5 Ways to Earn Customer Growth with Fred Reichheld (Creator of the NPS Management System)

“I preach to people to stop linking Net Promoter to bonuses and stop making it into a target, which makes it the objective as opposed to a learning process,” says Fred Reichheld, New York Times best-selling author, customer loyalty guru, and creator of the Net Promoter Score management system. After engaging with numerous C-Suite leaders, and learning that only 10% of companies and their leaders put customers first, Fred has quite a bit to say about how the NPS system has been utilized. 

In his new book, Winning on Purpose, Fred shares strategies to help leaders and companies think differently about measuring customer success, steering away from the way it’s so often used.

“Very few use it correctly, most people misuse and even abuse it. So, part of the reason for the book was to get the Net Promoter movement back on track, and to stop some of these horrible practices, like linking it to the frontline bonuses or reporting a score to your investors with no footnotes, and no process,” says Fred.

We have to look at our purpose for using NPS scores, and in this discussion, Fred and I chat about how we can implement NPS the way it was intended to be used; it needs to connect back to enriching lives. We chat about the hard work that comes with good leadership, and the dedication that’s needed in order to live up to promises, to put customers first, and to serve as a beacon of light.

This is a good conversation you won’t want to miss!

You Need to Earn Growth

Overall, Fred believes that an NPS score is great for learning and for inspiring teams. He says, “When you share the 10s and talk the verbatims, and have the team huddles, it’s brilliant. But when you link it to a bonus, or you make it a target, it’s mediocre.” The best way to grow your business is by treating your customers well so they come back for more and also bring their friends; this is when you measure your net revenue retention rate. 

“So for every new customer that comes in the door, ask them, ‘What’s the primary reason you decided to give us a try?’ If they say referral, a recommendation, that counts as an earned growth, new customer. When you start to measure those referral flows, suddenly it became clear to me that, ‘Oh, my goodness, this has been an invisible process that I’ve been arguing is the most important in business.’ You know, the Net Promoter question, ‘How likely are you to recommend to a friend,’ right? It’s because it’s the best place to focus on.”

Knowing how likely someone is to recommend your business to a friend is the best place to focus on when it comes to NPS results. ––@FredReichheld, #NPS #WinningOnPurpose Share on X

Below, I list 5 tenets for “winning with purpose” that Fred shares in his book:

(1) Lead with Love

According to Fred, when you lead with love, you’re working on the unbeatable purpose that’s connected back to enriching lives. As a leader, your job is to make sure your team understands their role and that they have the resources needed to do their job. You should also care for their health and well-being. Leaders should bring the best version of themselves to work.

(2) Unleash NPS Caliber Feedback Flows

As a leader, do you know how you performed? Do you know how the company performed? Fred understands that it’s hard to speak the truth, but mentions that it’s important for leaders, customers, and employees to speak the truth without fear or favor. Feedback needs to be appropriate, constructive, and in a tone that won’t demotivate the team. He shares that this requires some rigorous thinking, as it needs to link back to the core processes for running the business and making important decisions.

(3) Nurture Relentless Learning

Fred tells us that it’s important to think about how you can learn from your experiences of the day, what went well, what you want to repeat, and what needs to change. Determine how you can inspire that process in yourself and in your teams. You have to continuously learn and improve.

It’s important to think about how you can learn from your experiences of the day, what went well, what you want to repeat, and what needs to change. –– @FredReichheld #NPS #WinningOnPurpose #CX Share on X

(4) Quantify Earned Growth Economics

“Until people understand the flywheel, they’re going to be confused at what’s a smart decision, and what’s a dumb decision,” says Fred. You need to know what keeps the customer coming back and how it drives every element of the accounting economics.

(5) Regularly Redefine the Remarkable

Think about why you go to a store versus having the online experience. “It’s because of the treasure hunt,” says Fred. He goes on to say that you need to think, “How do I ‘wow’ a customer that reminds them how much I love them. And that they have to share this with all their friends because it’s so special.”

What Do You Know Now That You Wish You Knew Then?

Fred says:

I think the biggest thing I wish I understood was the difference between ‘big NPS’ and ‘little NPS’ and how people are confusing the two, and therefore, ‘what arguments and metrics and tools do I need to help people go along that path.’ I guess I wish I knew that only 10% of leaders thought that customers came first. I really presumed it was 70 or 80%. Yeah, so I thought I was working in an incremental improvement mode, when in fact, this is the capitalist manifesto, radical creed that most people will disagree with. So this is a much longer, much tougher challenge I took on than I thought I did.”

About Fred Reichheld

FredReichheld Fred Reichheld is the creator of the Net Promoter system of management, the founder of Bain & Company’s Loyalty practice, and the author of five books, including the New York Times bestseller The Ultimate Question 2.0. He is a frequent speaker at major business forums, and his work on loyalty has been widely covered in The Wall Street Journal, The New York Times, Financial Times, Fortune, Businessweek and The Economist. Fred currently a Fellow and Senior Advisory Partner at Bain, where he has worked since 1977.

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