PPB June 2015

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to recommend your company to others pro-
vides a solid base.
Find out if they’re likely to buy from
you again. Probably the first way to gauge
customer loyalty is to compute the percentage
of customers who are repurchasing, reusing or
returning to a product or service. This data
can be collected from past sales or from sur-
veying customers about their past or future
intent. Net Promoter Score (NPS) is a good
way of measuring customer loyalty through
understanding word-of-mouth marketing. It
is based on a single question: “How likely are
you to recommend [product or service ] to a
friend or colleague?”
NPS is calculated by following a three-
step process. First, ask your customers the
question. Next, compute the proportions of
promoters, passives and detractors. Promoters
are customers who are most likely to speak
positively about and recommend your prod-
uct or service. Passives are generally satisfied
with your product or service but are less
likely to recommend it to others. Detractors
are not only the least loyal, but also the
most likely to actually discourage friends
and colleagues from purchasing or using
your product. Compute NPS by subtracting
the percentage of detractors from the per-
centage of promoters.
Getting access to competitive data can be
difficult for some industries and products.
Even so, the best comparison is to measure
the same product, service or company over
time. Netflix offers a great example. In
February 2011, the company’s NPS was very
high at 73 percent. Then, in the fall of 2011,
the company decided to split off its home
delivery of DVDs and the streaming service
into two companies, which angered cus-
tomers. My company surveyed Netflix cus-
tomers a month after the change and found
the NPS had plummeted to -7 percent.
Perhaps Netflix did perform such testing
and anticipated losing customers. The much
larger loss is likely due to other factors and
perhaps to untested customer correspondence
and the geometric effect of negative word of
mouth. But using the Net Promoter Score as
a predictive analytic tool can help prevent
disasters and identify winners early.
Be aware of bad profits. How does it
feel to pay the check at the restaurant where
you had terrible service and bad food? Or
how about paying $150 to change your air-
line reservation? Obviously, nobody likes to
pay for a subpar or overpriced product or for
bad service, and yet, in these examples, com-
panies financially benefit from a customer’s
negative experiences. However, it’s a short-
term benefit. Those are bad profits, and
they’re a ticking time bomb. They lead to
customer resentment and a decrease in cus-
tomer loyalty, and they eventually impact
profits negatively.
By combining Net Promoter Score data
with customer-by-customer revenue data, you
can estimate the amount of revenue derived
from bad profits. Even if you don’t have
access to financial data for your company or a
competitor, you usually can estimate the per-
centage of bad profit revenue. For example,
when my company measured customers of
consumer software products a couple years
ago, we found that about 17 percent of
Adobe Photoshop users were detractors.
Assuming everyone pays around the same
price for a Photoshop license, some 17 per-
cent of Adobe’s revenue from Photoshop
comes from detractors.
While it’s bad to generate revenue from
dissatisfied customers, it’s worse if a large
proportion of your revenue comes from
detractors. With too much detractor revenue
for a product or the entire company, you are
48 • PPB • JUNE 2015 GROW
Do You Create The Ultimate
Customer Experience?
Scott McKain was a recent guest on a PromoKitchen
podcast hosted by PromoKitchen chefs Mark Graham and
Dale Denham, MAS+. McKain, a former PPAI Expo
keynote speaker, is founder of
The Distinction Institute, a com-
pany that explores the role of
ultimate customer experiences
in creating enhanced client
retention and revenue. He is the
author of three
No. 1 business bestsellers, all
focused on teaching companies
how to expand profits, increase
sales, and engage customers.
His latest book, 7 Tenets of Taxi
Terry , provides the specific
steps for every employee to create and deliver ultimate
customer experiences. Listen to the full 35-minute PK
Podcast #79 at
You came up with the term ultimate customer experi-
ence. Can you define that and why we need to care
about that in 2015?
For a long time I was giving a speech called All Business Is
Show Business. People think it’s about song and dance but
Shindler’s List was show business; Silence of the Lambs
was show business. Show business succeeds when it cre-
ates a positive, creative connection with the audience.
How do we use that to get more customers and keep the
customers we have? That spawned the thought that it
takes an experience so why not take it to the ultimate
experience? If everything went exactly right, what would
that experience feel like? It’s not only about pursuing cus-
tomers but being so distinctive at what you do that you
actually attract customers.
You talk a lot about this idea of setting high expecta-
tions and then exceeding them. The common belief is
to set realistic expectations and then exceed them. Do
companies need to set the bar even higher? Does that
set the company up for failure?