Purpose in the Digital World

Winning on purpose works beautifully in Caliber’s gritty business of collision repair, even though that might not be the first industry in which you’d expect to find an example of virtuous employees providing loving care for their customers. (Think of the body shops in your own past!) So, could this same approach also work in a twenty-first-century digital business populated mainly by software engineers, coders, and systems designers, most of whom rarely interact directly with customers? The answer is “yes,” and this became clear to me as I observed the successful evolution of one of the software industry’s most admired companies.

Scott Cook and I joined Bain around the same time in the late 1970s. I stayed to consult and write books; he departed to found the financial software giant Intuit, which he built into an impressive loyalty leader with a market cap over $100 billion. Intuit’s resilience is most impressive when you consider how few software companies managed to transition successfully from the era of shrink-wrapped boxes sold by mail order or through computer stores to the digital download era and all the way to cloud-based apps. I remember chatting with Scott at Intuit’s headquarters in Mountain View, California—more or less the heart of Silicon Valley—shortly after I conceived of Net Promoter. He was so excited that he insisted we walk across the parking lot (in the middle of a rainstorm) to go tell his CEO about my new concept.

I’m not sure if the Net Promoter System would have ever taken off the way it did had it not been for Scott’s early enthusiasm and his commitment to finding innovative ways to integrate the system into the core processes that made Intuit great for its customers. Intuit was a pioneer in using Net Promoter to guide annual budgeting and capital allocation processes. In addition, Intuit was the first company I know of to regularly report to investors its NPS for each business line, benchmarked to key competitors. Scott bravely shared his goal: that every business line would lead its competitors’ NPS by at least ten points. In the NPS universe, that’s a lot of points.

I think Scott became one of Net Promoter’s earliest adopters because he saw the possibility that it could help him manage an essential element of his company’s purpose: to solve customer problems and make them happy. I’ll always remember the way Scott described the primary purpose of his organization, a quote that I’ve already foreshadowed in the introduction: “We don’t deserve any profit until we have made our customers happy.” Back when Intuit was still young, he believed that Net Promoter could help the company live up to that credo. He remains convinced of that in today’s digital world, as Intuit continues to play a leading role both in its industry and in the Net Promoter community.

The Intuit credo constitutes a remarkable departure from the traditional capitalist notion of caveat emptor—buyer beware—that ranks profits for investors far ahead of customer interests. Of course, profits sufficient to attract investors are necessary to make a business sustainable, but profits measure value extracted, so to customers and employees they are inherently selfish and uninspiring, which in turn creates other problems. For example, old-fashioned capitalism puts a company’s employees in a precarious position. They are supposed to care more about profits than treating customers and colleagues right. They are supposed to endorse the idea that caring for customers can take a back seat to feeding the (insatiable) appetite of investors. And by and large, they know that this makes no sense especially in the long term.

What’s the alternative? A new cynosure: enriching customer lives through products, services, and experiences so remarkable they afford employees lives of meaning and purpose. When leaders decide that their primary purpose is to put employees in a position to enrich the lives of customers, they are aligning the ambitions of their companies with those of their teams. When Scott says, “We deserve profits only after customers are happy,” he is pointing toward a new North Star—a new way of setting a course. Especially for public companies that historically have navigated mainly toward profits, it’s a radical shift indeed.

This is not an easy or obvious transition, and it won’t happen without relentless determination at the top. Leaders who decide to make this leap must come to grips with a plethora of tools and practices that are based on (and reinforce) the old profits-above-all paradigm. This paradigm continuously infects and reinfects firms, even those led by determined people such as Scott Cook. Why? There are lots of reasons. The old recidivist mindset spreads virally through business schools that are looking backward, journalists who aren’t doing their homework, and transferring employees whose only work experience has been in firms that operated on traditional profit-centered principles. New hires (and new board members) join the Intuits of the world and unconsciously spread practices and processes that stifle customer-centered leadership. The drumbeat of financial reporting—and accountabilities tied to financials—can easily drown out the call to do the right thing for customers and colleagues.

In other words, living the right life is an ongoing challenge. But as we’ll see in the following two stories—from the opposite ends of the NPS spectrum—it’s an investment that’s well worth making.

NPS, the Wrong Way

Let’s start with the disheartening story. On the first stop of a recent car-shopping trip, I was impressed with the dealership’s fancy new showroom: a glass palace replete with snack bar and leather sofas. I knew going in that this particular auto manufacturer and its dealerships boasted about their embrace of Net Promoter. Toward that end, they had implemented software company Medallia’s state-of-the-art customer feedback technology platform, which is used by Apple and other leading Net Promoter practitioners. This system provides relevant customer feedback scores and comments directly to each employee’s smartphone to enable real-time learning and improvement. So, at my auto dealership the table seemed to be set for a satisfying customer experience.

Wrong. In fact, my car-shopping adventure at this dealership was maddeningly old school, more reminiscent of a root canal than a delight-filled, life-enriching experience. At his first opportunity, the salesperson—let’s call him Joe—disparaged the website I had used to research a fair price for the new car. Then he made an offer for my trade-in that was far below that website’s estimate of its true value. I stayed relatively cool and told him that on both ends of the deal—trade-in and purchase price—I was only looking for a median deal. (In my younger days I would have insisted on something in the best quartile, but I guess age has mellowed me.) Even so, we spent the next hour dickering back and forth. The negotiation tactics were dishonest and manipulative, aimed at tricking me into paying the highest possible price (“just one moment while I confer with my manager”) while reimbursing me as little as possible for my trade-in (“gee, now that we see it again in the daylight, we realize that it’s in pretty good condition, after all”).

It was an irritating, time-wasting process that ate away at both my patience and his dignity. Despite it all we finally agreed on a deal, and the next thing Joe said nearly took my breath away. “Of course, Mr. Reichheld,” he began, putting on his most earnest face, “you know that you will be receiving a survey about your experience today. And at our dealership, only a score of 10 out of 10 is a passing grade.” I must have been spotted rolling my eyes, because a few minutes later the clerk at the cashier’s window who had overheard the conversation reinforced the point. “I hope you realize how seriously management takes this survey,” she said. “Joe really will get in a lot of trouble if he gets a score less than 10.”

Within a few days I received a survey not from the manufacturer, as I was expecting, but instead from the dealer. It turns out that many dealers try to get out in front of the manufacturer’s survey with a preliminary “practice” survey of their own to ensure that their customers will give them all 10s when the subsequent “real” survey arrives. Despite my irritation with the whole process, I really didn’t want to get Joe in trouble by slapping him with low scores—after all, most of the problems I encountered were the result of the systems and incentives created by management and thus beyond his control—so I simply ignored the dealership survey. But, of course, that wasn’t the end of the story. Next I received a barrage of messages by phone and text imploring me to fill out the survey and to get back to them right away if I felt I couldn’t give them a 10 on every question.

Well, I value my time, so I ignored those messages, which were nothing more than a silly exercise in gaming the system. They obviously didn’t care the slightest little bit about getting honest feedback and learning how to improve how they did business. They just wanted to be sure that if I did bother to respond to the real survey, from the manufacturer, I would score them a 10. And sure enough, next came that real survey, which I also chose to ignore. I was fatigued by the whole experience—especially the survey antics—and had no energy to keep playing this game.

After the fact, I found myself wishing I had the opportunity to ask Joe how he feels when he gets a 10 from a customer. Is it in some way gratifying, or is he simply relieved? Failing that, I did the next best thing: I asked the dealer group senior executive who at the time was responsible for that location what Joe would have said if he had the courage to be completely honest. In response, the senior executive first explained that, as I suspected, the dealers are simply marching to the drumbeat of the manufacturers, who have little faith in tools such as closed-loop follow-up, root-cause diagnosis, or test-and-learn systems, which are the kinds of tools that make Net Promoter possible. He confided that most dealership managers watch scores but don’t even bother reading customer comments. What the manufacturers do care about is winning a J.D. Power Award, mainly for its perceived advertising value. So, they built a system to punish dealers if they receive low scores that would disqualify the brand for an award.

Then the senior executive answered my question more directly. “Fred,” he said, “that salesperson certainly wouldn’t have said anything about feeling good about his life. Most likely he’d have said something like ‘Thank goodness I dodged another bullet, and I get to keep my job another day.’ ”

So, the answer is no. Receiving a 10 at that dealership doesn’t generate positive energy among employees; it mostly alleviates fear. Management posts the scores for each salesperson on the wall of the team meeting room. During weekly reviews, anyone receiving a low score feels the heat. Any salesperson with two or more low scores in a week is at risk of being fired. And yes, most scores are 10s, but it’s a system rigged with begging for forgiveness, pleading and browbeating, and occasional bribes of free car mats or oil changes—and nobody’s fooled by it.

In other words, Net Promoter surveys, even when delivered with a state-of-the-art technology platform, can’t magically transform the low-grade hell on earth that so many of us experience on visits to our local Auto Mile. That requires a change of heart from leadership and a new way of thinking about what Net Promoter is really trying to measure and why.

NPS, the Right Way

Now let’s turn to the second and more inspiring story. It focuses on Apple Retail, which now operates more than five hundred stores worldwide and was an early adopter of the Net Promoter System. I have done a number of favors for Apple over the years, including appearing onstage at a couple of its worldwide store management meetings. In return, Apple invited me to visit its flagship store on Boston’s Boylston Street for a morning of filming and interviews. This was highly unusual: the Apple retail stores, like the larger company, operate under a pretty thorough veil of secrecy. So, I was very pleased to get a rare behind-the-scenes opportunity to observe Apple teams putting Net Promoter into action.

I arrived an hour before the scheduled 10:00 a.m. opening time. The team began its day with a stand-up huddle, dubbed the “daily download.” This turned out to be a high-energy affair, focused almost entirely on issues relevant to enriching the lives of customers and employees, which is the explicitly stated core mission of Apple Retail. The team leader didn’t talk about sales targets or what the store had to do to “make its numbers.” Instead, he reviewed the Net Promoter feedback received from the prior day’s customers. Team members shared ideas for solving a range of customer problems, and the leader summarized some ideas that might delight even more customers that day. He reminded the team of some retail basics—looking customers in the eye, shaking hands when appropriate, and so on. Finally, there were several minutes of formal recognition for team members who had received “Promoter” comments from yesterday’s delighted customers. Since this was a stand-up meeting, the ovations were standing ovations.

This may strike the reader as a bit corny or formulaic or forced. But to my eye, in real time it was none of those things. It seemed to me that the team members who received shout-outs were energized and inspired by that recognition. And it’s only a short step to infer that those employees were inspired by their mission as well: enriching lives.

After the huddle, team members dispersed to their various assignments. I made my way down to the basement team room to interview the associate with the highest Net Promoter Score in the Boston store, which at the time was earning some of the very highest Net Promoter Scores among Apple’s flagship stores.

This young woman—let’s call her Alice—soon struck me as the distillation of the best aspects of the millennial generation. For example, she seemed far more interested in mission than in the size of her paycheck and more focused on purpose than on how quickly she would get promoted. Her role at that time was an “Apple Creative”—that is, a teacher who helped customers learn how to get the most out of their Apple products. She began by describing her upbringing, emphasizing the impact that her education at a Quaker school in Cambridge had on her. There, she said, she came to understand that the Golden Rule—treat others the way you would like to be treated—is the best foundation for a healthy community and a good life. I asked her for an example of how she put that rule to work. She thought for a moment and then responded. “I struggled with ADHD in school,” she said, “and I had trouble concentrating in boring classes. That experience made me focus on finding ways to make learning exciting and fun for all my students.”

By “students,” Alice meant her customers. She said that she listened carefully to her customers’ comments and feedback to be sure she was able to put herself in their shoes. Early on she realized that many of her customers found technology intimidating, so she discovered ways to make those customers feel safe and comfortable. She made a point of telling them that there is no such thing as a stupid question. When they occasionally asked her about something she didn’t know, her response was usually along the lines of “Well, that’s a great question. Let’s go find out together.” Then she and her customer would walk over to consult with another employee in the store who had deeper expertise in that particular subject.

Alice told me that she got most of her job satisfaction from seeing the positive impact she had on her customers’ lives. She explained that one major advantage of Apple’s Net Promoter System was that it tracked how well she was doing, each day, at enriching customer lives. Net Promoter enabled her to gauge how consistently she was living up to the Golden Rule that she had embraced years earlier as a life standard. She wasn’t apprehensive about getting this kind of visible, rolling “report card”; in fact, she welcomed it. She was proud when Promoter comments scrolled across video monitors in the break room, thereby making her positive impact visible to all team members across the store. (By that point the Boylston Street store had more than five hundred employees, few of whom would get to see firsthand the smiles on her customers’ faces.) And Alice knew that her store leaders studied these scores—as did her market manager, as did Apple execs in faraway Cupertino.

I asked Alice how it made her feel when she got a 10 from a customer. She pondered and then she said something I’ll never forget: “It makes me feel like I’m living the right life.”

My initial reaction was one you might expect from someone who was forty-plus years older than Alice: a mix of skepticism, empathy, and maybe even a little frustration (“Ah, Alice; you’ll learn soon enough that the world doesn’t always reward that kind of idealism!”). But then I realized that although I might have used different words, I felt exactly the same way. When the question is asked honestly and if in response to that question someone decides to give you a 10—in other words, an unqualified recommendation that they would want their loved ones to have a similar experience—this is incontrovertible evidence that you have brightened their existence. I’ll go further. It’s not too much to say that in earning your 10, you have found and embodied a little greatness—in the sense that Martin Luther King Jr. intended when he observed that everybody can be great because everybody can serve.

Living the Right Life: The Net Purpose Score

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. With a bit of reflection and even without the benefit of a mind-focusing cancer diagnosis, most of us come to realize that the surest path toward this goal is enriching the lives of the people we touch. The trouble is that this goal seems so elusive—so amorphous, rarely urgent, and generally impossible to measure—unless, that is, you work at a company where the Net Promoter System rigorously tallies each day the portion of lives each employee enriches (Promoters) and subtracts the portion of lives diminished (Detractors).

When I walk into an Apple store, I can feel the positive energy and vibe from that community of employees. They are not simply trying to sell me another iPhone, although they’re very good at that (Apple has far greater sales per retail square foot than anybody else).² They are also striving to brighten the day of another customer—and by so doing live the right life.

To some extent, the argument that customer and employee happiness are inextricably intertwined and are linked to organizational success seems self-evident. How could they not be mutually reinforcing? And yet, too many companies fail to connect the dots or connect them badly. In my view, the typical Apple store (along with its customers and employees) is getting far more benefit from its Net Promoter System than the typical car dealership. This was not by accident but instead was by design. Apple designed its system to energize frontline employees and help them learn how to innovate to enrich customer lives. (Alice received daily digital feedback from customers’ smartphones, not just scores but also comments and suggestions that helped her track and manage her progress.) By contrast, most car companies design their systems not to help frontline dealer salespeople learn how to enrich customer lives but instead to help their corporate team control their sometimes unruly dealers.

Regrettably, the Net Promoter System at most companies resembles that of my local car dealership rather than Apple’s. The leaders of those companies have missed a golden opportunity. But there’s no reason why they can’t get it right. In the chapters ahead, I will review the best practices that consistently inspire teams to delight customers. Many of the choices involved in designing an effective Net Promoter System hinge on the answers to seemingly small questions. For example, should employees ever mention impending surveys and desired scores to customers? Should individual employee results be shared with peers? Should individual employee score results drive recognition, compensation, or promotion? Who should be responsible for closing the loop with unhappy customers? Can we replace bothersome surveys with customer behavior data that signals their status as Promoter, Passive, or Detractor? Should there be a target score or benchmarks for score improvement? Who should have ultimate accountability for customer scores?

The choices made in response to these seemingly small choices accumulate into enormous differences in results. But the most important decision of all is this: What is the primary mission toward which leaders are navigating with NPS? NPS helps employees consistently enrich the lives they touch—in other words, lead the right life. That is the purpose of great organizations. Designed and deployed correctly, NPS can become an organization’s Net Purpose Score and gauge progress toward living that purpose.