The Ultimate Question
Next up on my pre-conference reading list is Fred Reichheld’s The Ultimate Question. I like Reichheld’s work, and I’m particularly a fan of his earlier book, The Loyalty Effect. He’s done a lot of research showing just how powerful the difference is between a loyal customer and a fickle one. In association terms, we fight hard to boost membership, but sometimes we end up with too many of the “wrong” members who don’t produce long-term value. A truly loyal member gives much more than just the current-year dues payment, so anything we can do to figure out how to attract more loyal members will benefit us.
One thing loyal members do is refer us to their friends, and that is the focus of his current book. According to Reichheld’s research, if you want a metric that is going to predict the growth of your company, you simply have to measure the answer to one question: would you recommend us to a friend? Put this on a ten-point scale and your 8-10s are your strong promoters, in the middle are some “passives,” and then at the bottom are your detractors (and let’s be honest: we all have people/customers/members who, when asked, would actually say a few negative things about their experience with us).
Reichheld suggests that if you subtract the percentage of your members who are detractors from the percentage who are your promoters, you get your “net promoter score” (he’s a consultant, so he converted it to an acronym: NPS). Notice that the passives don’t really play a part in the score. If half of your membership is passive, 30% are active promoters and 20% are active detractors, your NPS is only 10%. USAA Life Insurance company is a “star,” according to Reichheld, at 82%. But don’t feel bad: Southwest Airlines is a “star” at only 51%. Remember, your NPS can easily be negative (like many of the other airlines!). He has some impressive statistics that show correlation between net promoter scores and company growth in a variety of industries.
I’ll post more as I get through more of the book, but I like the notion that dissatisfied members are just as powerful as satisfied ones. More specifically, dissatisfied customers are actually more powerful than neutral ones. We may look at revenue targets and membership numbers, but do we know what parts of our experience are creating “detractors?” I’m very curious to hear how Reichheld applies his work to associations.
Comments
I was underwelmed at this ASAE Annual Convention. The opening reception at the art museum was overcrowded. Peole were forced not to go inside the art museum but in a tent outside that had entertainment and food. Although the entertainment was great, the bar and food lines were too long. For example, I waited about 15 minutes for soy sauce at the sushi bar. For such an important item for sushi, I do not understand why they did not stock a non-perishable item under the table. The art museum itself was very moving; pices there I have only read about in books and never seen; it was truly a pleasure.
The tour of the hisotric breweries that was $98 started late due to persons wanting to meet up with their freinds at another hotel and the bus went to that hotel instead of going to the brewerey. The first brewerey on the tour was not prepared to serve beer. The more they poured, the seemed to blow kegs. whereas the second brewery was prepared with beer in pitchers and kept poring and introduced to beers so attendees knew what they were drinking; the first brewerey did not do an intro to the beers they served. In fact, the service was so bad at the first stop, a couple ot attendees and myself went downstairs and paid for a beer instead of waiting for the free beer to be poured. The gentleman who was hired to give historical backgroud of the breweries was engaging and know alot of history. However, there were some attendees in the group who were so obnoxious, he could not be heard. The last stop on the brew tour, I was able to get hitory fromthe tour guide one and one. The beers were good but they served oysters in a half shell that looked like they had been sitting on the hounter for hours. They should have at least served them on ice. The beer primarily served on the tour were Samuel Adams which is a beer I can get here at home. The sessions were good, the Boston Convention Center was BEAUITFUL! The shuttle service was ok but there were a few times the bus seem to run on its on schedule. After the Pops concert, the bus driver taking those of us staying at the Marriott Copely dropped us off across the street from the hotel as it seemed to be easier for her at the time. I was not impressed with the food at the tradeshow. The traffic was good and were got alot of good leads. However, the additional $98 charge for the brew tour was not worth it and I look to ask for a refund.
I love the city of Boston but if I was a planner, I would not be impressed with how the city showed for the planners.
Posted by: Amy Johnson | August 24, 2006 11:10 AM