looking to improve his business during the summer, due to skyrocketing gas prices. The solution: measure customer satisfaction. Autopia Car Wash in California was one of the first customers I shared Fred Reichheld’s Ultimate question, Net Promoter Score (NPS).

The Autopia Car Wash story shows how effective NPS can be to improve your business.

Can You Measure Achieving Your Core Purpose?

In Winning on Purpose, Fred Reichheld believes customer satisfaction(NPS) measures fulfilling your Core Purpose. The data he shares provides evidence, organizations who achieve the highest customer satisfaction scores succeed at a higher rate than Jim Collins’ Good to Great Companies.

Reichheld believes the highest purpose of a business is to serve its customers “One common denominator that a lot of us human beings seem to share is the desire to live a life of meaning and purpose—to make this world a better place.”

Martin Luther King Jr. quote: “Everybody can be great, because everybody can serve.”

Reichheld believes meaningful service to others should be the true measure of greatness. It should be your businesses’ ultimate goal.

Because “meaningful service to others” has been difficult to measure, businesses default to easily measured financial metrics for gauging greatness.

A company can’t be great without embracing a great purpose. (Download quotes on the value of purpose)

When profits become purpose, it’s too easy for large and powerful firms to boost their financial performance by shortchanging customers and employees.

Good to Great Companies Performance VS. NPS Leaders

Reichheld shares data from Good to Great measuring performance against companies who lead in NPS performance.

Compare the graphs. Good to Great companies delivered only 40 percent of the median market performance, while The Ultimate Question 2.0 NPS exemplars delivered 510 percent of the median return.

Eight of the eleven Good to Great companies lagged the US median (1/1/2001–12/31/2010)

All eleven NPS leaders beat the US median (1/1/2011–12/31/2020)

Good to Great employed a financial capitalist mindset, defining greatness in terms of financial results.

Reichheld recommends measuring greatness against the standard of a winning purpose.

Collins emphasized leaders concentrate where they have passion (Hedgehog Concept). Net Promoter concludes the primary purpose worthy of passion—and the one that consistently wins—centers on enriching customer lives.

Collins’s famous flywheel won’t keep spinning unless it is powered by loyalty economics, an insight Good to Great may have overlooked.

Customer Capitalism – Net Purpose Score

Reichheld believes firms who practice customer capitalism—putting customer interests first—achieve sustainable greatness.

Firms that make customers feel loved are winning; they outpace and outgrow competitors.

Reichheld notes, when Apple Store founder Ron Johnson designed their successful retail outlets, he was inspired by Jesus’s advice to “Love thy neighbor as thyself,” which Johnson considers to be the essential message of the Bible.

Johnson explained his goal was to “design a store based on love.”

Every Apple Store employee badge proclaims this purpose: “to enrich the lives of employees so they can enrich the lives of customers.”

He designed the operation to emphasize service and education above sales. He invested in real-time customer feedback and avoided commission-driven compensation typical in electronics retailing.

“We treat customers the way they’d like to be treated—with warmth, helpfulness, empathy, and incredible service.”

Apple designed its system to energize frontline employees and help them learn how to innovate to enrich customer lives.

The best way to have happy customers.

Have happy employees.

These are not mutually exclusive!

NPS helps employees consistently enrich the lives they touch. That is the purpose of great organizations. Designed and deployed correctly, NPS can become an organization’s Net Purpose Score to gauge progress toward living your purpose.

Reichheld’s recommendation. Use NPS as a tool not just for measuring customer loyalty; employ NPS as a practical moral compass for your organization.

Rackspace CEO Lanham Napier, “I think of NPS as a GPS [Global Positioning System] for greatness,” he said. “It lets our teams know how often they are achieving great results for our customers.”

One of the most important gifts a leader can provide is to help your team know when they have touched greatness—by providing extraordinary service to others.

NPS can illuminate your best path forward toward greatness—defined as “enriching customer lives.”

Leaders and organizations are great when they help team members lead great lives.

That’s purpose energizes everybody in the organization.

To create an environment where everyone is inspired to give their best, contact Positioning Systems today to schedule a free exploratory meeting.

Growth demands Strategic Discipline.

Building an enduring great organization requires disciplined people, disciplined thought, disciplined action, superior results, producing a distinctive impact in the world.

Discipline sustains momentum, over a long period of time, laying the foundations for lasting endurance.

A winning habit starts with 3 Strategic Disciplines: Priority, Metrics, and Meeting Rhythms.   Forecasting, accountability, individual, and team performance improve dramatically.

Meeting Rhythms achieve a disciplined focus on performance metrics to drive growth.

Let Positioning Systems help your business achieve these outcomes on the Four most Important Decisions your business faces:

Positioning Systems helps mid-sized ($5M - $250M+) business Scale-UP. We align your business to focus on Your One Thing! Contact dwick@positioningsystems.com to Scale Up your business! Take our Four Decisions Needs Assessment to discover how your business measures against other Scaled Up companies. We’ll contact you.

NEXT BLOG – Be Remarkable, Not Merely Satisfactory

Peter Drucker, the father of modern management wrote, “to satisfy the customer is the mission and purpose of every business.” Fred Reichheld disagrees. The purpose of a great business is to enrich customers’ lives. Enriching customers’ lives means delivering experiences so remarkable they feel loved; they tell others about it. You wow customers. Next blog we explore being remarkable.