The ultimate question (in business, that is)
One important measure of a company’s growth prospects is how good their word of mouth is. The theory is that good growth and healthy profits come from creating positive word of mouth flowing from your customers.
Fred Reichheld, in his popular business book “The Ultimate Question” introduces the idea of a Net Promoter Score, or NPS. The NPS for Phanfare, for example, is determined by asking our customers the following question: How likely would you be to recommend Phanfare to your friends and colleagues? I won’t go into how to calculate the score, which is explained well in this piece. Basically, you segment your customers into three buckets: promoters, passives and detractors and subtract the detractors from the promoters.
We just finished surveying our customers to determine our NPS. Our methodology was not perfect, but with 41% of our customers responding, we found our NPS to be 67%. How good is 67%? Well, the average company has an NPS of around 5-10%. Here is the list of all-star NPS companies from Reichheld’s book:
| USAA | 82% |
| HomeBanc | 81% |
| Harley-Davidson | 81% |
| Costco | 79% |
| Amazon.com | 73% |
| Chick-fil-A | 72% |
| eBay | 71% |
| Vanguard | 70% |
| SAS | 66% |
| Phanfare | 67% |
| Apple | 66% |
| Intuit (TurboTax) | 58% |
| Cisco | 57% |
| FedEx | 56% |
| Southwest Airlines | 51% |
| American Express | 50% |
| Commerce Bank | 50% |
| Dell | 50% |
| Adobe | 48% |
Our customers are a happy bunch. We hold up many of these companies internally as truly great companies. Personally, I have great admiration for nearly every company on this list (although I must admit I have never been to Chick-fil-A). We certainly hope to make Phanfare as much of an institution as these companies.While we are happy about the results of this survey, we also know that we are not yet half done with making Phanfare great. Some of our customers are passives! Our customers pointed out many areas where we can improve and we are earnestly working on closing the gap. While we do that, we will continue to follow the golden rule of business, which is to create a company where we would want to be a customer. What does that mean? That means that we staff our 800 number with bright motivated people; that we don’t practice deceptive advertising or promise more than we can deliver; that we are always honest with customers; and that we relentlessly strive to improve the product and improve the value offered to our customers. There are many photo and video sharing services out there, but we do believe we are the very best — and we will get even better.
