1. Per a July 2021 Bain survey of business executives.

2. For readers unfamiliar with the business school case method, this is the term for a typical opening of a class session in which the professor calls on a hapless student to analyze the case that the students should have all studied the night before.

3. And the field of marketing in general had fallen out of the front ranks of academic concerns decades earlier.

4. Frank Newport, “Democrats More Positive About Socialism Than Capitalism,” Gallup News, August 13, 2018, https://news.gallup.com/poll/240725/democrats-positive-socialism-capitalism.aspx.

5. In that address, Bloomberg emphasized (among other things) the importance of treating employees fairly—a “good act that makes sense,” as he put it. See Clea Simon, “Former New York Mayor and Philanthropist Urges Grads toward Ethical Business Practices,” Harvard Gazette, May 30, 2019, https://news.harvard.edu/gazette/story/2019/05/michael-bloomberg-extolls-moral-leadership-at-harvards-class-day/.

6. All the other dimensions must be treated as constraints with threshold requirements. Once these constraints are met, all of the energy and creativity can be focused on maximizing the one objective function.

7. For example, treating the cost of capital as a true cost (say 8 percent in the current interest environment) removes the confusion of trying to maximize shareholder value at the same time the organization is maximizing customer value (along with employee engagement, community contributions, innovation, human rights, sustainability, etc.). There will be more on this in subsequent chapters.

8. The first time I recall seeing this phrase in print was in Roger Martin’s excellent article “The Age of Capitalism,” Harvard Business Review, January/February 2010. In subsequent research, I discovered that a book titled Customer Capitalism was published in 1999 (London: John Murray Press) by Sandra Vandermerwe, a marketing professor at Imperial College in London who coauthored several articles with scholars, including HBS professors Christopher Lovelock and John Quelch.

9. This research is described in Fred Reichheld with Rob Markey, The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World (Boston: Harvard Business Review Press, 2011), 47–51.

10. See, for example, Siemens, “Sustainability Information 2020” (Berlin, 2020), 34, https://assets.new.siemens.com/siemens/assets/api/uuid:13f56263-0d96-421c-a6a4-9c10bb9b9d28/sustainability2020-en.pdf.

11. Geoff Colvin, “The Simple Metric That’s Taking Over Big Business,” Fortune, May 18, 2020, https://fortune.com/longform/net-promoter-score-fortune-500-customer-satisfaction-metric/.

12. Fay Twersky and Fred Reichheld, “Why Customer Feedback Tools Are Vital for Nonprofits,” Harvard Business Review, February 2019.

13. Open-source means practitioners are free to use the theories, methods, and tools associated with the Net Promoter System to drive sustainable, profitable growth for their businesses. The NPS marks, including NPS, NET PROMOTER, and NET PROMOTER SYSTEM, may not be used for commercial purposes except under license from Bain. For example, licenses are required for feedback, analytics, and data firms that incorporate NPS into services and solutions they sell to their customers. All use of the NPS marks—whether by practitioners or commercial licensees—must comply with Bain’s trademark attribution requirements. More information about NPS licensing and use is available here: https://www.netpromotersystem.com/resources/trademarks-and-licensing/.

1. Per the July 2021 Bain survey of business executives (previously cited).

2. According to Chain Store Age, Apple registers a staggering $5,546 per square foot per year. In second place is Murphy USA, a gasoline and convenience store retailer ($3,721 per square foot), followed by Tiffany & Co. ($2,951 per square foot). For the 2017 numbers, see Marianne Wilson, “The Most Profitable Retailers in Sales per Square Foot Are …,” Chain Store Age, July 31, 2017, https://chainstoreage.com/news/most-profitable-retailers-sales-square-foot-are.

1. For the video of this roundtable, visit https://www.netpromotersystem.com/insights/journey-to-greatness-nps-video/.

2. Collins’s highly influential book, published by HarperBusiness in 2001, continues to be a bestseller today.

3. Jim Collins, How the Mighty Fall, and Why Some Companies Never Give In (New York: HarperCollins, 2009).

4. We examined all public firms over $500 million in revenue and took the median of all these firms—not cap-weighted, since cap weighting conflates size with greatness.

5. This also muted the skyrocketing performance of The Ultimate Question 2.0 stars such as Amazon and Apple, thus providing a more conservative comparison.

6. See Christopher Mims, “Apple Pitches Values along with Credit Card, News and TV Plus—but Will People Buy It?,” Wall Street Journal, March 27, 2019, https://www.wsj.com/articles/apple-bets-that-plugging-its-values-can-help-create-value-11553607751.

7. Subsequent to that book’s publication, I recognized that anointing Facebook and Alphabet as NPS leaders was premature because we surveyed consumers (who loved free use of the social media platform and search engine) rather than advertisers (who were the actual paying customers). Luckily, the index results change very little whether these two stocks are included or excluded, so for now I have left them in.

8. The Total Stock Index is cap-weighted, however, so a more appropriate benchmark would be the nonweighted Invesco Index. During the past decade these two benchmarks yielded similar results, but that is not always the case.

9. Kaplan noted that a 26 percent return placed the FREDSI in the top quartile of net returns to private equity fund limited partners. And my investment in FREDSI companies didn’t burden me with the risks of leverage and lack of liquidity inherent in private equity investing.

1. Bain’s NPS Loyalty Forum is a group of several dozen companies that are passionate about earning superior customer loyalty. The group gathers quarterly to help solve challenges and share best practices and has played a vital role in advancing the NPS mission.

2. See page 5 of Chewy’s SEC S-1 filing, June 12, 2019, https://www.sec.gov/Archives/edgar/data/1766502/000119312519170917/d665122ds1a.htm.

3. As you will see in chapter 6, Bain estimates that Chewy’s true relationship NPS is lower—just under 60—but still more than 25 points higher than those of Amazon and other leading competitors.

4. See Farhad Manjoo, “New $4,000 Treadmill May Illustrate the Future of Gadgets,” New York Times, January 9, 2018, https://www.bendbulletin.com/nation/new-4-000-treadmill-may-illustrate-the-future-of-gadgets/article_46dec879-6eb7-5360-9e2f-d638771f20f4.html. The company has created a virtual community of bike riders who can compete with one another and anointed a cohort of fitness class leaders, some of whom achieve celebrity status.

5. Ibid.

6. “Airbnb Statistics,” iProperty Management, https://ipropertymanagement.com/research/airbnb-statistics.

7. I later checked up on this claim, and sure enough, cumulative TSRs for Costco in the thirty-four years since its initial public offering exceeded the TSR of the Vanguard 500 Index Fund by a factor of five times over the same period.

8. The Good Jobs Strategy was published in 2014 by Amazon Publishing. Ton focuses on how investing wisely in employees lowers costs and boosts profits.

9. Sarah Nassauer, “Costco to Raise Minimum Hourly Wage to $16,” Wall Street Journal, February 25, 2021.

10. Brendan Byrnes, “An Interview with Jim Sinegal, Co-founder of Costco,” The Motley Fool, July 31, 2013, https://www.fool.com/investing/general/2013/07/31/an-interview-with-jim-sinegal-of-costco.aspx.

11. More on this in the next chapter. It turns out that customer service reps find living the Golden Rule extremely motivating.

12. This only happens to customers who have opted in to email alerts.

13. A FICO score is a well-known brand of credit score created by the Fair Isaac Company in 1989. The higher your score, the lower the risk that you will default on your loans.

14. It’s more fun to deal with happy customers than cranky ones. Fortune now lists T-Mobile among its top one hundred great places to work.

15. This is her real name—and what a perfect middle name for a person in customer service.

16. Specifically, NPS jumps from 69 at the fourth-year renewal to 79 at the fifth year.

17. In insurance lingo, PURE has a loss ratio 10 points better than its less tenured peers’. In other words, even after the discount, profit margins are still 10 percentage points superior.

18. From a company press conference, quoted in Junko Fujita, “Tokio Marine to Buy U.S. Insurer Pure Group for About $3 Billion,” Insurance Journal, October 3, 2019, https://www.reuters.com/article/us-pure-m-a-tokio-marine-idUKKBN1WI0BJ.

19. See, for example, Scott McCartney’s excellent article “The Hotel Fees That Barely Even Make Sense,” Wall Street Journal, January 1, 2019.

1. Harry Strachan and Darrell Rigby deserve special thanks and credit for this.

2. I’ve already explained that I’m skeptical of these lists because they tend to focus on things that may make employees happy without making anyone else happy. But Bain shows up on a lot of them and, I’d say, mostly for the right reasons.

3. See “2021 Best Places to Work,” Glassdoor, https://www.glassdoor.com/Award/Best-Places-to-Work-LST_KQ0%2c19.htm.

4. Times have changed: today, more than half of the members of Harvard College’s graduating class apply for a slot to interview with the firm.

5. One advantage of asking teams for their best ideas anonymously—prior to the huddle—is that introverts and junior team members are more likely to give voice to their ideas.

6. Organizations with more stable teams may find that this question works better: How likely is it that you’d recommend your team leader as a person to work for?

7. In the spirit of full disclosure, I was a member of Bain’s nominating committee that tapped Tierney and next joined the compensation and promotion committee.

8. Yes, we borrowed that name from Apple Retail, but the content is based primarily on the systems and processes we developed to make Bain a truly great place to work.

9. The inspiration may have come from nearby neighbor Amazon. Jeff Bezos had already declared that in order to deliver on Amazon’s customer-obsessed mission, he would restructure into “two-pizza” teams (small enough to be fed with two pizza pies). See Brad Stone, The Everything Store: Jeff Bezos and the Age of Amazon (New York: Little, Brown & Company, October, 2013), 169.

10. The Second Mile Service program you will read about in chapter 7 has biblical roots and illustrates how serving others is the basis for a life with meaning and purpose.

11. Steve Robinson, Covert Cows and Chick-fil-A: How Faith, Cows, and Chicken Built an Iconic Brand (Nashville: Thomas Nelson, 2019), 6.

12. For comparison, Harvard College’s acceptance rate hovers around 5 percent—about ten times higher than Chick-fil-A’s. Even Bain & Company’s acceptance rate for 60,000 or so recent college grads who applied for a job last year ran just under 2 percent, reinforcing just how picky Chick-fil-A is in selecting its store operators.

13. Matthew McCready, “5 Things You Need to Know before Investing in a Chick-fil-A Franchise,” Entrepreneur, January 13, 2020, https://www.entrepreneur.com/slideshow/307000. The acceptance rate and foot traffic statistics are also from this very informative slide show.

14. Frederick Reichheld, Loyalty Rules! How Leaders Build Lasting Relationships (Boston: Harvard Business Review Press, 2001). See the Loyalty Acid Test, pp. 191–198.

15. Of course, public company CEOs visit with Wall Street analysts regularly, but most would never think to set foot in a call center.

16. Even if the balance rolled, the interest rate was typically much lower.

17. Officers and vice presidents are expected to attend two of these sessions, which are scheduled on Tuesdays and Fridays every week. Supervisors from those areas attend to help explain the circumstances of each call and to answer questions that arise.

1. The lunch was an item up for bid at an auction supporting a San Francisco–based charity that Buffett’s late wife Susan had supported.

2. Howard Gold, “Opinion: Jack Bogle Even Towered over Warren Buffett as the Most Influential Investor,” MarketWatch, January 17, 2019, https://www.marketwatch.com/story/jack-bogle-even-towered-over-warren-buffett-as-the-most-influential-investor-2019-01-17.

3. John Melloy, “Warren Buffett Says Jack Bogle Did More for the Individual Investor Than Anyone He’s Ever Known,” CNBC, January 16, 2019, https://www.cnbc.com/2019/01/16/warren-buffett-says-jack-bogle-did-more-for-the-individual-investor-than-anyone-hes-ever-known.html.

4. You will recall that my FREDSI index selects companies with superior customer love, as indicated by their superior NPS ratings.

5. Is it possible that in mature markets, only NPS leaders consistently beat the total stock market index?

6. We end the period of analysis in figure 5-2 with 2019 because T-Mobile acquired Sprint in 2020.

7. We specify our regression TSR versus NPS models using natural logs of TSR because that number is a compounding advantage, which implies a geometric relationship with NPS over time.

8. These percentages come from the companies’ 2019 annual reports.

9. Note that Chrysler is missing from this auto industry analysis because the company was bankrupt at the beginning of this period, so calculating a meaningful (and comparable) TSR was impossible. Chrysler’s NPS at 46 was the lowest in the industry.

10. The period of study for restaurants ends in 2019 rather than 2020 due to lack of data available for same-store sales at some restaurants as of the writing of this book.

11. Khadeeja Safdar and Inti Pacheco, “The Dubious Management Fad Sweeping Corporate America,” Wall Street Journal, May 15, 2019, https://www.wsj.com/articles/the-dubious-management-fad-sweeping-corporate-america-11557932084.

12. Just to remind ourselves, a double-blind experiment is one in which the identities of both the tester and the tested are concealed from both parties until after the test is completed.

13. Visit NetPromoterSystem.com for further explanation of the various types of NPS ratings and their appropriate uses.

14. This was the sampling methodology utilized in the 2010 Satmetrix NPS study we used to identify industry leaders in The Ultimate Question 2.0.

15. In one recent case, simply changing the order in which the rating scale was presented—with the scale running from 0 to 10 (with 0 on the left) versus 10 to 0 (with 0 on the right)—changed the resulting score by more than 10 points!

16. Again, that approach wouldn’t work because the only way PRISM could recruit a large enough sample of First Republic Bank customers was to invoke the bank’s name, which results in a sample overpopulated with Promoters.

17. Rob Markey, “Are You Undervaluing Your Customers?,” Harvard Business Review, January–February 2020, https://hbr.org/2020/01/are-you-undervaluing-your-customers.

18. For a deeper dive, see SaaS Capital’s white paper “Essential SaaS Metrics: Revenue Retention Fundamentals,” November 12, 2015, https://www.saas-capital.com/blog-posts/essential-saas-metrics-revenue-retention-fundamentals/.

19. And it turns out that you can get by with less, as detailed in appendix B.

20. Most private equity funds set a hurdle rate of 8 percent (approximately the returns from investing in Vanguard’s total stock market index since inception), which they must exceed before earning substantial bonuses. A similar structure should be used for executive compensation in public firms.

1. Jesus is quoted in the gospel of Matthew (7:12): “In everything, do to others what you would have them do to you.” And in Matthew (22:39): “Love thy neighbor as thyself.”

2. Analects of Confucius.

3. Sorry; I couldn’t resist.

4. A Meal, Ready to Eat, or MRE, is nutritional paste in a pouch bag with a flavoring such as “Brisket & Sausage.”

5. When regulators insisted that investment managers act in their customers’ best interest—at least when handling retirement accounts—the political pushback was so intense that the rule was reversed.

6. The same phenomenon arises in poorly administered “360” reviews.

7. Adam Grant, Give and Take: Why Helping Others Drives Our Success (New York: Viking, 2013).

8. See Deepa Seetharaman, “Jack Dorsey’s Push to Clean Up Twitter Stalls, Researchers Say,” Wall Street Journal, March 15, 2020.

1. This probably needs some airing out. Amazon doesn’t discourage the independent vendors on its website from using dynamic pricing. In fact, Amazon encourages the practice but in specific and limited ways. If you can raise the price of your sunglasses in the summer, says Amazon to the sunglass company, go for it. See the interesting “Amazon Pricing Policy,” Feedvisor, https://feedvisor.com/university/amazon-pricing-policy/. “If [the seller] does not take into account seasonal changes, consumer demand, seasonality, and so forth,” advises Amazon, “he could end up missing out on profits.” But—and these are important qualifiers—your Amazon price has to be equal to or lower than the price you charge in other virtual marketplaces, and every buyer has to get the same offer as any other customer at any given point in time. As for Amazon’s own vast inventory, in those vast and proliferating warehouses I’ve found no evidence that the company engages in the intrusive and predatory forms of dynamic pricing described in the text.

2. Brad Stone, The Everything Store (New York: Little, Brown, 2014), 125–126.

3. Robert D. Hof, “The Wild World of E Commerce,” Bloomberg, December 14, 1998, https://www.bloomberg.com/news/articles/1998-12-13/amazon-dot-com-the-wild-world-of-e-commerce.

4. Christina Animashaun, “The Making of Amazon Prime, the Internet’s Most Successful and Devastating Membership Program,” Vox, May 3, 2019, https://www.vox.com/recode/2019/5/3/18511544/amazon-prime-oral-history-jeff-bezos-one-day-shipping.

5. Part of the reasoning behind this prediction was that Barnes & Noble was about to launch a website aimed in part at crushing the upstart Amazon. Experts warned Bezos to “play the hedgehog” by defending his core business, advice that Bezos wisely ignored.

6. “Principles Underlying the Drucker Institute’s Company Rankings,” Drucker Institute, https://www.drucker.institute/principles-underlying-the-drucker-institutes-company-rankings/.

7. Think of the fall lineup on TV, the new model year in the auto industry, the steady stream of brand refreshments and website relaunches across almost all industries, etc. It’s a little embarrassing to admit, but we humans crave shiny new things.

8. Current patent litigation may yield additional income for USAA. See Penny Crosman, “USAA Won $200M from Wells Fargo in Patent Fight. Will Others Be on the Hook?,” American Banker, November 18, 2019, https://www.americanbanker.com/news/usaa-won-200m-from-wells-fargo-for-patent-infringement-will-it-stop-there.

9. Geoff Colvin, “The Simple Metric That’s Taking Over Big Business,” Fortune, May 18, 2020, https://fortune.com/longform/net-promoter-score-fortune-500-customer-satisfaction-metric. “Blasphemous” was Colvin’s dig at the designers of those massive hundred-question surveys that we all hate to fill out.

10. Matthew 5:41. To be honest, I was unaware that “going the extra mile” had biblical roots, but I wasn’t surprised.

11. This is the cow that implores us to “EAT MOR CHIKIN.”

12. It’s no accident that Chewy’s NPS rating tops Amazon’s by 28 points.

13. Malcolm Gladwell, Blink: The Power of Thinking without Thinking (New York: Time Warner Book Group, 2005).

14. “Paper diagram, step aside,” says the BILT website (https://biltapp.com/). For the technical among us, BILT converts manufacturers’ CAD into interactive cloud-based 3D instructions. I got a kick out of learning that the company grew out of an evening of frustration experienced by a software sales executive and his wife who were trying to assemble an IKEA nightstand. Enough said about IKEA.

1. The phrase is from Leviticus 25:10.

2. Far more pages are devoted to customer stories and core-value messaging than to financial results.

3. The formal title of this book is Voices of Discover: The Stories and Culture of Our People, published by Discover Financial Services in 2012.

4. “Leadership Principles,” Amazon, https://www.amazon.jobs/en/principles.

5. The company doesn’t break into Glassdoor’s 2020 Top 100 “best places to work” list, for example. By way of comparison, Google comes in at number 11, Microsoft at number 21, and Apple at number 84. “2021 Best Places to Work,” Glassdoor, https://www.glassdoor.com/Award/Best-Places-to-Work-LST_KQ0,19.htm.

6. CEO letter to shareholders, Amazon 2020 annual report.

7. Dana Mattioli, Patience Haggin, and Shane Shifflett, “Amazon Restricts How Rival Device Makers Buy Ads in Its Site,” Wall Street Journal, September 22, 2020, https://www.wsj.com/articles/amazon-restricts-advertising-competitor-device-makers-roku-arlo-11600786638.

8. Brad Stone, The Everything Store (New York: Little, Brown, 2014), 317.

9. Enron 2000 annual report, 55.

10. Ken Brown and Ianthe Jeanne Dugan, “Arthur Andersen’s Fall from Grace Is a Sad Tale of Greed and Miscues,” Wall Street Journal, June 7, 2002.

11. Greg Ryan, “Tamar Dor-Ner Keeps a Keen Eye on Company Culture at Bain,” Boston Business Journal, January 3, 2019, https://www.bizjournals.com/boston/news/2019/01/03/tamar-dor-ner-keeps-a-keen-eye-on-company-culture.html.

1. Matthew 5:5.

2. Jim Collins, How the Mighty Fall: And Why Some Companies Never Give In (New York: HarperCollins, 2009).

3. Tom Donahoe is the father of John Donahoe, who wrote the preface to this book.

4. I hope you are listening, Amazon, Apple, Facebook, Alphabet, et al.

5. A more comprehensive checklist of actions and requirements is presented in appendix A.

6. Isabelle Lee, “Can You Trust That Amazon Review? 42% May Be Fake, Independent Monitor Says,” Chicago Tribune, October 20, 2020, https://www.chicagotribune.com/business/ct-biz-amazon-fake-reviews-unreliable-20201020-lfbjdq25azfdpa3iz6hn6zvtwq-story.html.

7. “Jay Hennick: From Pool Boy to Billionaire,” OPM Wars, September 8, 2020. OPM Wars is a newsletter for Canadian money managers, investors, and moguls.

8. GE was the unfortunate poster child of this phenomenon, with its former CEO, Jeff Immelt, earning hundreds of millions during his tenure as CEO while the firm delivered negative TSR to shareholders.

9. Jay’s compensation was almost entirely equity-based, which reinforced his inherent respect for investors.

10. Jay recently converted his supervoting shares into common shares but remains the largest shareholder of both FirstService and Colliers.

11. CertaPro closes on more than 80 percent of referred leads.

12. I didn’t let them know I was a board member of the parent company.

13. I did give him a couple of $20 bills in thanks.

14. The word “humble” derives from the same Latin root as “humus” (a gardener’s best friend). Both humble and humus have “from the earth” connotations. We all share the same humble journey—from ashes to ashes and dust to dust.

1. The NPS Loyalty Forum grew out of a predecessor group, the Loyalty Roundtable, referred to in chapter 9. A full list of NPS Loyalty Forum participants appears in my acknowledgments.