Richard's and Laura's Blog" + " Community Blog

Oct 28, 2012

Dear Diary:

I’ve finally cracked it. I’ve been looking for a way to grow companies that doesn’t involve creating promoters. It must be some unique form of advertising model, because companies spend so much money on advertising that it must work better than customer experience, right? Otherwise, it would make sense to plough the money into something boring like better product, shipping, service (yawn). Nowhere near the fun of showing us a catchy Super Bowl ad!

It’s going to involve some kind of enticement to get customers to try products at a massive discount. Once through the door, they will convert to full paying, profitable lifetime contributors. It’s like advertising – doesn’t rely on flakey word of mouth – only different.

Fingers crossed for the Giants tonight!

Oct 29, 2012

Dear Diary:

Despondent! Turns out (as usual!) someone thought of it before me. In fact, worse than that, several people did and convinced investors to give them hundreds of millions of dollars! That could have been all mine! Can’t believe my bad luck. Some company in Chicago called Groupon and, worse still, they seem like they already went public.

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Orchestral Maneuvers in the Dark

What happens when tech guys build and sell cars? Well, we don’t know yet. If it’s built like computer software, well, expect people to replace the steering wheel with a new “ribbon” across the top of the dashboard. Once you have learned where each function – like the left turn indicator – is located, the next rev will conveniently relocate the function. Or delete it. Or perhaps, in the Apple version, not offer braking as “stop” is too, well, negative a concept to add to a product.

Or perhaps you have Tesla.

Like many before me, I was wowed by the concept and the opportunities to replace crazy expensive California gasoline with crazy expensive California electricity. That, and drive an all-electric car that will give much more of a literal meaning to my tendency to coast down the mountain from Tahoe. Or perhaps it’s having Google maps on the console that makes it feel so...geek chic. Anyway, I dutifully filled in the paperwork and joined the queue somewhere in the 10,000’s backlog (that’s no joke) to wait for my opportunity to test drive a car I want to buy, if not sight-unseen then certainly performance-unseen. Wait a minute! You don’t get to drive a car before you buy?

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Blog Tags : b2c, customer, customer_experience, netpromoter, owen

I couldn’t resist. Once you watch the video you have to buy the product. It must have been the dancing bear, a staple of any good advertising campaign. So now I get my razor blades from www.dollarshaveclub.com. And, in a small way, I just diminished the value of the Gillette brand.

Of course, it’s not just the advertising that makes this such a compelling offer. Those blades are cheap! And “F**king great” as Mike, spokesman andLogo3.jpg founder, is quick to point out. But really, this is just an exclamation point on a business relationship trend that is going to turn every business on its head. We are now entering the subscription economy.

Twenty years ago I was working hard to sell personal computers with Dell. Back then, we thought of two types of customer: relationship and consumer.

Relationship customers were typically large businesses, who demanded and financially justified a continuous dialog with their vendors. You didn’t sell them a product, you sold them a multi-year strategy for products with, of course, lot of machines as part of the deal. It was a relationship worth investing in; for your efforts you earned a stream of millions of dollars.

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Blog Tags : owen, relationship, satmetrix, subscription

Well it’s over. Put away the Kleenex and start thinking about the football season starting (either side of the Atlantic) as an excuse to fill the hours of un-programed life left vacant by the closing ceremonies. As we look back at the games, what have we learned? My top three takeaways:

  1. The athletes are looking younger every year
  2. The rockstars are looking older every year
  3. The Olympics have found some common ground with your net promoter program

Of course they have! We eat, drink and sleep this stuff so we have to find a connection or we couldn’t write a blog.

First, the gaming. Even in a super-ethical, values based “organization” like the collective Olympic athletes, the boundary between gaming and cheating is pretty fuzzy. If there are high stakes, if people care, there will be gaming. In your organization I’ll bet you have the equivalent of the Chinese badmintonMedals_2265798b.jpg players who think that the technical interpretation of the rules is more important than the spirit of the program. There are many ways in which people can “go through the motions” in your program but ultimately it’s the “spirit” of the program that matters most – the culture of customer behavior – and technical compliance is not usually the failure point for customer experience initiatives.

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Blog Tags : netpromoter, nps, olympics, owen, satmetrix

I’m test driving a clever device called the “fitbit ultra”, an electronic pedometer that advertises “real time activity stats so you know how close you are to your goals”. The “ultra” designation refers to the fact that this version will actually exercise for you while you sit in the bar. At least that was my hope: when I hear that technology will help me lose weight, I cling to the notion that someone will solve the problem in a way that involves, well, less sacrifice on my part. Sadly, the fitbit merely measures my feeble efforts, it doesn’t even lie about them to me (another important design feature that I have thoughtfully submitted). Gaming the result is not supported.fitbit.jpg

One of the most intriguing features is an ability to measure my sleep efficiency. Up to now, I hadn’t thought of my sleep as being particularly inefficient, but in an era of hyper productivity, it makes sense that I should care, doesn’t it? So I eagerly awaited the results. After a trial of several weeks, I know with reasonable certainty that I have a sleep efficiency of 90% or higher. I will sleep well, knowing that. Or perhaps I won’t.

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Blog Tags : fitbit, leaders, nps, owen, ultra

“We know you have a choice in air travel, and you made a bad one”

Bender, “Futurama”, Fox Broadcasting Corporation

Remember the day when corporate leaders around the world watched eagerly to see the news break on their customer satisfaction scores? Remember the flurry of transformation activity that took place to address the major issues identified? No? We don’t either.

This week, the ACSI released its annual report on airline customer satisfaction and provided, with perfect timing, an illustration of how the world has been changed by technology. The ACSI approach is right in line with traditional measures of customer sentiment, comprising as it does a metric that doesn’t matter (satisfaction) with a process that provides a slow and infrequent result (once a year). It’s not much of a surprise that few corporations use this metric and an estimated 35% of large US firms use NPS; but it is a touch ironic that the leader in their survey, JetBlue, is a well-publicized adopter of Net Promoter.

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Blog Tags : airlines, benchmarks, jetblue, nps, owen, sparkscore

Perhaps it’s because this is my first opportunity to vote in a US presidential election, I’m fast becoming a political junkie. Hence my excitement to see data on presidential Net Promoter Scores pop up from our friends at BigInsight the other week. I suppose it should come as no surprise in an era of a jaded political public, it’s still eye popping to see such low NPS for the two leading candidates.

0425-obama-vs-romney.jpgAccording to the data, we have Barack Obama at -80.7% NPS and Mitt Romney at -59.3%  NPS. If you are reading this blog and are unfamiliar with the methodology (hope springs eternal that people read this at all), the simplest way of thinking about these numbers is this: virtually (not quite literally) nobody would recommend either of these candidates. Marginally fewer people feel so negative about Mr Romney than they do about Mr Obama. To put in context, these scores are really bad. If they were businesses, we would invite them to speak at our conference just so we could figure out how they stay in business.

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Blog Tags : election, nps, owen, politics, presidential, sparkscore

Headline from the WSJ: GM pulls advertising budget from Facebook! Days before the IPO, that’s just plain mean spirited. If I was banking on a $100bn valuation, I might be a tad concerned about this development. With a budget of over $3bn to spend on ads, GM is the third largest spender in the US (P&G is #1). Perhaps they were miffed that they only have a $33bn market cap after all these years, and quite a few motor cars sold. Either way, the implication is that targeting Facebook members as advertising opportunities is the principle value from the site is missing the point. Facebook is a treasure trove for companies.

I am of course, looking to the social voice of the customer. I’ve made the gross generalization in the past that advertising spend is simply a tax you pay because your customers are not advertising your product for you. That’s extreme for effect. But it is true that companies with higher NPS don’t need to spend as much money on ads as those who have lower, to get the same result. It’s a logical conclusion from the word of mouth economics studies we have done around NPS.

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Blog Tags : facebook, media, netpromoter2.0, owen, social, sparkscore

" …'Ere, he says he’s not dead. Well, he will be soon, he’s very ill. … I’m getting better! No you’re not, you’ll be stone dead in a moment. …I think I’ll go for a walk You’re not fooling anyone, you know"

Monty Python and the Holy Grail 

Surveys are the worst possible solution to the data collection problem, until you consider the alternatives, the joke goes. The punchline is that there are no alternatives. It’s fast becoming time to reconsider. 

Fact is, surveys are on a steady, but inevitable, fall from grace. I will illustrate my case through example. Google "Nielson Box" and choose images. Take a look at the pictures, it’s like looking at stills from one of those fashionable TV series set in the 50’s (which presumably Nielsen measures) when a computer could conveniently fit into a small living room (if you had the air conditioning, which you didn’t). It’s not the future, but it was the only available tech at the time. Advertisers showed you commercials, you watched (yes son, we watched TV commercials back then!) and advertisers had to figure out if they got value for money (good luck with that). Then came click through ads and you didn’t have to guess as much. Next, coupons attached to your facebook page that will not only enable the promoter to track your exact purchase, and that of your friends, but also probably whoever you stood in the line next to at Starbucks this morning. OK, I made that bit about Starbucks up, it’s not shipping yet. 

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Blog Tags : 2.0, media, netpromoter, owen, social

“Before I draw nearer to that stone to which you point,” said Scrooge, “answer me one question. Are these the shadows of the things that will be, or are they shadows of things that may be, only?”

GhostOfChristmasFuture.png

If you care about NPS, you should care about your relative NPS. It’s that time of year – the benchmarks get published and you get a glimpse into your company’s future.

But before I prognosticate, a word on benchmarks. Your own NPS data is almost certainly different than the benchmark data that gets published. There are several reasons for this (all these are real examples)

Sophisticated reasons:

  • Sample differences, different mix of customers
  • Independent data collected by a third party might be different than when collected under your brand
  • Comparing transactional NPS with relationship measurements 

Less sophisticated reasons:

  • You
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Blog Tags : benchmarks, nps, owen, relative, usaa

I’m bad to the bone
George Thorogood

Investing your entire 401k in Enron stock.


Marketing Las Vegas as a “family friendly” destination.


Microsoft Bob.


Amongst the worst business ideas ever, customer experience zealots add “dependence on bad profits”. For the Net Promoterati, the label of “bad profits” is wielded like a medieval mob scene accusing an unpopular villager of witchcraft. It’s time to break out the pitchforks and torches.

I’m here to tell you it’s all wrong. Leave bad profits alone. What did they ever do to you? (Except reduce your NPS, of course.)

The latest assault on bad profits is from the UK government. Say what you want about murderers or perpetrators of mayhem, the British media hath no fury like a consumer wronged. It is thus that the BBC gleefully informed me that the government is working to stamp out the practice of charging fees that are “in excess”. Consumer groups welcomed the news. “Drip pricing” is going to be regulated. No, we are not charging for drips, it’s the unconscionable practice of revealing more and more incremental pricing as you go through the purchasing transaction. (for a humorous, but rude take on this, see the following

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Blog Tags : bad, owen, profits

I recently saw a presentation from ad:tech San Francisco in which the following phrase was used:   "Recommendation is the new advertising."

The substantiation for this claim was that 90% of online consumers trust recommendations from people they know more than any other source. This of course starts one to wonder whether advertisers have entered the world of recommendation, in which they can try to influence that recommendation to achieve business benefit.  In considering this trend, I've also noticed that the window from Buy to Advocate in most of the advertising models shows this cycle as very short – meaning once someone makes the decision to buy, they immediately become an advocate.  This may make for an interesting model, but we all know what happens in between buy and advocate: the customer experiences a company’s brand, product, services, support, etc.  And along the way, perceptions are created that either serve to counter that initial buy decision or enhance it.

True recommendation comes from a positive feeling created through a multitude of experiences – it is a natural extension of these experiences, not a manipulation. Understanding these experiences – both online and offline – is still vital to any long-term customer strategy. As we know from word-of-mouth analysis, the value of a Promoter is both their lifetime purchase behavior in combination with their positive referral behavior. The combination of the two yields a total customer's worth. And we also know that the value of that referral behavior has exponentially changed through social engagement. Promoters are referring at greater rates across industries. Undeniably, social influence is growing.

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Blog Tags : brooks, media, nps, social

"Hold everybody accountable? Ridiculous!"

W. Edwards Deming

Seems like five laws is one too many? Suffering from “Law Fatigue”? Worried that you have already broken so many laws that you are in danger of being busted by the NPS Police?

If you have endured this far, you are probably looking for a catchy, motivational final law. One Law to "rule them all?"

So the notion of "accountability" doesn't exactly jump off the page as that Law. But put a hold on that judgment, friend. You see, organizational accountability is where the change "rubber" hits the corporate "road".

Organizations, particularly large organizations, have a problem getting stuff done. Put yourself in the CEO shoes for a second - assuming you are not already wearing them. You have a strategic imperative to create promoters. Maybe it's even going to require a massive change in culture, process, operations. If you are one of the majority of companies that isn't a loyalty leader and for whom your company culture wasn't born around the customer experience, this is tough stuff. For the leadership team, the weapons of choice for change across the organization are compensation (reward) and accountability.

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Blog Tags : law, net, owen, promoter

"Reality is that which, when you stop believing in it, doesn't go away."- Philip K. Dick

Economists have micro economics and macro economics. Net Promoter leaders have micro NPS process and macro NPS process.

Micro processes, or operational processes are all about closing the loop, activating promoters – they are focused on the individual, customer or business. It’s customer experience improvement based on the “don’t just stand there, do something” school of management – and it works. To an extent.

You see, customers love companies that show commitment. Remember the old adage that a well executed service recovery actually improves the customer perception of your business? Well, it works to the extent that customers don’t get exhausted by a company constantly executing flawless recovery of errors that shouldn’t have happened in the first place. After a while, they just want to see the “Maytag repair man” strategy (the guy who has no real job to do because apparently the hardware never breaks) and not the “we try harder” approach. They want Yoda – “do, or do not… there is no try.

Companies that focus entirely on tactical closed loop execution for detractor recovery risk making the same error in judgment that the lookout on the HMS Titanic made when he bragged “just wait until you see the turning circle on this baby at full speed”. Tactical execution just isn’t enough.

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"All the women are strong, all the men are good looking, and all the children are above average."

Garrison Keillor, Lake Wobegone Days

Most performance measure in business are relative. Market share, growth rates, earnings. We benchmark against others all the time. But with NPS, many companies don't really know where they stand, and where they stand could be the ultimate measure of performance.

Several years ago, Bain and Company did some great research to understand how profit pools got divided up by industry, and how NPS played a role in that. They found that every industry had a “bright line”, an NPS score which separated winners from the pack, and that those who entered the winners circle (so to speak) enjoyed a disproportionate share of the profits in their industry. This shouldn't surprise anyone; in most industries profits are not linearly correlated to size or even market share. It's not a fair game - it turns out it's rigged in favor of NPS leaders.

What's really interesting to me, however, was that the bright line that separated the leaders was not uniform across all industries or geographies. Rather, it varied significantly by industry. This should come as no surprise: we usually see that Business to Business NPS results are often significantly lower and less variable than Business to Consumer. We also know that customers compare and formulate perspectives based on their expectations, which can vary according to prior experience and price. We teach customers what to expect in our industry, then we give them relative pricing to help set their expectations around our role as discounters or premium players.

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“The second rule of Fight Club is: you DO NOT talk about Fight Club!” - Tyler Durden, Fight Club

The Second Law of Net Promoter is “You MUST talk about NPS!”

Well, maybe not, but not far off. Actually, it’s more like “you must act immediately on customer feedback”. This is a little unkind because everyone acts, to some degree, on customer feedback. And “immediately” is quite subjective, isn’t it? But it's the spirit of the second law that we should focus on.

If you asked people what they least liked about taking surveys, they might come up with:

  • “Too long. I successfully cultivated a small stalactite cave while filling in the answers”
  • “Stupid questions they should know the answer to already. Did I stay in a hotel that they are asking me to rate? If I didn’t it was an amazing lucky guess on their part”

But, in the context of this blog:

  • “What’s the point?”

Sure, we say we are grateful for their feedback. But we don’t reciprocate. Worse, we have trained people to expect nothing, so why should they invest in us? In ancient times, before 140 character limits meant something to a writer (yes I’m that old) researchers would gather data by making lots of phone calls. Consumers would welcome these calls, as this coincided with a low point in domestic culinary expertise and the decline of quality TV journalism, so having your dinner or TV show interrupted by a stranger was a welcome break. How the hours would fly by, helping the hapless researcher (for it is they) understand exactly why we could use a firmer door latch on our Frigidaire Rollermatic. We would end the call confident that our opinions would be represented in the form of a detailed annual report that, in a pinnacle of decisive momentum, the CEO of the firm would pound the table demanding action or heads would roll!

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So, Los Angeles survived Carmageddon. Unworthy of any movie plot where LA is usually reserved for the most heinous destruction, (does that say something when those who live there constantly make movies destroying their city?) the 405 freeway opened ahead of schedule. Or ahead of expectations, at least.

It’s tempting fate when so many civic projects go so horribly wrong to ask the question, but have we become a nation of sandbaggers?

My flight gets in on time. We left the gate 20 minutes late. I guess we have the pilot, Captain Dan Dare, to thank for this heroic act. Did he go to the mat with air traffic control to get us a faster route? You can imagine the cockpit conversations:

Co-Pilot: But Dan, think of the fuel burn! Don’t you realize that Jet-A fuel is up 40% in the last year? Think of the profitability per passenger seat, for God’s sake man!

Dan Dare: Dammit, Mike, we can’t let these customers down. The wheels of commerce; families ripped asunder; just think of our NPS! Push the throttle to 11 and let’s get them there on schedule…

When

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Blog Tags : competition, expectation, experience, intel, nps, performance

Three shall be the number thou shalt count, and the number of the counting shall be three. Four shalt thou not count, neither count thou two, excepting that thou then proceed to three. Five is right out.”

Instructions for the Holy Hand Grenade of Antioch - Monty Python*

We all spend a lot of time dealing with the sophistication of Net Promoter but it’s worth, on occasion, reminding ourselves of the merits of getting the basics right.

With this in mind, and with all humility, I offer my Five Laws of Net Promoter as a starting point for discussion. If we need a simple compass to program success, I hope this may help us stay on the right track. Or, you may decide that “five is right out”.

  • The First Law of Net Promoter: You need to know your score, and it needs to be trustworthy
  • The Second Law of Net Promoter: You must act immediately on customer feedback
  • The Third Law of Net Promoter: You need to know how you rank against others
  • The Fourth Law of Net Promoter:
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A math quiz for my 11 year old son:

It is 419 miles from San Francisco airport to Las Vegas airport. And 2 miles from Las Vegas airport, terminal 2, to your hotel room. If the average speed of a Boeing 737 is 560 mph in cruise, and your average walking speed is 3 mph, how long will the total journey take?

Of course, it’s a trick question. The answer is, ALL NIGHT.

If you could walk from the terminal at Las Vegas to your hotel room, without being roadkill, it would only take you 40 minutes. Of course, you can’t do that. The airport planners, car rental companies and hotels work to ensure that, when Southwest airlines proudly announces that “the safest part of your journey is over” as they land, they could also add “the shortest part of your journey is over”.

Las Vegas, like many airports, has constructed a “consolidated rental car facility” which they proudly announced was “for your convenience”. This is great news, as I had been thinking that having the car rental facility within a short walk of the gate had been very inconvenient in the past. Now it’s located in a neighboring state, Kentucky, and is accessible by a bus ride (see prior postings on airport buses). By the time we arrived, Hertz was doing a cracking trade (at 11:30pm), and required 30 minutes of waiting time before service, during which they processed five other customers at their 3 desks. It’s hard to figure out what people are doing in these situations, but from the safety of the queue a well trained eye can hazard a guess:

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During a conversation with a customer, the following exchange really struck a chord with me.


“Our CEO is starting to talk about the company being customer-centric”


Good news, right? Change starts from the top and all that. Net Promoter programs need executive sponsorship. And this is a very big company! Think of the opportunity.


“I don’t believe him.”


Four little words. Volumes of meaning. What those four words actually meant was:


“We say we care about the customer, but we don’t.“
“I’m skeptical we will ever change that view.”
“Our CEO will never put the words into action.”

The phrase “putting customers first” has become a bromide, a placatory statement.


I recently sat in a conference of the 100 top managers of a significant UK business as the top executive led his recap of their (successful) financial year. I heard the term “free cash flow” 6 times in 20 minutes. People were happy. Stock price got a mention. Then the #2 executive did something quite remarkable, something they had never done before. He welcomed two major customers onto the stage, sat them down and asked them if they would recommend his firm. In a display of mutual corporate courage, he asked two people – who he

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