Net Promoter Community

Are there economic benefits for Net Promoter? Yes, according to Satmetrix's Dr. Laura Brooks, one of the co-developers of Net Promoter. So what is the economics of Net Promoter?

Well, first, there is measurable economic impact from promoters as well as detractors. Straight to the punch line: On average, the relative economic impact of promoters who recommend is that they bring in additional $565 in revenue and while detractors are responsible for $701 in lost revenue. This is from a sample of B2B software companies. This data was calculated by understanding the number of referrals or negative comments these folks gave.

So promoters bring in more revenue through word of mouth marketing, but they are also a driver of revenue growth while detractors are drivers of lower growth. No surprise here. In addition, promoters total value is much more then detractors. Again, no surprise. What I found most interesting with all these benefits of promoters – they are also have a lower cost to serve. So they cost less and are more filling!

Laura talked about important to amplify promoter community through customer testimonials, inner circles, and special communities to further cement the relationship. While there is a lot of attention given to detractors by most customers it is the smart companies are also figuring out how to leverage these promoters through the power of Word of Mouth.

The last word on economics is that committed Net Promoter companies see financial gains. On average, with B2B companies studied, they experienced 23% revenue growth over a 3 year time frame, with an average 9% gain in Net Promoter.

What I wonder, with data like this, why aren’t all companies using Net Promoter?

So here we are - a room full of people with our eyes closed pointing where we think north is - hands pointing in every direction. Andy Brierley, Project Director of De La Rue, is up on stage, telling us that our random and varied pointing about sums up De La Rue’s customer focus strategy before they embraced the (Net Promoter Score) NPS.

Andy’s talking about how they have harnessed employee ideas to dramatically improve customer experience reflected in turnaround in NPS figures (UK) from -34 to +34, and made productivity gains of £38m in two years (global). Wow.

De La Rue’s “My Contribution” initiative is an employee scheme that invites employees to identify business improvement solutions, implement them as projects, and get rewarded for them. Focus is to be on solving customer, employee (or shareholder problems).

Andy has put up a De La Rue ‘jam’ of the classified ad that Antarctic explorer Ernest Shackleton took out to recruit for an expedition

“Men Wanted for Hazardous Journey. Small Wages, bitter cold, long months of complete darkness, constant danger, safe return doubtful. Honor and Recognition in case of Success."

The challenge for De La Rue has been to embrace empowerment (allowing employees to drive the program), permission (turning employees into stakeholders for project implementation) and measurement.

“My Contribution” Program success is measured in terms of improvements to customer NPS and value of initiatives implemented. Key factors in making “My Contribution” work include

• Communicating program effectively across business
• Creating program champions in each site
• Training - giving employees problem solving, project management and facilitation tools
• Peer review of suggested ideas - rank, rate, comment
• Reporting and demonstration of successful projects
• Rewarding employees - “Spotlight” initiative where project managers of top project present their initiative to senior management
• Getting critical mass in terms of contribution

Andy’s is a refreshing jargon-free zone - but can’t help thinking that his “My Contribution” program is a gold standard exercise in applied Wikinomics - using mass collaboration and collective intelligence to drive customer experience - NPS - and therefore growth. Wow. Wow. Wow.

Final flourish - chart of De La Rue stock price over the period "My Contribution" has been delivering results, massively outperforming competition. I am inspired.

We began the Process Excellence track with a presentation from HSBC's Nadya Hijazi.

A Little Context

Because HSBC is such a large, global company it's difficult to present themselves cohesively to their customers. Perceptions of their customers differ widely based on where they are located and which part of HSBC they work with.

And, HSBC have a very competitive environment in which they must make a multi-million dollar investment in HSBCnet, introducing new functionality, and supporting geographic expansion. 

What They Did
HSBC needed a compelling metric at high level that would provide actionable data - one question and diagnostics was used to hit the ground running. A key point was that Nadya worked with the business teams to define the diagnostic questions - but she would only allow their questions to be included if they were ready to action the answer. That's a great way to ensure action takes place!

HSBC surveyed 27,000 customers across 24 countries with a complete survey of the end-to-end customer experience. The last two questions were NPS and why? HSBC also made sure that they included the end users in the survey, not just the decision makers.

Nadya presented three findings around detractors:

• 14% of end users who were detractors made 6 or more calls into call center vs. 7% of promoters.  That adds up to serious costs. This higher cost-to-serve goes across all aspects of HSBC brand - whether experience is personal or professional.
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• Quality was critical for the customer, and a major factor for customer dormancy and attrition.
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• Satisfaction survey - good measure, but NPS more powerful. Only "delighted" were likely to be promoters. "Satisfied" were more likely to be detractors. This surprising finding upset some people who thought they were doing a good job with a 70% satisfaction rating, but their NPS didn't tie up.

She concludes NPS is a measurement of the quality of the relationship versus satisfaction with specific event.

Put It in Context

Nadya related two key things to understand to correctly put your Net Promoter score in context: cultural differences and competition. HSBC found that their top scoring countries were the same as in the Satmetrix white paper. Furthermore, 75% of HSBC customers are multi-banked. They asked their customers to rate and rank their competitors in country which gave evidence of their relative position in market segment in that country. Key learning: do not compare country to country without knowing the cultural bias and competitive climate. It is more important to benchmark in country, and incentivize on local transactional NPS.

How to Move That Score? Innovate by Involving Your Customers!

Nadya implemented a technique called "tryvertising" - beta test online changes on their internet banking platform. They identified main issues, and asked users to road test and give feedback. It was quite revolutionary, as they used detractors and passives as the focus group for the issue. They were able to increase NPS 20%.

Second, involve lots of customers. Don't just use 5-10 people in focus group, involve everyone - she ran webinars with her channel across 3 regions. HSBC got excellent feedback, and had a big impact on their customers' perception of them, which proved to be good for morale for product team and customer!  And it cuts out a lot of discussion about what to do, as the improvement design comes straight from customer's mouth.

How Do You Improve the Impact of the Multi-Million Dollar Investment?

NPS alone is not the remedy to everything.  Understand how to make changes that strike a balance. Prioritize your customer issues and invest in what cuts across many of your customers, or what costs you your most valuable customers. But, remember, much of what you do is baseline or expected - it will minimize detractors, but will not create promoters.

An interesting technique on increasing response rates is to phrase questions around how the customer expresses something directly - this struck a chord for HSBC customers and doubled their response rates.

Nadya gave us lots to think about.

Sinead Kwant of Philips International quotes Dr. Morris Massey: "The gate for any change is always unlocked from the inside." This was a very engaging presentation if you count the number of hands going up asking questions at its end. If I was to summarize, the key ingredient that drove the success of the Net Promoter program at Philips is to gain the hearts and minds of employees. Employees engaged in the customer experience will deliver happy customers stated Sinead.

The challenge was large for Philips. They needed to get 120,000 employees to believe in the customer experience or the program would have failed. They have had success. So how did they do this?

Well first, it is Philips' ambition is to become a truly market-driven organization delivering profitable growth. A key part of this is to build loyal Philips customers using Net Promoter. Navigating change is hard, as Sinead states. So there were four key areas of the journey to build the program and engage employees:

• Awareness
• Understanding
• Buy-in, and
• Commitment.

The awareness objective was to introduce the concept of Net Promoter into the organization - this started at the top with Philips CEO Gerard Kleisterlee who became a vocal advocate. Senior leaders went to the call center and started to listen to customers. This really motivated the support center staff. Proof points and pilot projects were done to prove the concept and win over internal detractors.

The next stage was to understand the data and deliver the evidence that Net Promoter works. Philips proved that there were tangible benefits from moving passives and detractors to promoters. Sinead gave the example of positive growth in market categories where they were Net Promoter leaders. As Net Promoter leader, they out-performed their competitors, seeing a 4% annual growth above the market average. Where they worst-in-class they underperformed the market by 3%. I guess that Net Promoter is tied to growth!

Building buy-in was next. First, they did the voyage of discovery. Two hundred executives went to talk to leading companies to learn how to engage their employees. They talked with FedEx, Starbucks, GE and other leading loyalty companies to learn what best practices worked.

Last is commitment - secure commitment to structure, resources, expertise and next steps to deepen deployment of the Net Promoter program. Also important is training, business workshops, and other employee communication strategies to get everyone up to speed.

When asked in the Q&A, Sinead stated one of the key learnings of this whole journey is to keep it simple. Do not over analyze the data. Previous satisfaction studies did not allow them to act on the drivers of the data nor engage employees. As Sinead stated, this is an on-going process for Philips. They have already seen positive results, but there is more to come.

The room is still full for the last session for today. To end the day, we are hearing from Fred Reichheld, with his talk on Loyalty and Net Promoter. Fred makes the point - relationships worthy of loyalty should be a top priority - but that in most business it is still a joke. This is why Fred has stated that he is no longer the high priest of loyalty but is now the godfather of growth.

Loyalty leaders are growing at 2.6x their competitor averages.

But Fred stated that by investing in loyalty, you get big financial returns. Enterprise Car Rental has achieved the number one slot in the car rental industry by focusing on loyalty. Southwest Airlines, Costco, Chick-fil-a are all loyalty leaders with loyal customers and employees. These guys are treating people in a way that earns their loyalty

The secret of building loyal relationships? Fred quotes Colleen Barrett of Southwest Airlines "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."

Bad profits, while providing short term gains, do not lead to long term growth. Fred blames the CFO for focusing on the numbers and not the customer experience. Accountants can't distinguish good profits vs. bad profits nor are they concerned with the golden rule.

So, the way to grow - build promoters! They generate the growth and profits. So how do you do that? Listen to them. Companies who track referrals see the value of building customers that will recommend you. For TurboTax, promoters are worth 80% more then the average customer and detractors are worth 36% less then average. And TurboTax has been listening: when customers told them they did not like rebates, they acted. The result: their Net Promoter score has gone from 46% in 2003 to 60% in 2005 and market share in the same period from 70% to 79%.

Fred also talked about the history of Net Promoter and why the 0-10 scale (something about it being invented by the caveman). But the bottom line is that the Golden Rule does drive growth and there are many business examples that prove the point.

As we enter the home stretch of Day One of the EMEA Net Promoter Conference, I cannot but be impressed with the amount of best practices that have already been shared by some very distinguished speakers. And this trend continues well into the afternoon as I have the pleasure of covering two speakers for you who will be laying out some key concepts that are the foundations for running a fine tuned Net Promoter program.

The speaker I am covering first is Simon Lyons, Global Head of Marketing and Communications for Aggreko, a generators rental business targeting companies, individuals and countries as well as providing mission critical power supply to disaster hit areas and regions impacted by war. They are a global company with a 1.5 billion market cap.

Simon talked about how things were when he joined 3 years ago. There was no collation of customer issues, no structured issue-handling mechanism and no real voice of the customer coming in to Aggreko. As Aggreko moved toward addressing these challenges, the inflection point came through a Harvard Business Review article that showcased similar business models to theirs where NPS was linked to revenue.

One of Simon's immediate actions was to move marketing closer to operational business. He rolled out the Net Promoter program using a phased approach, all the while addressing the challenges that had been the impetus for Net Promoter at Aggreko.

Three key points:

1. Get the support of your CEO
2. Keep the data simple
3. Make sure that the data can be used to produce useful insights

Simon made sure that the data collected through the Net Promoter surveys was made available to all Aggreko employees immediately. And I mean immediately! The responses go out to the groups who are required to take action and these groups or individuals are given forty-eight hours to connect with the surveyed. If they miss, their superiors are notified and are put on a similar forty-eight hour clock. Talk about intense commitment to follow-up!

Aggreko has seen a change in the way their customers have responded, and internally, they have found that the benefits of having NPS as a program brings the focus back on:

• Credible data for performance metrics
• Real time metrics that the company can act upon
• True operational transparency

All these elements combine to illustrate a facts-based picture that allows Aggreko to get closer to what truly matters to its customers.

Martyn Christian, VP Worldwide Marketing for IBM Enterprise Content Management, talked about their success with implementing Net Promoter and customer loyalty program over the last 5 years.

Wow! These results tell the story:

• Increased Net Promoters from -6.73% to +20% (Net Shift of +26%)
• Acting on Key Drivers, Drove Over 30 Company Wide Improvement Initiatives
• Increased Revenue from Existing Base from 72% to over 80%
• Increased Net Profit 10 percentage points
• Increase “Positively Ecstatic” Customers
• Database with customers willing to serve as references increased from 100 customers to over 600 in 12 Months
• Published over 100 Customer Success Stories
• Increased Press Activity
• Analyst Validation – Gartner/IDC/Forrester briefings on program

So how did they get there?

They collected the feedback, but more importantly they acted, in the front lines, on the data.

One of the things they learned after the dot-com bust was that they had to invest into their existing customers – up-sell and cross sell. As Martyn stated, nobody will buy from you if they do not know or value you. Because of this, mining their existing customers was the core of their strategy over the last few years.

They had new products coming to market so central to their goals was to increase revenue, sales efficiency, increase customer and partner loyalty, and to build barriers to entry for competitors, all while selling the new products into the installed base.

FileNet started with a simple business problem that sounds familiar – they had, quoting Martyn, “No systematic process or program to generate advocates of our products and improve customer loyalty”. This resulted in a fragmented client relationship model; limited visibility into the customer’s enterprise; a fragmented customer-centric culture; and some departments that were engaged but most that were spectators. Employees, like the engineers, did not want to visit customers, especially unhappy ones.

One of the first things they did was to set goals, including Net Promoter targets for all employees worldwide. They also got executive sponsorship from the start. They built communication programs around this approach to drive compensation strategies and focus on response rates.

But the key was they acted! “Hot sites” was a Monday morning event where they reviewed customer issues. As Martyn stated, “Put the customer in the center of everything”. Relationship with the customer was a top company objective.

From a roadmap point of view, they started with a customer engagement initiative which resulted in a customer loyalty initiative, from Satmetrix, which was launched as one of the CEO's top 5 initiatives. From this program, they identified three areas to further investigate: a product lifecycle; leadership development; and development lifecycle initiatives.

They created a loyalty council, which was focused on direct customer action for all “trigger 6” surveys (detractors). They tied this into their CRM and set company targets around this. There was a case-by-case direct customer engagement in all functions – both front line and back office.

They also set some goals – like calling on existing customers at least 4 times a year – even if the customer had no budget! They also focused on segmenting customers as tune-up accounts or development accounts, which resulted in specific engagement strategies.

Another way they got value into the CRM system was to integrate the customer data so sales people could easily link into their customers’ experience data inside the CRM system.

Finally, every employee had a part of their variable compensation tied to NP or other customer engagement initiatives. They also had a sales contest where they could win a customer experience award, for which the sales teams were judged on a number of customer metrics, including the NP score, response rates and revenue. This prompted a fierce global competition between all the sales teams to win this award.

Here are some of the key takeaways that I got from Martyn’s presentation:

• Do not over-complicate!
• • Start simple and direct
• Create earlier and stronger transition/change management activities
• Share information across all disciplines
• Re-think functional roles and responsibilities
• Tie compensation to customer Loyalty
• Take a programmatic approach
• • Consider this a component of your corporate fabric
• Prepare the company
• • Education/Roundtables

All great advice!

We are kicking off the Net Promoter Conference here in London at the Park Lane Hotel with introductions from Satmetrix's Martin Green, Managing Director - EMEA. He kicked off the meeting with the one big feedback item from the first NP conference in New York in January: more information about how to implement a successful NP program.

Since the theme of this conference is “driving results with the NP Discipline” it is only appropriate to talk about the framework that drives NP results. So what is the NP discipline? There are four main areas:

• Organizational Alignment: gaining alignment and preparing the organization
• System Infrastructure: building the system infrastructure to support collection and distribution of customer feedback
• Process Integration: integrating loyalty data into your employees day to day business practices
• All of this must be build on a foundation of executive sponsorship, setting the tone from the top by truly driving a customer centric culture throughout the organization

But you will be seeing more about this in other blogs about the presentations from the conference.

Martin also shared some insights into the Net Promoter community and the conference in general. First, there are over 5000 members registered on the NetPromoter.com web site. At the conference, were again, like New York Net Promoter Conference, more than 200 people from 23 countries with strong representation from the telecom and financial services industries.

Looking at the conference agenda, it looks like it will be exciting. Wish you were here.