Net Promoter Community

Part 1: Leaping into the Net Promoter Domain

I am writing this blog on the plane ride home from the Net Promoter Conference in London. As I ponder the success stories I heard at the conference - stories from GE Real Estate, Aggreko, Philips, Groupe Neuf Cegetel, and other prominent firms - it occurs to me how critical Net Promoter has become for these businesses. Many attendees who were "on the fence" at the outset of the conference have jumped over to join the Net Promoter community. Success is contagious.

I'll give you a few examples. GE Real Estate has nearly doubled its revenue since implementing its Net Promoter program. The loan-processing giant attributes 25 percent of these revenue gains to Net Promoter - to the tune of $3.4 billion. Meanwhile, Net Promoter is helping broadband supplier Groupe Neuf Cegetel become a leader in member satisfaction by monitoring customer activity in its call centers. For LEGO Group, success with Net Promoter is all about business transformation and brand revitalization. FileNet (now IBM Enterprise Content Management) reported a 26 percent improvement in its Net Promoter score, accompanied by an increase in revenue from its existing customers. According to its case study, FileNet's sales from existing customers have jumped from 72 percent to 80 percent, yielding an increased net profit of 10 percent. In addition, Philips revealed how it is out-growing competitors in segments where Philips is the Net Promoter leader.

What do these companies have in common? They all credit Net Promoter for managing and improving customer experiences. Their employees understand the value of building a network of promoters. They know that having "net-positive" promoters is good in the same way as net profits: it's a currency that drives growth. Thus these companies measure success not only in monetary terms, but in the goodwill of their customers. Finally, they have a reliable metric to track their progress.

The companies who presented their stories in London realize the value of a reliable customer metric just as CFOs understand the value of business metrics like cash balances, days sales outstanding (DSO), and gross margins. These are tried-and-true financial metrics, just as Net Promoter is quickly becoming a tried and true customer metric. While skeptics insist that simple loyalty metrics can't possibly tell the whole story, these companies are proving them wrong. Balancing Net Profits against Net Promoters is the right way to maximize growth. The rewards are evident for those organizations that are willing to follow the Net Promoter journey—and really listen to customers along the way.

There is another reason why this is not just important, but essential. There is a huge cultural change happening between customers and businesses. Your customers are talking about you, and this time they have megaphones. Blogs, wikis, RSS feeds, podcasts, and other forms of social networking are growing in popularity, amplifying the voices of individual consumers and business partners. Frustrated letters to the CEO and phone calls to the support department are now being played out on You Tube. The suggestion box on the CEO's door is now being posted on the Web.

Do you know what your customers are saying, and are you interested in monitoring their feedback? These public expressions are influencing opinion whether you know it or not. Facebook claims 90 percent of the student population in the U.S., which represents an increasingly affluent purchasing demographic. MySpace has 57 million members from all walks of life. People think twice when they see a 2-star score on eBay or Amazon.

As Richard Owen, CEO of Satmetrix, the co-developer of Net Promoter, stated during his opening presentation in London, what's at stake here is nothing less than the reinvention of marketing. I found it prophetic that New York Times columnist Thomas Friedman wrote about this topic the same day of Richard's talk. As he put it, we're all public figures now. The blogosphere has made the global discussion so much richer - and each of us so much more transparent. He was referring to public figures when he made that statement, but the same phenomenon applies to companies. Whether you're selling cars or newspapers, Friedman reported, it's essential to get your "hows" right: how you build trust, how you collaborate, how you lead, and how you say you're sorry.

Companies that embrace customer experience will be rewarded with a loyal group of promoters who do free advertising, just like Apple has been rewarded by its loyal group of iPod customers. Those who do not embrace customer experience will be forgotten. (Which company first released an MP3 player anyway?)

Net Promoter helps you get your arms around customer experience, in the same way Net Profit focuses your company on profitability. Are you still on the fence? If so it's time to make the leap.

The second session was by Satmetrix's James Young, Managing Consulting - Europe. James discussed goal setting and best practices for actioning business improvement by setting appropriate goals. I think this is a very important topic, and one that I've heard much discussion and debate, especially when wanting to tie compensation to these targets.

James believes that having a step-by-step process approach for setting up appropriate goals is critical.  He reiterated that the process should be based on the foundation that had been raised by previous Satmetrix presenters, which contains the 4 main pillars: Executive Foundation, Organizational Alignment, System Infrastructure, and Process Integration.

The specific process James reviewed was:

• Set Strategic Direction
• Capture Customer Experiences
• Target Value Drivers and Action
• Leverage Functional Processes
• Balance Targets and Align Strategy

James also noted the importance of directly linking goals to drivers of loyalty using statistical techniques. He showed a cascading approach, and used a pyramid diagram to convey the details. At the top of the pyramid was Net Promoter Score (NPS), then it moved to functional level goals, and then event or transactional goals at the bottom. The point I took away from this is that one metric is not enough to truly achieve your objectives. James points out that in order to make improvements across the business you must set goals that are relevant in the various operations in the business. This includes setting goals all the way down to the front line employees. Setting goals on solely on overall aggregated NPS is just not enough.

James also talked about how important it is to continue to reevaluate your goals over time. Targets will move. While you may take great care to set initial goals, often times business conditions and priorities change and as a result your goals should reflect these changes. This will more easily allow you to track performance against these goals as they relate to corresponding financial performance. James suggested that setting a periodic review process is an effective way to achieve this.

Goal setting is a complex undertaking, but James's structure seems to address the key issues to consider. I really enjoyed this session.

In the Net Promoter community, 68% of companies aspire to be customer centric but only 15% achieve this goal based upon research Satmetrix (co-developer of Net Promoter with Fred Reichheld and Bain & Company) recently conducted with over 100 companies in the community. This aspiration is why there is so much interest in the Net Promoter conferences, stated Henry Jones, Satmetrix's Director of Business Consulting, EMEA, in his talk.

Companies that exhibit best practices around the Net Promoter discipline see results. In this case, the winners, as he called them, were seeing high NPS with an average 3-year revenue growth of 50%. Their winners were intensely customer-centric, had executive engagement and delivered a superior customer experience. Sleepers did not.

The winner companies all scored the highest in the four key areas of the Net Promoter Discipline and Satmetrix Maturity Assessment Model. This included executive commitment and actions, organizational commitment from all employees, system infrastructure of a trustworthy data collection and delivery system and business process integration.

So what are the challenges Henry asks? First, it's getting executives to put their money where their mouth is. CEOs state they are customer centric but still need proof points to act. These proof points are out there as we have seen at the conference and documented in the conference blogs. The next challenge is getting organization to get employees to have the behavior that generates the right customer experience. This is best done by rewarding employees financially who have the right customer-centric behavior.

The last point Henry makes is to be sure you have a closed-loop tactical feedback system in place. This is where we get feedback information into the business and act on this in a way so that the customer sees results. There are proof points that show by focusing on the key areas of the discipline, you will get results like IBM, GE, Phillips, Lego and other companies that presented their case studies.

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.