If you want to really understand customer loyalty, go get The Ultimate Question: Driving Good Profits and True Growth. In this book, Fred Reichheld, customer loyalty expert and director emeritus at Bain & Company, a global business consulting firm, gets to the heart of measuring customer happiness and satisfaction.

It all boils down to one question, The Ultimate Question, which he recommends asking customers of most industries (in certain B2B settings, the question may need to be massaged a bit):

“How likely is it that you would recommend (Company X) to a friend or colleague?”

Bain & Company’s research had proven that conventional customer-satisfaction measures are unreliable. They found that there is little connection between satisfaction rates and actual customer behavior, or between satisfaction rates and a company’s growth. The many complex reasons for this are detailed in the book.

In tests administered to thousands of customers recruited from public lists in six industries, with the goal of determining which customer satisfaction survey questions showed the strongest statistical correlation with repeat customers or referrals, this question ranked first or second—and it makes perfect sense.

If customers are really loyal to a particular provider of goods or services, what’s the most natural thing for them to do? Of course: recommend that company to someone they care about. Does any other question matter? Not so much.

Reichheld notes that two conditions must be met before individuals will make a personal referral:

1. they must believe that the company offers a superior value in terms of quality, price, etc., (engaging their head), and

2. they must believe the company understands them, values them, listens to them, and shares their principles (engaging their heart).

On a one-to-ten scale, people who answer 0 to 6 to the Ultimate Question are considered Detractors, who will give the company negative word of mouth and defect at a high rate. Those who answer with a 7 to 8 are Passives, who have some degree of dissatisfaction with the company and don’t have strong loyalty. Only people who answer 9 to 10 are considered Promoters of the organization, and these best customers will bring a high rate of referrals and are also less price sensitive.

This book is filled with information on the pitfalls of being addicted to bad profits (profits gleaned from Detractors instead of Promoters), case histories of the relationship between a high NPS (Net Promoter Score) and company growth, and suggestions for measuring and improving your own NPS.

The bottom line: Try asking your customers how likely it is that they’d recommend your company to a friend or colleague, and track your own Net Promoter Score. Then commit to raising it. Every organization, of every size, in every industry, can profit from Reichheld’s (surprise!) common sense, research-backed recommendations.

Read more about The Ultimate Question at the author’s website.

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