CHAPTER 9
Be Humble
Net Promoter 3.0 and Beyond
At Bain, we teach that in every communication you should give the answer first and always finish high—with a call to action.
I will try to follow that advice in this final chapter. The answer first: you will be humbled by the distance you must travel in order to become truly customer-centric. This chapter will help clarify that distance by providing a checklist of requisite components comprising a state-of-the-art Net Promoter System 3.0. Here, I have attempted to distill twenty years of learnings gained through working with and observing leaders at the vanguard of the movement toward customer capitalism.
First, though, I want to return to what I consider the central idea in this book: that an enlightened understanding of the Golden Rule provides the bedrock principle underpinning customer capitalism and serves as the foundation for generating good and sustainable profits. You may recall that I opened chapter 6, “Honor the Golden Rule,” by recalling a luncheon with an old friend who was a pastor and divinity school instructor. Two vital lessons stuck with me from that lunch discussion. I’ve already shared one of them: that my friend—who is a very bright and thoughtful man—expressed his deep skepticism that “love thy neighbor as thyself” might have any relevance for business.
I hope he reads this book and comes to a different conclusion, but at the very least, he should know that I took his caution to heart. I reluctantly conceded that most folks would share his skepticism that making the world a better place for customers might represent a successful business strategy, let alone be the primary purpose of a winning organization. My proposition probably strikes many people—who believe that business runs on selfishness rather than service to others—as either hopelessly naive or half-baked. The notion that enriching customer lives should rise above all other stakeholder duties as the company’s primary purpose must seem utterly preposterous to the traditional Wall Street crowd.
But if you’ve stuck with this book this far—almost to the end—maybe you’re ready to join that small hardy band who believe that the future belongs to customer capitalists. If so, welcome aboard—and be aware that you are part of a very select group. Remember, only 10 percent of executives today believe that the primary purpose of their business is to enrich customer lives.
Let me return once more to that luncheon with my minister friend and to the second lesson that stuck with me from our discussion. As we were walking out of the restaurant, I shared a biblical conundrum that had long vexed me. One of the beatitudes from the otherwise compelling Sermon on the Mount never made very much sense to me: “Blessed are the meek, for they shall inherit the earth.”1
Meek? Really? Meekness as a winning life strategy? In my experience, loyal, principled people shouldn’t meekly fold in the face of challenge. If they want to make this world a better place, they must stand up courageously for their beliefs.
Looking back, I believe that my friend must have been amused by my consternation. He told me to stop fretting, because biblical scholars today pretty much agree that “meek” was not a very precise translation. The scribes of the King James Bible settled on that word simply because its single syllable suited the cadence of their very poetic interpretation. The accurate translation, he reassured me, is not meek but rather humble: Blessed are the humble, for they shall inherit the earth.
Slightly less poetic but surely more sensible. Without humility, there is little hope for true servant leadership, a prerequisite for earning loyalty. Without humility throughout the organization, selfish entitlement—which stalls learning and growth—blossoms. And to tie this into the main themes of this book, without humility, employees up and down the organization won’t prioritize or process feedback, which is vital for innovation and upgrading the customer experience. Humility clarifies the need for constant learning in order to better serve others and is therefore a foundational ingredient for sustained success in a customer-centered world.
We’ve already looked at Jim Collins’s Good to Great and its collection of putative exemplars. As we’ve seen, many of those companies soon fell on hard times. Collins, to his credit, then tried to figure out what had gone wrong. In his follow-up book, How the Mighty Fall, he concluded that their downfall began when executives became arrogant, intoxicated by success, and committed to the undisciplined pursuit of more.2 I think Collins was largely correct, but I would also argue that aside from arrogance and greed, these executives were to some extent victims of our financial capitalist system, which has traditionally rewarded short-term quarterly performance and growth (irrespective of its quality or sustainability) versus a long-term focus on growing employee and customer assets by enriching their lives.
I’d add that the fragility of large-company success extends far beyond that handful of Good to Great companies. You might think that companies that are adept enough to elbow their way into the top tier of big business should be able to leverage the resulting advantages of scale, experience, financial strength, brand familiarity, and lobbying power to stay on top. Not so. Over a decade ago, I found that the half-life of Fortune 500 companies was only seventeen years. Today’s accelerated pace of creative destruction will likely shorten this half-life even more. Do we remember Blackberry, Blockbuster, Compaq, and America Online? Just barely, right?
Back in October 1997, at my Loyalty Roundtable, I asked a group of loyalty-leader CEOs for their take on why so many successful companies stumble and fall. That gathering included the CEOs of Intuit, State Farm, USAA, Harley Davidson, Bain, Enterprise Rent-A-Car, both Dan and Truett Cathy of Chick-fil-A, and Tom Donahoe, former vice chairman of Price Waterhouse.3 Their consensus was that the primary enemies of sustained success are not external threats, such as new competitors armed with breakthrough technologies. Instead, the real enemies often arise from within, the heinous four horsemen: greed, arrogance, complacency, and entitlement. These four deadly sins represent different facets of the same transgression: failure to be humble.
The longer a firm enjoys success and the more powerful it becomes, the greater the risk of greed, arrogance, complacency, and entitlement combining to derail progress. At the same time, it becomes easier for executives to focus internally—contesting political turf wars, revamping organizational charts, and so on—instead of listening to customers. Time gets wasted on internal squabbles rather than being spent on innovating ways to solve customers’ problems and enrich their lives.
How do you avoid this trap? The best way I know is to embrace the mission of enriching the life of every customer you touch and to make sure you are listening to customers and scrutinizing their behavior so you know whether or not you are actually delivering on this mission. Asking for and acting on feedback from customers requires great humility, and this challenge increases as a company grows in power and stature. We have yet to discover a company with no detractors, so even the greatest firms have room to improve. Embracing this Golden Rule–inspired purpose of enriching every life you touch keeps you humble. Being humble helps you get to the top but plays an even more vital role in helping you stay there.4
It is good news that two-thirds of the Fortune 1000 companies now use NPS, with many reporting their NPS ratings to investors. The bad news is that so few have adopted the Net Promoter System mindset required to win in the era of customer capitalism. So let me declare here, in the form of a manifesto, the foundational mindset and core elements comprising NPS 3.0.5
The Net Promoter (Customer Capitalist) Manifesto
Great companies help people lead great lives—they are a force for good. Great leaders build and sustain such communities. They inspire team members to forge lives of meaning and purpose through service to others—service not merely satisfactory but so thoughtful, creative, and caring that it delights customers and enriches their lives.
The building blocks of great communities are relationships, founded on the principle treat others the way you would want a loved one to be treated or, in its purest form, love thy neighbor as thyself. This Golden Rule establishes the highest standard of excellence in human affairs.
When companies create policies, procedures, cultures, and rules of membership to reinforce accountability to Golden Rule standards—across all community members—they provide the foundation for building relationships worthy of loyalty.
Companies earn loyalty from customers by treating them with loving care. That loyalty is apparent when customers come back for more, recruit their friends, and provide precious feedback on how to build an even better relationship. In this way, love begets loyalty, which powers sustainable, profitable growth, and illuminates the path to greatness for the organization, its teams, and for each individual team member. This system underpins the financial prosperity enjoyed by communities that hew most closely to Golden Rule standards.
Therefore, the primary mission of every organization striving for greatness should be to build a community whose primary purpose is to sustainably enrich the lives of customers and where all members are treated in accordance with (and are held accountable to) the Golden Rule.
This mission demands that leaders:
1. Embrace an unbeatable purpose. Leaders clarify that enriching customers’ lives stands foremost as the organization’s primary purpose. They teach team members how this philosophical North Star should guide priorities, decisions, and trade-offs, thus illuminating the path to personal and organizational success.
2. Lead with love. The primary duty of leaders is to care for their people. They must inspire teams to embrace this customer purpose and enable their success by allocating sufficient time, education, and resources to accomplish this mission. Leaders must be role models who practice, preach, and teach Golden Rule principles and values that systematically reinforce a loving culture through symbols, words, and deeds.
3. Inspire teams. Team members must feel energized by this mission to enrich customer lives and be empowered to root out policies, procedures, and behaviors that are contrary to the Golden Rule, confident that they will be supported in their efforts to always do the right thing.
4. Unleash NPS-caliber feedback flows. Systems and technology support timely and reliable feedback from customers and colleagues, augmenting surveys by incorporating the entire signal field of purchase behavior, usage, online commentary, ratings, and customer service interactions. Constant innovation is required for collecting, curating, and distributing the right feedback in a world overwhelmed with dataflow that has grown tired of surveys—a world that relies increasingly on digital bots, data science, and algorithms.
5. Nurture relentless learning. Leaders must create a culture of loving feedback, a prerequisite for honoring the Golden Rule. This includes training on the most effective techniques for giving, gathering, and receiving feedback and providing a safe space for processing it.
6. Quantify earned growth economics. Leaders and employees must understand and utilize customer-based accounting metrics (provided and endorsed by the CFO) to evaluate trade-offs and investment decisions.
7. Regularly redefine the remarkable. Leaders and teams must humbly recognize how much progress and innovation are required to make sure each customer feels loved. Leaders strive continuously to invent new ways to delight customers with remarkable products and experiences. Each individual, team, and group feels empowered and responsible for creating such remarkable experiences that customers come back for more and refer their friends.
Embracing the Movement
The elements of my manifesto may seem daunting, especially for leaders of well-established firms with an entrenched financial mindset. Almost every leader will feel humbled after reviewing our comprehensive checklist of NPS 3.0 requirements in appendix A. But failing to reorient your firm’s mindset toward loving customers by incorporating the full checklist of best practices is probably the riskiest path of all, given the growing evidence—summarized in chapter 5—that NPS laggards can’t deliver true value to investors. To help you make a clear-eyed assessment of where your organization stands versus customer-love winners, we have created an NPS 3.0 diagnostic that is freely available at the website: NetPromoterSystem.com.
I had once hoped that together with my colleagues at Bain and our clients we could drive the NPS revolution forward, but over the past decade I have acquired a bit more humility myself. To change the way the business world defines and measures success, we need additional courageous leaders to join the movement. We must build a stronger and broader community across all stakeholders to hasten the transition from financial to customer capitalism. We need:
- Investors and CFOs to embrace earned growth economics. Financial accounting—and the financial planning and analysis that accompanies it—must incorporate customer-based accounting, which reliably measures the health of the firm’s customer relationships (the most valuable asset in most businesses). Customer-based accounting must track, among other things, the number of active customers and when they came aboard, increases and decreases in their purchases each period, defections by segment and tenure cohort, revenues per customer by tenure cohort, volume of new customers, cost of acquisition, split of new customers between earned (referral, recommendation, word-of-mouth, etc.) versus bought (advertising, promotional deals, commissions, sales, etc.)—in other words, all the key elements needed to estimate customer lifetime value for each customer.
- Customer rating sites and e-commerce platforms to make ratings reliable. Customer ratings sites must innovate solutions to provide ratings that are both honest and relevant and therefore more useful. As a frame of reference, Fakespot estimates that as of 2020, 42 percent of Amazon reviews are fake.6 I predict that in many industries individual customer tastes will vary so much that for ratings to be relevant, they will have to be curated and organized to highlight the most relevant raters for each consumer.
- Investors to challenge self-reported (uncertified) NPS scores. As I mentioned previously, many companies report unaudited customer feedback scores. Investors who want to understand the value of a company’s customer assets need to understand how these metrics are derived and demand consistent and reliable methodologies.
- Boards to become true customer advocates. Boards of directors must assume responsibility for ensuring that their organization’s policies and practices treat customers right—a higher standard than simply not breaking the law. Boards should consider establishing a customer committee to serve along with existing nominating/governance, audit, and compensation committees. This oversight will become even more important as companies embrace the promise (and risk) of interactions with customers that are driven by artificial intelligence (AI). Companies must go beyond ethical AI and regulatory requirements and raise the bar to the Golden Rule standard of customer love. For this committee to have real accountability and clout, it will need reliable NPS data. This data will be available from third parties, such as Bain’s NPS Prism, for some companies and from trusted internal processes for other companies. But for many firms, this will only happen when we have robust customer-based accounting that enables reporting metrics, such as earned growth, that gauge customers’ love and are audit-worthy and therefore most appropriate for public reporting and for driving executive bonuses.
- Boards to reward executives that play the long game. Executives must be shielded from the distractions of short-term speculators if they are to make decisions in favor of treating customers right. Since the highest total shareholder return (TSR) accrues to firms with the highest NPS ratings, long-term investor interests are best served by encouraging leadership teams to love customers. Executive compensation plans should evolve so that generous bonuses accrue to leaders who deliver true value to long-term shareholders— that is, TSR exceeding the hurdle of average stock market returns. In addition to TSR, customer and employee outcomes should become part of compensation plans.
- Employees to be more selective and insist that employers help them live the right life. Employees are already demanding purposeful work, particularly as the workforce transitions to the Millennial and Gen Z generations. You’ve heard a lot about the employee loyalty earned by the companies in this book. The best employees—from call center agents in Phoenix, Arizona, to user experience designers in Shanghai to meal-delivery providers in Madrid—have a choice about where they will work. The work community they select will deeply affect their ability to live the right life, so they should make this choice wisely, which means, in part, using the right data.
I realize that the path I have just outlined requires much work. Perhaps your humility is kicking in and you’re wondering if this effort might exceed your capabilities. My response is that it’s worth the effort. Why? Making the effort to hasten the transition from financial to customer capitalism will provide the most rewarding path for you and your team and will help you win. Remember the spectacular TSR performance of customer-love winners? That didn’t come easy, but I am sure the leaders in those companies would tell you it was well worth the effort.
Let’s look at one example.
First Serve Others
I first met Scott Patterson, CEO of FirstService, when he attended Bain’s NPS Loyalty Forum in the fall of 2011. We rode back to our hotel in the same car, and Scott explained that he was keenly interested in learning more about how NPS could help his business leaders build even stronger relationships with their customers. With a market cap over $7 billion and with twenty-five thousand employees, FirstService is North America’s largest manager of residential communities—that is, condominiums and homeowners’ associations—and also owns a portfolio of so-called essential property services, including CertaPro Painters, California Closets, Century Fire, and First Onsite Restorations. Over the years I have had the opportunity to learn much more about these businesses, including how they build superior customer loyalty and how the leadership philosophy guides FirstService, which is nicely summarized by its hashtag: #FirstServeOthers.
One day I received an invitation from FirstService founder and chairman Jay Hennick to have breakfast under a canopy of palm trees at a restaurant overlooking Miami’s Biscayne Bay. I didn’t know it at the time, but that breakfast was the beginning of a long process aimed at recruiting me to join his board. The more I learned about Jay and the company he founded, the more intrigued I became, mostly because he and his colleagues seemed to care about customer loyalty as much as I did.
FirstService began implementing the Net Promoter System across all its businesses in 2008. In truth, though, Jay had learned the importance of treating customers right and earning their loyalty many years earlier. When he was fifteen years old, he turned his first job as a lifeguard/pool attendant at a local apartment complex into a pool-servicing business that employed hundreds of employees while he was still in high school. A recent article about Jay titled “From Pool Boy to Billionaire” explains how Jay kept running the pool business on the side as he pursued a career as an attorney.7 In 1989, he rolled his ownership stake into a property services company (FirstService) and left his law firm to concentrate on the business full-time.
As I learned more about FirstService through my regular board meeting visits to Toronto, I came to realize what a compelling customer-love example the company provided. Every executive I met cared deeply about building superior customer loyalty—and was enthusiastic to learn even better ways to implement NPS to its full potential in their business. Their results provide a wonderful case study on the economic benefits of earning superior customer loyalty. You’ve seen in figure 5-1 (chapter 5) that FirstService’s TSR has been in the same league as that of Amazon and Apple over the past decade. But FirstService’s remarkable run started long before that. Its stock was listed on the NASDAQ exchange in 1995. Of the approximately twenty-eight hundred public companies in North America at that time with revenues over $100 million, FirstService’s TSR over the subsequent twenty-five years ranked number eight (99.7th percentile)—almost 22 percent per year. An investment of $100,000 in FirstService stock in 1995 would have grown to $13.6 million by 2019. In retrospect, I wish Jay had invited me to breakfast a few years earlier!
What accounts for this remarkable track record? You already know the answer. FirstService has been powered by a loyalty-fueled growth engine that generates superior cash flow. Jay and his team utilized that love-driven cash machine to acquire other firms over the years, including Colliers International, a substantial real estate professional services and investment management company. When Colliers grew to the point that it could sustain itself as an independent company, Jay proposed that we spin it off as an independent public company so it could get the appropriate level of attention from its own board and generate its own cadre of long-term investors who understand and value its global brokerage and management services.
Why is this spin-off story unusual? It is unusual because humility does not come naturally to many CEOs today. They strive to build empires large enough to get invited to attend the annual World Economic Forum in Davos, Switzerland, as well as the Augusta National Golf Club to watch the Masters Tournament, film openings, Academy Awards parties, and other high-visibility, ego-stroking events. And executive compensation consultants presume that the bigger the company, the bigger the CEO’s paycheck should be.8
Wise (and humble) leaders such as Jay Hennick and Scott Patterson understand the importance of an owner’s mentality. They ensure that the leader of each of their businesses has incentives aligned with those of their long-term investors.9 This approach works best when that equity stake is not dissipated across lots of unrelated businesses that happen to be operating under the same corporate umbrella. For example, it is far better for the California Closets franchisee in Miami to own equity in that local franchise than to have a stake in the FirstService brand. A core philosophy at FirstService is therefore to ensure that business leaders have a substantial equity stake in the business they run. This same discipline runs throughout the organization, all the way up to CEO Scott Patterson and the rest of his senior leadership team, whose bonus plans pay out only when the company achieves ambitious growth in earning-per-share targets. This ensures that long-term investors as well as customers and employees are treated with respect.
Jay’s ownership stake (beefed up with supervoting shares) provided air cover, enabling his business leaders to confidently play the long game and focus on the right measures of success.10 This enables executives to build resilient strategies based on loving their customers. As evidence of this resilience, consider the shocking impact the Covid-19 pandemic wreaked on the real estate services sector, in which FirstService competes. Yet somehow the company kept motoring along.
Scott explains that “FirstService has lots of little engines of growth where every branch manager acts more like an owner than an employee because they are measured and compensated based on the success of their own little engine.” This organizational structure, coupled with a customer-focused mindset founded on service and loyalty, has proven that loving customers provides a resilient winning strategy—even for public companies, if they are built like FirstService.
Humility
You might not expect much humility from leaders with such a remarkable track record, but Jay and Scott continue to learn and grow. When I described my plans to develop an earned growth statistic to Scott, he exclaimed, “That’s a great idea, Fred. It perfectly reflects the way we think here at FirstService.”
Scott attributes much of his firm’s performance to nurturing a customer-service culture reinforced through local-equity ownership. Local managers can see the importance of generating what Scott calls organic growth. Each local business leader understands the enormous expense required to replace a customer lost through defection. They also know how much more efficient it is to earn new customers through referrals and word of mouth from existing customers. Scott estimates that half of all new customers in FirstService’s community management business come through referral. In both California Closets and CertaPro, 70 percent of the quality leads come via this route. Local franchisees know that when a lead comes through referral, this represents a quality lead that is likely to result in good business.11
By tracking and publishing audit-worthy Earned Growth Rates, companies such as FirstService will be able to clarify the source of their advantage and thereby help investors understand the sustainability of their loyalty-growth engines. Scott admits that he struggles to convince investors about the sustainable advantage that FirstService’s customer-centric culture delivers. “They hear my words,” he says, “but their financial mindset just can’t make sense of them. They keep asking for the real secret sauce behind our impressive track record so they can assess our future.” For this reason, Scott views the development of a measurable science around earned growth as being very much to his advantage and looks forward to the day when, armed with credible and rigorous metrics, his investors can see with confidence what’s driving FirstService’s profitable growth.
FirstService also provides another reminder that really good things happen when you hang around with good people—including the fact that they introduce you to other good people. One reason chapter 1 of this book opens with Steve Grimshaw’s Caliber Collision story is that Jay and Scott asked me to help them recruit Steve to join our board. I am pleased to report that Steve agreed to join us, but I recall thinking during our first phone call that given his remarkable accomplishments at Caliber and the fact that he had recently handed off his CEO duties and moved into the less time-demanding job of chairman, he would have many options for spending his time. So I asked him what made him consider investing his precious time serving as a director at FirstService. He replied, “You know, Jay Hennick and Scott Patterson have built such a great business and achieved such spectacular success, and yet they are such humble guys. Those are the kind of people I want to work with.”
I agree with Steve—that is certainly a central reason why I had signed on as a director. Spending time with Jay, Scott, and their executive team has been another eye-opening experience that further clarified my understanding of customer capitalism. And of course, the benefits to investors (including me) have been remarkable. However, my continuing fascination with the company goes deeper. My overriding interest in FirstService stems from its impact on its customers and employees.
Now, it would be tempting to tell stories at this point demonstrating how FirstService employees behaved in dramatic fashion to save customers in crisis, such as after a hurricane, fire, or flood. And there are many such stories, given that disaster recovery and restoration represent a core business for the company, especially in its Paul Davis and First Onsite divisions. But every company has such stories. When human beings see their neighbors or even strangers in tragic or life-threatening situations, many will heroically step up. Luckily, there is something in our wiring that makes us help one another in a crisis. But most of us are less good at showing this same loving care throughout the humdrum of our daily routines. That’s when it’s easy to occasionally lapse into our lazy or selfish selves. And that is where great companies separate themselves from the rest. Their culture of loving care, reinforced by systems, processes, measurement, accountability, and leadership, helps team members become their best selves—consistently.
Let me share a few seemingly mundane examples to illustrate how FirstService helps its employees live the Golden Rule. First, a recent experience of my own as a customer: I hired California Closets to design and install new racks and shelves in the master bedroom closet of our Florida condo.12 The installers arrived on time, clearly explained their process, built out the closets, and cleaned up afterward. They finished sooner than expected, and rather than dashing out the door for a long coffee break, they asked if there was anything they could help me with around the apartment.
It so happened that I had been struggling for weeks to find a handyman to fix the counter on our kitchen pass-through, which had sagged so badly that objects that could roll or slide downhill ultimately ended up on the living room floor. No repair person would touch the job because it was too small. So, I purchased a support bracket and started the repair myself but soon recognized I was out of my league. I had no idea how to find the metal support stud in the wall, push the counter up to level, and hold it there while simultaneously attaching the bracket without hitting any electrical or plumbing lines hidden within the wall. I was stuck (and frustrated)!
The California Closets installer said he and his helper would be happy to fix it, which took them about twenty minutes. When I offered to pay them something extra, he said that wasn’t necessary. I could see his young associate raise his eyebrows in surprise.13 The installer must have seen this as a teachable moment, because as the workers exited down the hallway toward the elevator, I heard him explaining to his assistant that doing favors for customers makes good business sense. They were speaking Spanish at that point, so I am guessing, but I think he told his associate that finding ways to delight a customer was a smart way to run a business—and the right way to live a life.
I mentioned this story to Charlie Chase, the CEO of FirstService’s brand businesses, and he was not at all surprised. He explained that FirstService teaches crews to seek out ways to go the extra mile for customers whenever possible. He forwarded this recent YELP review about one of FirstService’s installers as another example:
New Review for California Closets—Palm Desert
2/5/2021
This is not related to California Closets work alone, but one of their AMAZING employees who happened to notice that my front passenger-side tire had popped in a parking lot. This occurred as I was leaving a convenience store and he grabbed my attention, suggested I pull over into a parking space and then proceeded to help me change the popped tire to the emergency spare in the back of my trunk. The person who helped me is named Matthew H. In such a moment of despair, I didn’t know what to do and Matthew was there to help me when I needed it … and even after helping me with the tire, he [showed] me what to do etc. My horrible day became such a heart warming day. Thank you so very much to not only Matthew but to California Closets for hiring such an amazing young man. It is very rare to find people like Matthew! Amazing people!! You guys rock!
Charlie contacted Matthew’s boss to ask him why he felt confident taking this extra time to help a stranger. After all, Matthew was a relatively new employee, only recently promoted to a lead installer role. His boss reported that “Matthew said he felt empowered because it was the right thing to do. Since we trust him as a lead installer, it means we trust him to make the right decisions. He knew that once he explained the scenario, we would be supportive.”
FirstService tries to make it easy to do the right thing. CertaPro execs developed a list of potential wows to help keep them front-of-mind for their painting crews. Two examples: When painting a stairway atrium where a ceiling light is mounted high and out of reach, before the painters take away their ladders, they offer to replace the light bulbs. If there is a brass knocker on the front door, they offer to polish the brass. The list goes on.
These small acts of kindness cost very little but generate lots of smiling customers and smiling employees proud of a job well done, and so the economic flywheel begins to spin—customers tell their friends and request additional jobs. The result is that yes, investors love FirstService, but its primary beneficiaries are the thousands of employees and millions of customers who get to experience a life based on #FirstServeOthers—a life that makes the world a better place.
I couldn’t resist including Charlie’s message back to me after vetting this section of my book draft for accuracy:
Fred, your book hits on the themes we live every day. Be humble, empower people to live the Golden Rule, and lead them in ways that inspire. But, you should be aware this creates a real problem. We earn more customers than we can handle. Living the Golden Rule creates promoters who grow your business faster than anyone thought possible. Staffing up to meet the demand presents a difficult challenge!
Looking Forward
I began this book by sharing some special days that shaped my understanding of what it means to win in business, how to measure success (in both business and life), and the relationship between love and loyalty. I hope I have been clear that my definition of winning in business is measured by how many lives have been enriched, net of those diminished. The best way to win is for leaders to inspire teams to love their customers. To gauge progress, you can tell that customers felt the love when they are loyal, as evidenced by repeat purchases, increased purchases, increased share of wallet (or category), respectful treatment of employees, constructive feedback, and, most especially, recommendations to friends, family, and colleagues. This worldview has evolved throughout my work at Bain over the past forty-four years and through my experiences as a customer, an investor, board member, father, and now grandfather. There have been lots of special days that opened my eyes to this new mindset of customer capitalism.
Over the past few years, it has become apparent that we are living in a special era—an inflection point, if you will—in which rapid change is generating so many “special days” that the cumulative effect can sometimes be bewildering. Cloud-based computing, technology giants, smartphone apps, digital innovations, big-data analytics, and AI are merging with pandemic-induced changes in lifestyle patterns and priorities for both customers and employees. These are driving tectonic shifts in how companies can better love (or abuse) customers. I don’t have all the answers here by any means, but I’m confident they will emerge over time and morph into NPS 4.0 and beyond. But hopefully by viewing the changes of the past four decades through the lens of customer capitalism, we can provide some useful suggestions to help guide priorities in this brave new world.
In many industries, the vast majority of customer transactions will become digital. As I mentioned earlier, digital already accounts for 80 percent of all US banking interactions. This creates a new service workforce—the digital front line, consisting primarily of apps and self-service kiosks (ATMs, self-checkout) guided by AI, algorithms, and bots. Leaders must ask themselves a key question: How can we ensure that our bots love our customers? If bot learning models are based on optimizing financial accounting numbers—that is, selling more stuff at the highest possible price and lowest possible cost—then we are in for a rough ride. Somehow we must ensure that customer-based accounting as well as objectives such as the coefficient (or perhaps gradient) of NPS and earned growth predominate the objective function for each interaction, and that these metrics become fully integrated into our digital learning models. Net Promoter–style feedback loops must exist to enable bots to learn how to love customers and enrich their lives.
Several of the exemplar companies featured in this book are leading the way here. Thank goodness Amazon decided to follow a Costco-style pricing strategy or we might be having our electronic wallets emptied by computer scientists with access to way too much data about our personal lives, preferences, wallet status, and shopping habits! Thank goodness Apple decided to guard the privacy of customer data rather than exploiting that information to maximize profits.
Despite the best corporate intentions, the shift to a digital world brings new risks. Leaders must be clear that their organization exists to enrich customer lives and should exercise painstaking care to ensure that this mission becomes integrated into the digital front line. There will be far fewer humans on those front lines who can serve as cultural ambassadors and exercise the judgment required to ensure that decisions and trade-offs remain true to the Golden Rule.
Data and decision models ultimately power the digital front lines. If you have spent any time working with such models, you know two things. First, they are only as good as the data that goes into them. Second, a model needs clear constraints and an even clearer objective function—in other words, a single dimension that the model should optimize. Getting this wrong has massive risks. We have seen the emergence of the concept of ethical AI as leaders in technology and broader business begin to understand the risks. This is important and necessary. We need boundaries to ensure that our bots do no harm. We can’t accept digital redlining in financial services, health care, or, frankly, any industry. Machines won’t exercise judgment or care about treating people right; they won’t have the ability to avoid treating some customers preferentially. They won’t understand the cost of infringing on one’s privacy and could easily expose customers to harmful actions by bad actors who buy or steal leaked customer data.
But ethical AI is too narrow an objective. We should strive for loving AI in which the ultimate objective of AI is—you guessed it—to enrich customers’ lives. Consider what a challenging pivot this represents. Today most models run unchecked on objective functions aimed at maximizing accounting results. That is why airline ticket prices skyrocket in the path of a hurricane. That’s why automated hospital billing systems charge the highest price possible (even to those least able to pay). Until we have perfected a way to incorporate the Golden Rule into the machine’s decision matrix, how can a company ensure that customers will feel the love so they come back for more and bring their friends? And how can a firm deliver respectable returns to investors without this kind of customer loyalty? The challenge will grow as machine learning gets deployed at scale and executives hand over even more of the brains (and soul) of customer service to bots.
What is the solution, then?
Well, to me it’s clear. In stark contrast to the pundits who claim that Net Promoter will become less relevant in the digital age, I believe that the Net Promoter philosophy and the digital tool kit to support its implementation are becoming even more vital. As physical locations get shuttered and employees are replaced by digital alternatives, the voice of the customer will drift further away from the decision makers. It is essential that companies leverage Net Promoter feedback tools (both digital signals and surveys) to ensure that employees and their AI models are learning from the voice of the customer. Net Promoter critics have suggested that some of its core tools—surveys, customer verbatim explanations, and customer callbacks—are obsolete because digital technology can give us all the data we need. I disagree. Technology can’t tell us why customers feel and behave the way they do.
Yes, I am very excited about the possibilities of signal data, predictive NPS, voice sentiment analysis, session replay, and a host of other amazing innovations. But let’s not pretend that click patterns and digital observations can understand how a customer is feeling or tell us why. The most sophisticated digital dashboard will never yield the same insight as a conversation with a customer. AI requires many more years of development to approach the genius of human intelligence. It will surely take much longer for artificial love to approximate real love. Machines can never understand or replace human love. The unbeatable strategy of loving customers will always depend on us humans.
Final Thoughts
As I finish writing this final chapter, I am preparing to visit my local cancer center for my annual screening exams. Few things reinforce my humility these days like these unavoidable reminders that my time on Earth is finite.14 For two main reasons, I’m thankful that my health has held up. First, I’ve been able to see this book through to completion, distilling the lessons of my forty-four years at Bain into a set of principles—a framework based on Golden Rule standards of loving care persistently reinforced with metrics, processes, and systems.
Second and more important, I was blessed to be able to welcome two new grandchildren into this world, Adelaide and Clare.
My primary goal in writing this book was to help companies successfully transition toward and win in the customer capitalism era. But I hope it has broader relevance for Adelaide, Clare, and their hoped-for siblings and cousins along with extended family, friends, and neighbors young and old. No matter what path their lives take, the ideas in this book can make that path smoother and more successful.
Adelaide, Clare, and their cohorts will certainly be customers. I hope some of the lessons in this book will help them discover the very best suppliers—those that strive to love their customers.
At some point in their lives they’re also likely to be employees, and the ideas in this book should help them figure out which companies would be worthy employers. In their roles serving customers they will benefit from a service mindset, embodying the goal of enriching the lives of their customers in truly remarkable ways.
Maybe they will be leaders. If so, they can experience the joy of helping team members lead lives of meaning and purpose through delighting customers. I hope they will innovate enhancements to internal systems to reinforce more persistently standards of accountability to the Golden Rule. And finally, as Adelaide and Clare become investors, this book should help guide them in placing winning bets.
When you add it all up—as more and more individuals realize their moral and economic power as customers, employees, and investors—the advantages of customer capitalist firms will accelerate. Smart leaders will get out in front of this wave. They will expedite the shift toward a customer-centered worldview and embrace the wisdom of building the right corporate culture in which all members hold one another accountable to Golden Rule standards of behavior and where success is gauged by the number of customer lives enriched.
Why is culture so important? It takes a community to make the Golden Rule work. Only strong and prosperous communities with strong cultures—such as the examples cited throughout this book—are capable of nurturing relationships that bring the Golden Rule to its full potential. Only when individual members can trust the community for protection from abusive takers—those bullies, slackers, and cheats who care little for enriching the lives they touch—can individual members safely concentrate on building relationships of service and devote their full energies to enriching the lives of their customers.
As noted, community turns out to be key. There is surely some truth to that old adage that one’s life becomes the weighted average of the company you keep. Your relationships with the people with whom you spend the most time profoundly influence your goals, your norms, your hopes, your dreams, and the way you measure success. I hope this book will help all my readers seek out and nurture communities that enable relationships affirming Golden Rule standards of love and service. These organizations will enrich your life, and they will win—on purpose. They will attract and retain the people who heed this grandfatherly guidance: Keep good company and choose your loyalties wisely. They will shape your life and define your legacy. Above all else, they will help you live the right life, a life that turns frowns into smiles and leaves things better than you found them.