Glenn Rogers, Director, Customer Experience, at Logitech presented a compelling business case based on his experience at Logitech on how NPS data can be used to prioritize and guide new product development as well as help transform a product focused culture into a consumer oriented one.

As background, Logitech is one of the leading providers of computer accessories (such as keyboards, mice, webcams, etc) in addition to a growing array of other popular consumer electronic products (such as Harmony, a no-brainer remote control that works with a wide variety of DVD players, TV's, etc).

I was surprised to learn just how complicated Logitech's business is, with 6 business units and over 100 new product launches every year. With such as large number of new product launches, quality isn't always consistent and there's the risk of alienating early adopters of a new product when quality isn't where it should be.

An additional challenge Logitech faces on a going basis (a challenge other consumer electronic companies face as well) is the relatively short "shelf life" of the product lines; the average Logitech product life cycle is only about 18 months! This requires constant innovation, which they've been quite successful in achieving over the past 25 years with an impressive 25% CAGR revenue growth.

As with many engineering driven companies, there is a strong focus on developing the next great product rather than starting with understanding what consumers really want (which is probably why none of us non-engineer types can ever figure out how to program our VCR's). Engineers intuitively want to know how to identify and fix "the bad stuff" (which is what Detractors are great at pointing out). Getting engineers to understand and appreciate what Promoters love about a product is a much harder concept to get across.

As a result of this challenge, Logitech has wisely chosen to go through a culture change while the business is good which will be heavily dependent on NPS as a "true North" guide to focusing on both Promoters and Detractors (and understanding what they both need).

Concurrent with this culture change initiative, Logitech re-organized the business in April 2007 with an EVP of Product as well as a CMO/SVP of Customer Experience (which includes marketing, customer support, customer experience and quality). The driving force behind these changes was a belief in "The Boomerang Principle"; i.e. the primary role of the business should be to focus on persuading current customers to return (i.e. creating promoters). This is a key principle many different types of businesses have confirmed is true; for example, 80% of Starbucks revenue comes from customers that come 18 times or more a month.

The re-org included the creation of a Customer Experience vision for Logitech, which is "a collective attitude that delivers on our Brand Promise by creating customer loyalty that leads to enthusiastic lifetime promoters who love and share Logitech experiences."

This long-term vision highlighted the need for two key priorities for the newly created Customer Experience team Glenn is creating:

• Incorporating the "voice of the customer" into new product development
• Integration of the customer experience into new product development process

Given these priorities, Glenn has been able to generate NPS scores for all of their product lines (which is very impressive given the large number of products) and is using this data to help improve product quality and processes. NPS is the key metric used to determine if Logitech is improving over time (and is a key input to the "Voice of the Customer" dashboard, which also includes returns to retail, customer support data and internet forum highlights).

Logitech's NPS journey started 18 months ago with few thousand responses using 5 point scale. This shifted in Q3 to an 11 point scale as well as the validation of NPS scores by product category and by product.

NPS data is collected via email and they are now generating 40,000 responses per quarter. Consumers are encouraged to go to www.logitech.com/ithink two weeks after a product is purchased. The NPS data is summarized on dashboards which are available to the business units and updated on a continuous basis.

Categorized verbatims were collected centrally last year (which took 5 full time people) but Glenn decided to get rid of this given the complexity of understanding verbatims from so many different product lines. The responsibility of analyzing verbatims is now with the respective business units who are expected to do regular "deep dives" on what's driving promoter and detractors. Glenn knows they still have lots of verbatims they're not doing enough with but is working on ways to gain additional insights from it in the future.

Understanding the economic value of NPS is also underway. Glenn is looking into ways to balance the short-term with long-term at Logitech. He's already determined the worst case with a Detractor is -$40 (product return plus negative WOM) using 20 year NPV plus negative WOM. He's still working on learning more about the upside potential that a Promoter has for the business.

He's also determined Promoters are almost twice as valuable as Passives in terms of long-term value and plans to use this knowledge to evaluate if additional investment in product is going to pay out (which would be a first for Logitech and a huge benefit to the consumer).

In 2009, Logitech will be expanding NPS to other regions and working to increase NPS response rates from non-software products (such as gaming, audio, keyboards), closing the loop via callback from customer service team and conducting quarterly "Voice of the Customer" workshops with each business unit to review the data and get the resources allocated accordingly.

In summary, Glenn outlined some key lessons Logitech has learned so far on its NPS journey:

• You need a catalyst to get going (in this case, they decided to make this culture transformation while the business was still strong)
• Top down support for NPS implementation  is absolutely critical
• It's a long term journey (i.e. minimum 5 year game plan)
• NPS is a philosophy that involves significant culture change
• You need a small group to "own" NPS
• Data collection is much more complex than anticipated
• Your customers will thank you for doing NPS since it will improve their experience with products they buy and use on a daily basis

I've heard a number of other companies that have implemented NPS echo these same valuable lessons.  So for those of you considering NPS for your business, consider these principles to be key to your planning and strategy assumptions (or ignore them at your own peril).

Click here to download the presentation.