Over the past year, General Electric Co. has rolled out a companywide performance measurement system called Net Promoter Score (NPS), a simple metric that indicates whether customers would recommend GE to other businesses.
It's a big deal at metrics-driven GE. So big, in fact, that at the company's annual executive meeting in January 2005, Chairman-CEO Jeffrey Immelt announced that up to 20% of senior executives' annual bonuses would be tied to the NPS.
"Last year we talked about the Net Promoter Score and got on board with the Net Promoter Score," said Immelt at GE's annual executive meeting in Boca Raton, Fla., last month. "I'm convinced that this is a way we can drive measurement, we can drive improvement and we can drive great communication in the company."
NPS is a metric that was developed by Bain & Co. loyalty consultant Fred Reichheld, who this month will publish a book, from Harvard Business School Press, about NPS titled, "The Ultimate Question: Driving Good Profits and True Growth."
The beauty of simplicity
"The beauty of NPS is that it's simple," said Pete McCabe, chief quality officer for GE Healthcare, the first GE business to use NPS beginning in October 2004.
"GE has thousands of internal metrics on financial and operational performance, but the only way I'm ultimately going to grow my business is to have customers tell others about us and buy more from us," he said.
Over the past five quarters, GE Healthcare has conducted surveys with more than 20,000 customers around the globe to calculate the NPS for various businesses. It uses the score to learn about potential problem areas, then implements Lean Six Sigma-a scaled-down version of the quality control method Six Sigma-to develop new processes to improve the situation.
For example, in GE Healthcare's European diagnostic imaging business, the NPS score was low, McCabe said. He declined to give the exact score.
"Our customers wanted us to be more responsive. They expect us to call them back within 30 minutes [if they report a technical problem]," he said.
The response time for this particular business was an average of 40 minutes.
To address the problem, GE Healthcare businesspeople across all different functions met and analyzed call center response processes. Using Lean Six Sigma, they redesigned the process so that the average response time has dropped to 10 minutes. The NPS for that business has improved by 15 points, McCabe said.
In GE Energy's parts business, the overall NPS was -11, said Luis Ramirez, president of the unit.
One area that was dragging down the overall score was the quote process, which had a score of -33, Ramirez said.
His goal was to get the overall business score above zero, so the number of promoters would be higher than the number of detractors.
Through customer interviews, the unit learned that the biggest problem was response time in answering a request for a quote.
So Ramirez pulled teams together across functions and put them in a room for two weeks to figure out how to fix the problem.
Scores prompt changes
Using Lean Six Sigma, the teams identified 85 different steps that were used between the time a customer asked for a quote and the time GE delivered a quote. The average response time for delivering a quote was 30 days, and the average order conversion rate was 17%.
By identifying waste steps and improving processes in the quote system, the team was able to improve the average response time to nine days and the average order conversion rate to 30% in December, the first month in which the process was used.
At GE Capital Solutions, the NPS has been used to improve the cycle time for funding deals from 50 days to five days, said Ken Peters, customer loyalty leader for GE Capital Solutions, which is part of GE Commercial Finance.
His business also pulled teams of people into a room for two weeks to analyze and improve business processes using Lean Six Sigma.
"It's a big investment," Peters said. "When you get into a room with all the people involved in a process, you are surprised at how many people may touch the process, and you are surprised at how the process works."
The bottom line, he added, is listening to the voice of the customer.
"This puts the customer at the center of our business," Peters said.