Net Promoter Community

You're pushing all the right buttons and your customers are more than likely to recommend you to their friends, family, colleagues and even their parish priest? But between being willing to recommend and actually doing so, there's a gap that is not easily bridged.

After all, the payoff for generating positive word-of-mouth and recommendations for your business can be big. Word-of-mouth is validated as the largest influencer in B2B and B2C buying decisions. A recommendation from a peer is the strongest medium money can buy.

But to move from "likeliness to recommend" to "active recommendations", every business needs to do more than delight its customers. It needs to be worth talking about. The harsh truth is that - as a customer - no matter how much I like you, I will only talk about you if it makes *my* conversations more interesting. If it increases *my* prestige of being "in the know". If it makes *my* friends laugh, or smarter, or happier.

Achieving this takes planning. But having been involved in two Management Centre Europe projects which among other things looked at this challenge, I have learned that it can be done. One was the redefinition of the Lexus Customer Experience. The other, the introduction of storytelling at Gemalto.

Here is what I learned:

STEP 1. Look at all those who can talk, not just the customer

In our drive to get customers to become promoters, it is easy to forget that there are others out there who can also speak well of our brand or business. They are the "influencers". The faceless group of people who say good or bad things about your brand, regardless wether they ever used it. But they are not to be disregarded. Some research even suggests that non-users may be more active promoters or detractors than actual customers. So when setting up programmes to identify and activate promoters, don't just stop at the customer. Include "everyone" who is exposed to your brand or business.

STEP 2. Dig for the emotion

To get people to talk about your brand or business they need to be passionate. And passion is an emotion. But people don't always tell you what they feel, even when asking all the right (NPS) questions. For example, in automotive, half of the women entering a showroom feel intimidated about the prospect of having to negotiate with a male. But unless specifically asked in the right way, hardly any of them will volunteer this information. Still, whithout that deeper, emotional, level, there will be no passion, and hence no real conversation. That is why you need to complement your NPS research efforts, with insight research that digs beneath the surface and uncovers the true emotional triggers.

STEP 3. Script a "talkworthy moment" at every step of the customer journey

Customer journeys shouldn't be "too scripted", but it does pay to include "remarkable moments" at every step the customer takes. This is not necessarily the proverbial "moment of truth" which helps your customer deepen their engagement with your business. Is a typically a small moment which is remarkable enough that people actually think it is worth talking about. For example, at Lexus UK they once had a woman's favourite doughnuts waiting for her, 3 years after she last visited the dealership. While no doughnut ever sold a car, in this case it did make a great piece of conversation.

STEP 4. Bring in the Storytellers

Sometimes people need a hand. Not everyone is equally gifted in telling passionate and relevant stories, even if they are about events that happened to them. Also, unique moments sometimes need amplification to be heard by more than the people involved. So once you have something remarkable happening, capture it. Bring in storytellers to structure it in a narrative that is easily retold. Create compilations which can be circulated through the business. Make your business' stories spreadable. Lexus once did this by compiling a Book of Legends. At Gemalto we did a global story hunt. And of course the classics like FedEx, Ritz or Nordström need no further mention.

STEP 5. Don't forget your staff

Finally, there are the people that work in your business. If you are a large corporation, their recommendation impact, and that of their friends and families, can be massive. Running the numbers in past projects I've been involved in, we have seen staff WoM affect upto a million individuals. The final step (or is it the first one?) is therefore be to make sure that the people who work for your company actively promote your business everywhere they go. Not because you tell them, but becaus they are willing, skilled and able to do so.

Andrei Litvinov - Senior Vice President, Life Financial Group & Irina Chichmeli - Head of Marketing, Life Financial Group

When Andrei Litvinov and Irina Chichmeli took the stage at the London Net Promoter Conference, they showed a new face of financial services emerging from a somewhat unexpected source – a rapidly growing group of regional banks in Russia.

Life Financial Group operates a network of over 230 branches in 58 regions of Russia, offering a wide range of consumer banking and business banking solutions under a variety of brands. Their motto is “Profitable growth, higher productivity, lower risk.” And the company is demonstrating how NPS fits hand-in-glove with this motto by building what they call a “loyalty-based business model.”

As conference delegates sat in the heart of London’s financial district hearing their story, I was tempted to grab some financiers off the street and bring them in for a dose of creative customer service. What Andrei and Irina described, in words and in photos, was a customer experience that was highly personalized, tailored to the local branch, and community-oriented…the antithesis of what you might expect in a typical banking experience.

But there is a method to the company’s creativity. By identifying loyal customers using NPS, they can link customer experience to key financial metrics, including faster top-line growth and lower risk. They have also developed an increasingly detailed understanding of how loyalty and NPS link to other key areas of experience such as “wow” service, employee loyalty and brand reputation.

Making the Link to Business Outcomes

Andrei Litvinov, senior vice president at the bank, explained their goal of differentiating through long-term relationships with customers. They aspire to be known for excellent service, not simply for product features or benefits. Their goal is to achieve an average customer lifetime of 20-25 years, and to build this competitive advantage today so they will be ahead of the market when economy rebounds.

Luckily, they have had a head start. Irina Chichmeli, head of marketing, explained how they experimented with a generic service strategy in the early days of their customer loyalty journey – but realized they would need something more specific to translate to their employees and branch leaders.

After measuring NPS for 3 years and working primarily with comments to drive improvements, they realized a stronger business case was needed to link customer attitudes (as measured by NPS) to economic measures of loyalty (such as customer account balances, profitability, and word of mouth). To accomplish this, they structured a pilot program with about 1,000 SME business clients in 6 branches.

Through the pilot they were able to observe some key business linkages:

• Promoters grew account balances by approximately 14% while Passives and Detractors had declining account balances.
• Promoters generated 25% more fee revenues than non-Promoters
• Positive word of mouth was nearly 3 times greater for Promoters vs. non-Promoters.

The Role of Branch Managers and Employees

The pilot also confirmed the extent to which branch operations influence the overall customer experience.

In fact, the likelihood of customers recommending the bank is only partially influenced by operations at the branch level. About 60% of the variation in their Net Promoter Scores was due to other structural factors such as interest rates and fees, the availability of credit, and perceptions of the bank’s overall financial stability—items that management controls at a strategic level.

But branch managers now understand their critical role in the remaining 40%. These operational factors can be controlled or influenced by the branch—things like the staff’s ability to resolve issues, the friendliness of employees, the branch atmosphere, and the experience while waiting in line. Pilot data also confirmed that timely and effective follow up with Detractors can effectively turn around customer attitudes.

What’s Next?

Armed with these insights into the business, NPS has become a key KPI for the company’s balanced scorecard. Their focus now is to roll out the program to all branches, capitalizing on the results and insights from the pilot. Now that they have begun to connect the dots between branch profitability, customer loyalty, employee loyalty, and service quality, branch managers are excited to take the program to the next level.

Frank McCusker's presentation addressed some fundamental questions about which customers to ask for feedback and when to do it in a B2B environment. Clients have often asked me if they should create a Net Promoter Score for each customer organisation. My answer has always been no for the reasons that Frank outlined. B2B products and services are usually purchased by a complex decision making unit - a mix of users of the purchase, influencers of the purchase and the economic buyer with the ultimate right of veto for the purchase. Each will have a different set of expectations and each will have their own experience. It's obviously vital to understand how each of these 'buyers' feels about the relationship. And therefore each will have their own NPS. Averaging these scores might be interesting but it won't really give you a true indication of the health of the relationship or the real likelihood to buy again. This is because the average will mask the score for the economic buyer and if this person is a detractor then you really need to know that and do something about it.

If you really want to use your 'relationship' survey to greatest advantage, you should, as Frank said, match the timing of the survey to the rhythm of the relationship. If you have an annual renewal for example, it makes sense to survey the customer in time for you to be able to rectify any problems or maximise any strengths before the renewal decision is taken. It is also essential that you have a relationship status check halfway through this annual cycle.  By adopting this approach you can really plan for success with every buyer in a single customer organisation.

Stefan Osthaus,  Vice President Worldwide Customer Support, Symantec

Stefan Osthaus presented a compelling story about NPS for product innovation that I wish all product engineers could hear. Perhaps Symantec has found a new breed of engineer that realizes customer driven innovation is a way to differentiate your company from others.

Stefan began the presentation painting the dire picture of the product – Norton Antivirus. The problem was the product had several severe issues.

In June 2006 Symantec found that their product in fact had very low loyalty scores. They also saw a direct connection between loyalty and the number of prizes they had won for their product. Their story was one of irate customers, 18% intallation rate failures, high call-ins to customer support and a product they knew they had to overhaul to make it something that customers would tell their friends about.

From 2006 to 2007 they began the journey to address installed program failure. For those of you in the software industry, you realize how many interconnecting parts there are to make software really work. At first, Symantec focused on the installed failure rate, but even with this focus it only dropped to 10% failure. More importantly they still had negative impact on support centers, and their NPS was also not improving dramatically. They realized, probably through much self-examination, that this meant they would have to rebuild the product and focus on multiple dimensions, not just installation.

Their turnaround approach is a lesson in cultural transformation for their product team. Like all good motivational goals, Symantec also articulated one for their engineers:

Internal rallying cry was--

1 by 10 by 100 . . . which means

Install in less than 1 minute

Boot time less than 10 seconds

Less than 100 MB

Interestingly, many leaders in the company (particularly in engineering) said it was an unrealistic expectation – Stefan noted that those employees not behind the initiative left the company. Stefan also proceeded to go through the 5 core innovation areas they tackled to bring the leading edge.

Needless to say, this is a happy ending in which Symantec was able to have a turnaround product story. Installed failure rate is now 0.5% and their NPS has gone up dramatically in the past 4 quarters.

Perhaps very important from a financial perspective, customer service inquiries have also gone down from 10 to 2 percent. In a dramatic shift for the company, they are now able to make tech support free of charge.

Interestingly, Stefan finished the presentation understanding that product and support are only 2 but 2 very critical touchpoints. They now need to focus on the total customer experience – the end-to-end journey. Their aspiration is to be like Apple or Google in terms of their customer attitude -- to achieve a dramatically different level of engagement with their customers.

While not disparaging the former two companies, I believe Symantec is well on its way to achieve that vision.

Lenna Mariana's session on Benchmarking your NPS performance raised a number of old chestnuts about 'The Score' and the need to understand the context of your market and your territory.

One of the counter-intuitive things about NPS for newbies is the concept that a negative score can be good. Negative always has to be bad - right?  Lenna's summary of the Satmetrix cross-cultural benchmarks in Europe really drove home three key messages for me:

1.     You need to understand your score in the context of your competitors. This is particulalry important as in some markets, the market average may be a negative NPS score BUT if you have an above average NPS score you can typically expect to out-perform competitors who do not. In fact the study by the London School of Economics identified some interesting trends here.

2.     You need to understand your score in the context of your territory. The European benchmarks covered by Lenna show some fascinating things. For example the average score in Western Europe is lower than the 25% in Southern Europe. So if you work for a multi-national that believes in league tables, the UK team could be best in class in the UK but seemingly failing against the score for Italy where the team may only be average against their competitors. Understanding this is vital to motivating a rewarding teams correctly.

3.     The verbatim responses from customers are usually more valuable than the number. If you haven't the benefit of benchmarks for your market sector and territory, it is worth remembering that the verbatim feedback from your customers about the reasons for your score will provide the insight you need to raise your game. The Net Promoter Score without this context could actually be an unhelpful guide if you don't understand the importance of cultural and market differences.

The Satmetrix benchmarks are well worth a look for organisations keen to understand where they stand against their competition.

Businesses just can't afford to have too many detractors, either among customers or within the employee base. As Neil put it, this is absolutely at the core of almost any consumer buisness he has seen over the years that is not performing optimally.

Virgin Media was formed out of the merger of 42 different cable franchises. But the big challenge was that the entire industry, which was consolidating, had a culture based almost solely on financial engineering. In 2006, when they first acquired Virgin Mobile, he realized that there was a steep effort ahead because of the expectations that come with operating under the Virgin brand.

So they started their NPS journey in 2007, to drive a quantum leap in their customer experience. Their cost structure was at least as good as any competitor, but the big challenge for their business model was tenure...they were not keeping customers long enough.

How have they done?

Have driven churn down from 1.8% per month, down to 1.1% per month...and 0.35% of that was from customers who moved house from being on the network to off. In terms of NPS, they have had a 33 point improvement in operational NPS, and nearly a 20 point increase in relationship NPS.

Neil sees a direct relationship from NPS to the number of customers you keep, and also to the cost structure. So they chose NPS as the metric to embed in their balanced scorecard. They started the journey with Satmetrix in 2007, and now they have moved to the point where they are measuring NPS at every touchpoint, and also have started to measure NPS by product.

Take action on what customers say

If you are going to bother to measure what the customers think, be sure you fix them. Virgin understands this, having collected over 600,000 customer responses...and they have taken action in many areas. For example, customers are very specific about getting it right the first time. They knew intuitively that first time resolution was important, but having the measurement helped drive the change into the company. The same applies for call centre performance, but in-house and outsourced.

Think of NPS as a culture change tool

Virgin has over 22,000 employees, and he commented that NPS serves as a key focus point to drive culture change. This includes all parts of their operation, as well as outsourced service providers. It's about embedding the thinking of the customer throughout the organisation.

What about compensation?

From Neil's perspective, if you believe in customer experience and have chosen NPS as the metric, then put it into the compensation scheme. Align the organisation to the metrics that are important to you. He pointed out that you may not need to take this all the way down to individual employee level, but it is important to him that all key managment players share this goal, so that they can drive the right behaviors within their teams.

NPS is just a tool

In closing, Neil reinforced the point that NPS is just a tool. Ultimately, it's up to you to lead the organisation and run your company.

1. Don't overthink the customer's feedback.

2. NPS is an operating discipline, it's not a research tool.

3. If you're not prepared to act, don't bother asking.

4. If you don't align the organisation to your operating model, then you won't get long-term success.

5. By focusing on fixing the issues of most significance to the customer, you will get bettter

My favorite quote from Neil:

"Just implementing NPS doesn't change how you are running the business."