Part of my role at the conference, as well as blogging, included introducing some of my Satmetrix colleagues who were presenting on the Programme Design track. This kicked off with Henry Jones, our UK Managing Director who was focusing on who, how and what you should measure in your NPS program.

Now, I'm not going to spend a lot of words in describing the presentation itself, but instead focus on some key points that came out in questions from the audience.

First of all was a question around response rates. Getting your customers to respond to a survey request is pretty key to gathering feedback! Short surveys, however, are not in themselves an automatic guarantee of a fantastic response. The question from the audience focused on the difference between Web and telephone response rates. Well, in my experience (3 years at Satmetrix and 15 in total in the customer management sphere), Web survey response rates can range from under 10% to over 90%. For telephone -- the response rates that we've been getting for a customer recently have hit as high as 80%.

But a word of caution -- before measuring response rates, you need to take strike rate into consideration. The response rate is usually worked out as the number of customers who agree to take the survey as a percentage of those customers who have been been successfully reached. What we've found is, dependent on the quality of data etc., is that the strike rate -- the number of customers you successfully reach -- can be as low as 15%. The real key to response rates is having true customer engagement.

Another question from the audience asked about correlations. Popular ways of understanding the areas which impact most on loyalty are linear correlations (based on Pearson's R) and regression analysis (dependencies of variables). The point is that if you are adopting the pure two question survey, you can't build correlations or use regression. You need to have asked specific scale questions about functional areas to be able to determine correlation/regression drivers. What you can do is use your verbatim comment analysis to determine the volume of comments to highlight what appear to be key issues for your customers. But be aware that volume analysis does not always throw up the same results as correlation. It may look, from the volume of comments, that issue A is the key area for action focus -- but correlation techniques may show that issue A is only the 3rd highest driver of NPS.

Finally, following the discussion of whether or not the 2-question approach or multiple-question approach is the right questionnaire to use, there was a query about multiple question surveys -- in that surely it dilutes the strength of of Fred's pure approach? NPS in it's purest form is the two questions: "How likely are you to recommend Company X to your friends and family?"; and "Why?". My take on this is that pure is great...but, a lot of my customers are based in the B2B world and they have very complex business relationships and deliver highly complex solutions and sometimes the two question approach does not give them the clear information and correlation data they need to build a successful, actionable program.

In those cases, we tend to use a mixed approach of short surveys about overall relationship and transactional surveys (also short) for key touch points. What we keep in mind is Fred's comment about being respectful of people's time -- and not asking them to answer a survey version of War and Peace.

Now there's a thought...War and Peace style surveys...how likely are you to recommend those?

Having completed the first day of the conference, it certainly feels that the subject of communities is a growing concept for developing deeper relationships with customers; and a customer community perspective is a perfect partner to a more established loyalty program. Communities and the relationship with NPS were also the focus of the start to Day 2, articulated by a great speaker and veteran of the community concept, Kip Knight from eBay.

Now, you would be forgiven for thinking that eBay see their community solely in terms of their online existence but it was great to hear from Kip that their concept of community goes much deeper and wider. Before looking at this further, let's just refresh on the background of the company.

• Started in 1995, after a year of operations there were 41,000 users on eBay. Today there are over 248 million people active on eBay.
• The vision of the company is to make it possible for practically anyone to sell practically anything in a worldwide marketplace.
• At any one time, there will be 103 million items for sale on the site.
• Over 1.3 million people make a large part or all of their living trading on eBay.

The eBay community itself is defined in terms of including everyone who has a relationship with the company. That really does include everyone --  from buyers and sellers to partners, vendors and associate organisations. This is known as eBay's eco-system and through the online platform and wider community, eBay have developed their strategic differentiation through a unique asset and developed a real tool to promote and develop loyalty and retention.

Perhaps the key driver of the success enjoyed by eBay is the early focus that was placed on a set of values underpinning the business. Those values were outlined as:

• People are basically good.
• Recognise and respect each person as unique individuals.
• Everyone has something to contribute.
• Treat others as you would want to be treated.
• An honest, open environment will bring out the best in people.

As well as developing the online feedback tool, offline eBay has continued to develop the honest, open environment through live discussion events, "Bay In Person" visits, open dialogue and the member advisory group, Voices, who assist with ongoing developments. What eBay has found is that the more a member of the community is involved, the stronger their promoter status. And that involvement should not be limited to the online interaction.

So how does NPS fit into all of this? Well, first of all Fred Reichheld's Golden Rule is articulated as one of the core values. Secondly, eBay felt that the discipline would be core to developing best practice improvements, increasing competitive awareness, focusing on incremental investments and really enabling a deep-dive understanding of their members loyalty behaviour. The NPS discipline also appealed because it was based on a simple concept metric, it was easy to articulate and it provided a forward looking metric for the business.

Interestingly enough, as with some of my customers, it was not specifically the "Recommend" question that eBay used. After researching and analysing the data, it was found that "Intend to Buy" was a better-correlating metric for their business. They are now moving to "Recommend" as it certainly is relevant to their business and it does allow for more benchmarking comparisons across a wider range of organisations as so many comapnies are using it as a key metric today.

eBay have melded their community and NPS program into a coherent approach to loyalty. It didn't happen overnight and Kip and the team spent time in defining and planning the program (you only get the one opportunity to implement this!), building the foundation and they are now moving into further evaluation and expansion.

Kip's key learnings from the implementation are:

• Know when to centralise and when to delegate
• Never stop learning
• Process is king
• One size does not fit all

And yes, it's not simple in any organisation to implement a loyalty program -- it comes with its own set of unique challenges; but as Kip ably demonstrated -- it's worth it!

Click here to download the presentation.

For many practitioners of the Net Promoter discipline, the current climate of worsening recession usually heralds a period of budget cuts or constraints that directly impact the possibilities of getting full value from their customer loyalty programs. It's often an area that people don't want to face, so it was refreshing that the opening presentation at the 2008 London Net Promoter Conference from Satmetrix CEO, Richard Owen, attacked this subject head on.

Initially focusing on the financial industry, Richard spoke about the sub-prime mortgage "scandal" and likened the impact of this to the way in which the credit card market tends to operate. By offering initial, fixed-term incentives to get this mortgage or have that card, companies can attract high volumes of subscribers who artificially inflate the Net Promoter Score in the early stages of the relationship. I use the word 'relationship' loosely at this point, as one incentive does not a relationship make. The initial high related to getting a bargain only lasts for the honeymoon period. Come the point where the circumstances change, the interest-free period comes to an end or interest rates increase, customer happiness takes a sharp nose dive - especially as they watch their home being repossessed.

Now that recession is upon us, surely it is clear that the way in which customers are treated by an organisation will directly impact on that organisation's ability to survive in the current economic climate. What really happens when recession hits?

Richard introduced us to two interesting and revealing concepts:

1. The Wisdom of Small Companies

2. The Wisdom of the Masses

Let's start with number one. In times of recession (and Richard referenced some interesting research from McKinsey around the 1990-92 recession in the UK), large companies focus on restructuring and cutting costs. Small companies tend to go in the opposite direction and focus on customers. Is one approach more likely to help a company through recession than the other?  Based on the available research, the answer has to be yes. And it appears that small companies have got it right. The winners in these periods of economic downturn are the companies who put their customers at the helm of their strategy. They spend larger percentages of revenue on positive customer initiatives, marketing and advertising and R&D. The losers are those who move to greater levels of cost management - reducing the budgets that directly impact the customers' experience of the company. This leads to a growing volume of negative experiences and an increased number of detractors.

So this is great news for loyalty program managers everywhere. Don't cut our budgets! Let us use this customer engagement vehicle to support our survival through recession.

And guess what? That's not the only good news that Richard had to share. Let's move on to that second concept, of the Wisdom of the Masses. Ongoing data is proving that larger groups of people are more accurate in estimating or predicting events, behaviours or future requirements. Richard's example of a village participating in "ox-weight-estimation" showed that the overall average estimate of the bull's weight was pretty near accurate; far more so than any one individual's estimate.

The larger the group of customers you embrace in soliciting feedback, the more likely that feedback is to be accurate. And the good news? In today's technological world, reaching a greater number of customers does not have to come at a substantially increased cost. Customer communities allow organisations to reach more customers at lower costs. No longer do we need to rely on high cost focus groups - that may not be indicative of the mass wisdom - when we can use a community environment to get feedback and help build relationships.

Will all companies adopt these good news concepts? Unlikely in a world where short term accounting standards are often king. But as Richard points out, if you want to see the results of adopting these concepts as strategies, keep your eye on Dell, Charles Schwab and Starbucks. They are all putting long term customer mechanics ahead of short term accounting standards. Time will tell if this strategy works for them but, based on historical research, it certainly should.

Click here to download the presentation.