© 2015 – Side 1

ACCELERATING PROFITABLE GROWTH THROUGH SUPERIOR CUSTOMER LOYALTY (AND REDUCED CHURN)

Bain & Company, Fred Reichheld

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Worthy of Loyalty?

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Loyalty Leaders: Grow 2.6X competitor avg.

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Four Loyalty Behaviors Drive Growth

Repurchase

Buy additional lines

Referrals

Feedback

1

2

3

4

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Loyalty-leaders have not slipped into mediocrity

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The secret for building 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 Barrett December 4, 2002 Southwest

Airlines

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

Isadore Sharp June 25, 2003

Four Seasons

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Bad profit flouts the Golden Rule, alienates customers and demotivates employees

• Hotel: landlines 200x market rates

• Cellular: abusive roaming charges

• Rental Car: Gasoline refill @ 3X retail price

• Airlines: Change fees

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25% less pepper at the same price

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Who is to blame?

Tools for managing Profit

Tools for managing Loyalty

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

“Hold on Fred—we like our survey…..”

Andy Taylor, CEO Enterprise Rent-A-Car

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Balance of power

Net profit Net grrrrowth

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Closing the Loop: by local supervisor

Supervisor Customer

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Weekly Team Huddle

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J.D. Power 2013 North American Rental Car Satisfaction Study

JDPower.com Power Circle Ratings

for consumers:

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The Elements of the System

• Reliable Metric (rank-ordering branches) • Closed Loop • Shrink Bad Profits • Know Economics (value of promoter) • Huddle (Voice/Vote)

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Net Promoter

How likely is it you would recommend us to a friend?

Not at all likely

10 9 8 7 6 5 4 3 2 1 0

% % NPS =

Extremely likely

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Why intent to recommend is such an important signal?

• Best features

• Best service

• Best price

Head

• They know me

• They value me

• They listen to me

• They share my values

Heart

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CEO Bayer: “I take recommendations very seriously”

Dr. Marijn Dekkers

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Now: Net Promoter® Adopted by Thousands

Then

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Net Promoter® Adoption

100%

75

50

25

0

2004 2012 …2020 2006 2013

>50% Net Promoter Score Adoption

<5% Net Promoter System Adoption

Today

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Net Promoter System: 4 Core Principles

1. Categorize promoter/passive/detractor systematically

2. Close loop with all detractors (sample of passives/promoters)

3. F.R.E.D. a top leadership priority (eliminate bad profits)

4. Front line huddles motivated to delight customers

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Jeff Immelt: CEO General Electric; Chairperson of President’s Council on Jobs and Competitiveness

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

January, 2004

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Michael Diekmann: CEO Allianz

“The Net Promoter System...has made us a better company.”

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NPS Can Transform a Business

“Adopting NPS has been the single most important strategic decision we have made

since deciding to franchise.” - CEO Brian Scudamore

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Brad Smith: CEO Intuit

“Thank goodness for Net Promoter. It provided a framework for thinking about—and managing in this social media world…

our teams call it the love metric”

Brad Smith, CEO Intuit

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Tony Hsieh: CEO Zappos

“We use NPS every day to make sure we are wowing customers and employees.”

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Apple Retail Mission:Enrich the Lives of Customers and Employees (create promoters)

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Closing the Loop: Echoing Enterprise

Supervisor Customer

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A-B Testing

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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 32 Copenhagen1 BOS

ZipCar

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Is it the Chick-fil-A cows?

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34 34

NPS Drives Profitable Growth

0.0

0.5

1.0

1.5

2.0

$2.5M

-20 0 20 40 60

NPS score (2009)

Average sales per unit (U.S. 2009)

* *

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Second-mile Service

• Manager works front of store

• Help mothers with small children

• Umbrellas for rainy day

• Outdoor greeter at drive-through line

• Refresh Drinks

• Free celebration dinners for best customers

• Daddy date nights

• Valentine Dinner

• Alert for people who appear sad/lonely

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LEGO

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 37 Copenhagen1 BOS

American Express-Profitable WOW

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 38 Copenhagen1 BOS Humana core

American Express: Prioritize touch points

Value proposition

design

Early engagement

Solicitation marketing

Usage marketing

Acquisition targeting

Cross-sell,

upgrade Retention

Merchant Dispute

Marketing effectiveness

Channel management

Cost management, outsourcing

Brand management

Rewards programs

Technology, CRM

strategy

Customer entry

Replacement Card

Call center

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Finally, in 2013

AT&T Wins J.D. Power Crown for Customer Care.

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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 41 Copenhagen1 BOS

AirBNB

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AirBnB Customer Profiles

Cassandra Casual Host

“Now my visits to my boyfriend are paid for. Great

idea.”

Stephen Semi Pro Host

“Hosting on AirBnB is

partly about paying off our mortgage and partly about meeting amazing people any day of the

week.”

Paul Pro Host

“We post our

properties on about five different sites including AirBnB.”

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AirBnB Customer Journey Steps

How to Host

List Communicate Book Host

How to Travel

Search Contact Book Travel

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Tuft & Needle

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How Tuft & Needle gathers NPS feedback:

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Bonobos-Pants that Fit

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 47 Copenhagen1 BOS

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 48 Copenhagen1 BOS

NPS at Charles Schwab

-40

-20

0

20

40

2004

NPS

-352007

23

2010

35

Individual Investor NPS

“It’s the first thing I look at when I get into the office in the morning”

Walt Bettinger, CEO

• Branch Metrics

• Training

• Root cause closed-loops

• Clear link to loyalty economics

• ‘Bad profits’ elimination

• “CPS” (Client Promoter Score) fests

• HR integration (employee NPS)

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 49 Copenhagen1 BOS

Your baby is beautiful—may I hold him?