Enterprise car rental's simple lesson about customer focus

Like many companies, Enterprise wanted to know how they were doing with customers. They found a simple way to do it.

Fortune 500 companies do deep and vast amount of customer research. They use focus groups, market surveys, customer satisfaction reports and more.

A few years back, Enterprise (the car rental firm) was engaged in much the same activity - but they found that it was hard to actually discern anything useful in the huge amount of data.

The time required to sort through the data meant that even potentially useful things - such as data revealing a failing branch - was only visible months after the data was collected.

Andrew Taylor, the CEO of Enterprise (and son of the founder Jack Taylor) decided to try a simpler approach.

JUST TWO QUESTIONS

He decided to poll his customers using only two questions. One was about the quality of their rental experience. The second was about how likely they would be to recommend Enterprise to others.

From this slimmed down pool of data, Enterprise decided to track primarily the number of enthusiastic respondents. That is, customers who have a great experience and would recommend Enterprise to others.

When they focused on this single number, they found a surprise: the growth or decline of enthusiastic customers mirrored almost exactly the pace and growth of their business. Branch by branch, location by location.

A Harvard Business School graduate named Frederick Reichheld heard about Enterprise's new approach and was intrigued. Reichheld prepared studies to see if the approach could work across industries. The answer was an emphatic 'yes'. The more customers a business had who were willing to act as 'evangelists', the more the business could grow

It was a real breakthrough, because it was simple.

THE 'NET PROMOTER' SCORE

When Mr. Reichheld looked into Enterprise's survey - he found that only one question truly mattered to the results: 'how likely are you to recommend us to another person'.

(If you recall seeing or hearing this exact question from any number of companies, you can appreciate how pervasive Enterprise's approach has become.)

Reichheld found that the scale needed to discern the number of enthusiastic customers could also be simplified.

Enterprise used a scale of 1-10 but Mr. Reichheld made three groups of respondents - as 'promoters'(9-10 rating), 'passively satisfied' (8-7 rating), and 'detractors' (6-0 rating). He took the number of detractors and promoters as a ratio - and called that the 'net promoter' score.

For example, with 35 respondents, if 7 were detractors (20%) and 14 were promoters (40%) - your net promoter score would be 20% (40% promoters minus 20% detractors = 20% net promoters).

The net promoter score is interesting not only because it can track the growth of your business, but also because 'promoters' often spend more than others, and are willing to pay higher prices.

RESTAURANTS CAN ASK A SIMPLE QUESTION

Many restaurants don't have a reliable way to find out how customers react to their business.

Talking to customers in person will always be useful, but most customers don't offer revealing critiques and feel awkward about pointing out negatives. This can give a business a falsely positive sense that everything is fine.

Reading your own online reviews provides another peek at customer reactions, but also raises concerns about quality and reliability of the source. Some people like to complain, and they may not even be real customers of your restaurant.

There is a better way, related to the simple method Enterprise pioneered.

TRACKING YOUR REAL PROMOTERS

I am a big proponent of restaurants having a way to capture customer comments on their web sites (to help keep complaints private rather than hitting social media or online reviews). Taking things a step further, it's a small effort to create a web form on your site that lets you capture responses that help you count and track your promoters.

An open comments field - the most typical 'Comments' form on restaurant web sites can be supplemented with a single question with pre-supplied answers.

'How likely are you to recommend [restaurant name] to others?'

Answer choices can be pre-supplied as 'very likely', 'likely, but with reservations', and 'unlikely'.

Even with a passive approach, a form on your web site will over time collect a useful amount of data and let you observe improvements or declines in your performance.

A collection point for this sort of question can be added elsewhere on your site - even on your home page if you find a layout you like.

The work to do so is very basic web site programming. But, if you lack the resources to get it done, there are also online services that will help you create a form, embed it on your web site and host the data collection for you. At small levels of use it's even free. The easiest to recommend is Wufoo but Google Docs also offers these services for free.

AN ACTIVE APPROACH

If you want to take a more active approach, there are online survey tools where you can set up and send your survey to your email list of customers.

Some of the larger services are Surveymonkey and Surverygizmo. At small sizes, both companies services are free. Google Docs is also an option.

Aside from a direct email link, the surveys can be embedded in your other emails or on a web page. If you have an active social media presence, you can also easily post your survey (as a link) as part of a message on your Facebook or Twitter accounts.

Combining infrequent active surveys with a passive collection point on your web site should provide a useful amount of data and a continuing source that helps you view trends over time.

The number of promoters can give you a quick shorthand view into the health of your business. It can provide feedback around fundamental changes you make - such as changes in decor or price rises. And it can also be a simple point of focus that a staff can rally their customer service efforts around.

AND HOW ABOUT ENTERPRISE?

The original research about Enterprise is from 2003. So how are they doing now? Was their insight a flash-in-the-pan or a fad?

Apparently not. In the latest JD Power and associates rankings for 2013, Enterprise (through its two subsidiaries Alamo and National) holds ALL THREE TOP SPOTS in the car rental satisfaction rankings.

Not a bad result from a simpler focus on customer satisfaction. We encourage you to see what it might do for your business.

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