1SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

2SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

“Today’s lecture is on loyalty”growth

3SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

Loyalty Leaders: Grow 2.6X competitor avg.

0

50

100

150

200

250%

Growth

Average

100

Loyalty Leader

260

BC© 2003

4SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

Four Loyalty Behaviors Drive Growth

1. Repurchase

2. Buy additional lines

3. Referrals

4. Constructive feedback

SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

Successful programs: Loyalty transforms economics

6SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

How Leaders Build Loyal Relationships?

“Practicing the Golden Rule is integral to everything we do. As it happens, the natural result of ‘Golden Rule behavior’ is customer loyalty and employee retention.”

Colleen BarrettDecember 4, 2002

Southwest Airlines

“What’s the key to our success? It all boils down to following the Golden Rule.”

Isadore SharpJune 25, 2003Four

Seasons

7SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

8SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

• Hotel: phone bill bigger than room bill

• Banking: returned check fee: $35.00

• Cellular: $1.50 for directory assistance

• Airlines: $100 to redeposit miles

• Rental Car: Gasoline refill @ 3X retail price

Bad profits alienate customers and demotivate employees

9SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

Profits vs. Growth/loyalty

Tools for managingProfit

Tools for managingGrowth/Loyalty

10SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

Only 3% of CEO transcripts mention customer satisfaction

Source: The Wall Street Transcript, CEO interviews 2004

0

20

40

60

80

100%

% of 2004 CEO interviews with following topic mentions

Financial metrics

100%

Growth

94%

Customersatisfaction

3%

1,220 1,146 41No. transcripts:

11SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

“Hold on Fred—we like our survey…..”

“The only way to grow a business is to get customers to come back for more and tell their friends.”

Andy Taylor, CEOEnterprise Rent-A-Car

12SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

Balance of power

Net profit Net grrrrowth

13SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

BIG DOG: Impressive Results

Percent promoter

50

60

70

80

Yr 1Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9

Corporateaverage

Lowestquartile

• Two-question survey

• Reduce Detractors -Call backs-Reduce bad profits

• Grow Promoters-Branch rankings monthly-The Vote

• Leadership Priority-Promotion Jail/Audits-Reduce Bad Profits (gas price)

Revolutionary Approach

14SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

Is there a universal ultimate question?

• They know me

• They value me

• They listen to me

• They share my values

• Best features

• Best service

• Best price

“Would you recommend us to a friend?”

Head

Probes both dimensions of loyalty….

Heart

15SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

%Promoters

How to Calculate NPS

0-6

7-8

9-10

Net Promoter Score (NPS)

minus

%Detractors

Extremelylikely

Extremelyunlikely

16SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

50

100

150%

Detractors

100%

Passives

111%

Promoters

131%

681 936 1.292n

* Index based on average customer of detractors, 100% = 9.7 yearsSource: Bain NPS Automotive-Study Germany 2006; Bain analysis

0.5

0.0

0.5

1.0

1.5

2.0

2.5

Detractors

0.5

Passives

1.1

0.1

Promotors

2.3

0.0

0.4

693 926 1,239n

40

60

80%

Detractors

59%

Passives

63%

Promoters

71%

686 946 1,306n

Share of customers

using official car dealer's service

Index*

Customer retention (length of customer

relationship)

Number of al referrals and detractions per

customer

Ref

erra

lsD

etra

ctio

ns

Germany: Auto Sales

17SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

Germany: Auto Sales

Source: KBA; BAIN NPS studies 2005/06; Bain analysis

-20

-10

0

10

15%

-50 -25 0 25 50 75%

300KRegistr.2005

Opel

Mercedes-Benz

Audi

Ford

Renault

ToyotaPeugeot

Fiat

Porsche

300KRegistr.2005

NPS

Change in registrations 2002-2005 (CAGR)

VW

BMW

Smart

R2: 0.79

18SatmetrixMiami

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BOS

19SatmetrixMiami

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BOS

Correlation is even stronger for same-branch growth and NPS : Southern Region example

Bain Financial Services NPS survey 2006; FDIC Summary of Deposits DatabaseNote: Includes data from South only. South defined as AL, AR, DC, FL, GA, KY, LA, MD, MS,

NC, SC, TN, TX, VA, WV. 9795 branches included.

0

5

10

15%

-10 0 10 20 30%

$50,000,0002005 Deposits

Same Branch Deposit Growth 2002-05

Bank ofAmerica

Wachovia

SunTrust

BB&T

JPMorganChase

Amsouth

WellsFargo

$50,000,0002005 Deposits

Net Promoter Score

First Tennessee

Regions Bank

R2 = .83

20SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

Does it work everywhere?

“By the way, would you recommend us to a friend?”

21SatmetrixMiami

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BOS

Market Research View of NPS

• “NPS oversimplifies complex relationships”

• “What good is a score if it doesn’t provide solutions?”

• “Our [black box] index is based on far more rigorous research”

• “NPS is dangerous”

• “NPS does not link to growth”

• “Reichheld is a liar--or he is stupid”

22SatmetrixMiami

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BOS

Rapid adoption of NPS

23SatmetrixMiami

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BOS

“This is the best customer relationship metric I’ve seen”

Jeff ImmeltCEO, General Electric

January, 2004

24SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

NPS viewed as tool for cultural change

•CEO Leadership Role

•Joint sponsorship by CIO/CMO

•Compensation Driver

•Linked to Six Sigma

•Communications Strategy

•Monthly champions calls

•Standard Operating Procedures

25SatmetrixMiami

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BOS

1. Develop rigorous segmentation, set sample size to balance statistical rigor with capacity to close loop (with decision-maker)

2. Use 3rd-party vendor to ask 5 or fewer questions, leading with the NPS question

a. How likely to recommend us? Why?b. How likely to recommend my best competitor? Why?

3. Rely on supervisor/manager follow-up to probe root causes and take appropriate actions

4. Commit full-time, long-term resources to manage NPS, engaging all functions

5. Support workflows/reporting through web-automation, integrate with existing CRM systems . . . use Support Central orequivalent functionality

6. Use NPS to drive transformative, wing-to-wing process improvements

7. Establish a comprehensive program to leverage promoters

8. Elevate NPS in business reviews and communications

9. Phase out legacy Satisfaction/Loyalty surveys

NPS Standard Operating Procedures-GE

26SatmetrixMiami

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BOS

Many execs are promoters of NPS

“In the almost 20 years that I have worked at GE, NPS is the most powerful tool we have ever deployed.”

Dan HensonGE CMO

27SatmetrixMiami

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BOS

In 2001, Apple launched retail stores

Goal

Turn customers into loyal promoters by creating an outstanding retail and ownership experience.

28SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

Store layout fosters community

29SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

Services Designed to WOW

30SatmetrixMiami

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BOS

Apple Store Productivity

0

1,000

2,000

3,000

4,000

$5,000

Apple

4,032

Tiffany & Co

2,666

Coach

1,602

Best Buy

930

Neiman Marcus

611 557

Saks

362

Radio Shack

313

Annual sales per square foot

Circuit City

Source: Analyst reports

31SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

“We need fewer customers surveys—and more conversations”

Scott CookFounder of Intuit

March 8, 2003

Intuit Perspective: Scott Cook

32SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

TurboTax: Economics of Promoters, Passives, and Detractors

-50

0

50

100

150

200

Lifetime customer value (NPV)

Avg customerlifetime value

181

76

-36Promoter Passive Detractor

33SatmetrixMiami

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BOS

NPS at Charles Schwab

-40

-20

0

20

40

2004

NPS

-352007

23

“It’s the first thing I look at when I get to my office every morning.”

Walt Bettinger, CEO

34SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

How The Golden Rule Drives Growth

GoldenGoldenRuleRule

1) Buy More2) Feedback3) Refer

0-6

7-8

9-10

35SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

Simple Idea—But Requires Hard Work

• Which customers/which investments

• Training/tools for customer dialogue

• IT capabilities

• Team accountability and alignment

• Appropriate links to rewards

• Senior execs and front line rhythms

36SatmetrixMiami

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.

BOS

Books in stores February 2006NET PROMOTER.COM

37SatmetrixMiami

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BOS

It says, “recommend Me to your friends”