European Conference Blog 2009

Colin Shaw - How Customer Emotions Can Drive and Destroy Your NPS

info@netpromoter.com — Thu, 04 Jun 2009 22:12:57 GMT

A lively and entertaining session, from Colin Shaw, CEO of Beyond Philosophy, kicking off with a 'spot the gorilla' film clip - the issue being we spend so much time obsessing over detail that we can miss the big things. That's when the silly things can creep in, in times like this, and before you know here you are..charging 'bad profits'!

He also told the story of the racing driver, who when interviewed, was asked 'when you saw the accident, did you slow down?' To which he replied, no i didn't, I knew everyone else would slow down so I speeded up!

He asked, what is the experience we are trying to deliver? Most companies don't know! We need to step back and recognise that customers are human beings, and driven by emotions, and are not transactions to be processed!

So, what are the emotions we are trying to evoke in our customers? Most customer experiences today are NOT deliberate or thought through, they are consequences of many decisions the organsation has taken, So, they can come about by accident. So, is our customer experience deliberate?

Colin told a story about something my own company, Aviva, did, in the General Insurance field, a couple of years ago. There are lots of subconscious signals that companies give to customers but if you ask them to articulate them, they may not be able to do so but which do have an impact on the customers. Like pens on chains in banks!

So, we need to find ways to surface the subconscious, In the case study, a car was crashed, and then Colin's team had to go through the whole claims process. Little things then started to happen..... the first question the contact centre asked was, what is your policy number, and of course they did not know, as he was not at home! When the recovery vehicle arrived, the customer was told, we have to take you home, but the customer said I would rather be taken 5 miles down the road to my office than 100 miles to my home, but told, no we can't do that, we need to take you home, thats what the policy says!

The point is, there is an emotional journey that customers go through as well as a 'process' or physical or rational thing.

We then switched to audience voting, based on how we felt during a story Colin told us about his airline experience at the airport, involving coaches to different airports, fighting for places on the coach, having to load own luggage into coach, being counted in "there are 31 of THEM", queuing, only to be told you are in the wrong queue.

So, a very entertaining presentation, that also illustrated to me the power of stories - I guess quite a few of us will remember Colin's terrible airport experience for some time, and who knows, even tell others about it!

Fred Reichheld: Slashing Costs with Customer Loyalty

info@netpromoter.com — Thu, 04 Jun 2009 18:12:50 GMT

Fred admitted that he usually talks about profitable growth. But today, instead of discussing GROWTH, he discussed COSTS. That's what people are focused on today because of the economy.

How does loyalty save companies money? Here are just a few of the ways that Fred mentioned:

- Lower acquisition costs

- Fewer problems and complaints

- Longer tenure, which spreads fixed costs over a longer customer lifetime

- Lower risk of lawsuits

- Less need to spend on PR

- Employees get treated better, which reduces turnover

In my conference opening, I had pointed out that the hotel site sits adjacent to the London Wall, built in the 2nd century AD by the Romans. Fred pointed out that the concepts behind Net Promoter connect back to concepts from thousands of years before that...the idea that your reputation is the most valuable thing, as noted in Proverbs 22:1.

"A good name is more desirable than great riches. To be highly respected is better than having silver or gold."

As Fred put it, "How many people get turned into Promoters is essentially the same as Proverbs 22:1." And this connects directly to the economics of your business...including cost efficiency. As consumers we are looking for good value for the money...and that requires companies to be operating efficiently.

When you consider where to cut costs, look at the economics of detractors. They often are costing your company money. In one example he shared from work done by Bain & Company, it showed that detractors' lifetime costs can be 140% of lifetime revenues for the same group of customers.

What about employee costs?

Fred points out that in the accounting view of the world, employee salaries are a liability. So companies think of laying employees off when they need to cut costs. But it's not that simple. Employees are also the key source of value in your business. Keeping the right employees on board is just as critical as focusing on the right customers to drive efficiency and value in your business.

Fred discussed a new case study, from a company who spoke last year at our Net Promoter Conference, Travel Counsellors. This UK based travel agency, with work-from-home agents, has been defying gravity in a highly competitive industry by focusing its entire ecosystem on generating promoters. Top agents get consistently rewarded for generating promoters, and the top agent each year wins a new BMW!

As Fred told the story, I remembered my first phone discussion with the head of sales from Travel Counsellors (who I subsequently introduced to Fred). They told me the BMW story, and said that their NPS was in the 90%+ range. My first reaction was, "Are your agents gaming the system to win the car?" But as I talked to them more about the things they do to educate and motivate their agents to deliver exceptional customer experiences, I realized this was the real deal. And their revenue growth trajectory that Fred showed today proves the point. The company has grown steadily, and has gone from a startup 10-15 years ago to a business of over $280 million in 2009.

Fred also told the story of Apple Retail. By being creative with the experiences they offer in their retail stores (such as the Genius Bar), Apple has achieved annual sales per square foot of over $4000, compared to companies like Circuit City (which Richard Owen mentioned went bankrupt last fall), whose sales per square foot were closer to $550.

Fred's parting thought for the audience: You have 10 million minutes in your life. How will you measure your success? For your company, think about it as the number of Promoters you create, and your reputation will be your legacy.

Satmetrix: Richard Owen on Top 10 Lessons

info@netpromoter.com — Thu, 04 Jun 2009 16:00:14 GMT

Richard opened the conference with his take on the top 10 takeaways from his new book co-authored with Laura Brooks, called "Answering the Ultimate Question."

He shared his top 10 list of takeaways from Net Promoter companies.

1. The winner takes it all

Richard contrasted Verizon Wireless and Sprint, who are the leaders and laggards in NPS for US wireless. This shows up in their churn rates: Verizon's has been around 1 to 1.1%, while Sprint's churn rate is 2.4 to 2.7%. This may seem small, but is a huge gap in terms of industry performance.

2. Inertia is the enemy of greatness

Companies who get themselves into a bad position with their customers are unlikely to be able to recover from it. The only way for companies like that to recover is with a drastic switch in leadership.

3. Relative importance is all that matters

Absolute scores mean little; what really matters is relative scores among competitors. What is a good score in your industry?? The competitive set is who your customer compares you to, not who you think you compete against. If you are in retail, consumers may compare you to other

4. Pick your battles

Companies who are especially good at Net Promoter usually do ONE thing really well. LEGO, for example, is known for innovation. First Direct is known for employee loyalty. Amazon has focused a lot on logistics and reliable service execution. Most companies pick one thing to win on in the loyalty battle. So, know what you want to be good at.

5. Create the experience on the front line

Employees really matter. This is a huge challenge for companies who outsource important functions to third parties. NPS winners, by contrast, often have a very strong employee culture.

6. It's how your customers see YOU (not how you see your organisation)

Coordinate the way you get feedback. Don't just Net Promoter customers from every department in your company. It's not important to measure everything...what's more important is to measure the moments that mattter most from the customer's perspective. Consider whether you are measuring yourself, or measuring what matters to the customer.

7. Word of mouth economics trump advertising

If you have an advantage in WOM, you have a critical competitive advantage. For example, leading online retailers spend almost nothing on advertising. Richard postulates that advertising (traditional advertising) often serves as an alternative to good WOM economics. He mentioned recent findings from Satmetrix showing that companies with very high NPS get an expenential boost in actual WOM behaviors. This occurs because socially we are motivated to recommend more when we perceive that others will agree with us.

8. Follow the money

Companies must be sure to understand their core business economics and put NPS in that context. All feedback is not equal, understand which customers matter most to your long-term success.

9. Be like finance

If your company's NPS data as robust and consistent as your financial data? Is your information hoarded centrally? Or can it match up to financial data that is used throughout the organisation.

10. Don't confuse "simple" with "easy"

Richard wrapped up with the example of the iPod. On the surface, it might seem like a trivial product... How hard can it be to create a better solution than the iPod?? It turns out that this is really difficult, because making something simple is NOT EASY.

Net Promoter is like that. Its simplicity is a great strength, but that doesn't mean that it is easy. Your company has to leverage its simplicity by putting the right efforts in place around the metric. The most successful programs are treated like corporate transformation efforts. When companies do this, it ends up looking simple, but they earn it by putting in remarkable planning and effort.