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Net Promoter Community > European Conference Blog 2009 > Tags > answering
 

European Conference Blog 2009

2 Posts tagged with the answering tag
PaulMarsden

So Richard Owen, Satmetrix CEO and co-author of “Answering the Ultimate Question” is boiling down six years of research and experience in implementing high-impact Net Promoter customer loyalty programs into 10 key insights. Sweet.

 

Of the 10 insights, noted below for your delight and delectation, #7 is the one that I'd like to comment on - Word of Mouth Trumps Advertising.

 

First, my take-outs from Richard’s wisdom in a nutshell

 

  1. Winner Takes All – Your goal should be a Best-in-Class Net Promoter Score.  Why? NPS leaders grow faster and keep customers longer.  Compare Verizon with Sprint: Verizon NPS = 40%, growth = 13%, churn 1.1% - Sprint NPS = -15%, growth = -13%, churn = 2.4%
  2. Inertia is the True Enemy – The biggest obstacle in growing your NPS to grow your business is internal resistance to change.  You need to cultivate internal momentum with top management sponsorship to make it happen
  3. Relative Performance is All the Matters – Your NP Score is utterly meaningless – in isolation.  It’s your score relative to your (local) competitive set – and your past performance that makes Net Promoter meaningful
  4. Pick Your Battles – Using Net Promoter to grow your business usually involves delivering a differentiated customer experience that underpins a key reason to recommend. Few brands can be great at everything, find your inner experiential strength and build on it.  (Amazon – logistics, Virgin – culture, First Direct – service)
  5. Frontline Staff Are  Key– A key driver of successful customer experience redesign is where humans meet humans.  It’s difficult to overestimate the role of customer facing staff and partners in driving experience
  6. It’s How Customers See You – 80% of senior managers believe their brands deliver a superior experience, 8% of their customers agree.  Customer Experience Management begins with the customer experience from the perspective of the customer.
  7. Word of Mouth Trumps Advertising – ‘Happy Customers Talking’ is the best advertising and acquisition tool you can get.  Consider Amazon, Zappos, and Overstock – brands built on delivering *remarkable* experiences, not paying for ads.  Advertising is the last recourse for the mediocre.
  8. Understand the Economics – it’s all about money, the rest is just conversation.  Unless you know the economic value of a Promoter and the cost of a Detractor to your business – and use it to build a solid business case your Net Promoter program is unlikely to get traction
  9. Be Like Finance – It’s all about money, the rest is just conversation (2).  To succeed, make your Net Promoter program CFO friendly, with language, processes, and rigor of your finance department.  Excel not Powerpoint is your new best friend.
  10. Don’t Confuse Simple with Easy – The goal of any Net Promoter program is simple – delivering customer delight.  But just because it’s simple to get, doesn’t mean its easy to deliver.  Consider the iPod and iPhone; years of development (perspiration as much as inspiration) underpin the elegance of simplicity.

 

So a useful 'reality checklist' for brands looking to walk the customer experience talk.  And as the guy known as “Buzzman” in consulting circles, you can guess it’s at #7 ‘Word of Mouth Trumps Advertising’ when I started cheering.

 

It’s true, it’s true – just about every research study shows that word of mouth is more powerful than advertising.  But the problem for brands is that you have to EARN word of mouth (by delivering a *remarkable* experience), you can’t buy it (word of mouth agencies notwithstanding).

 

But, and it’s a big but (and where I’d qualify Richard’s point) Word of Mouth trumps Advertising, but Advertising Activates Word of Mouth.  Our own research shows that up to 50% of promoters are mute promoters – and that advertising can activate them and the Word of Mouth potential of a brand (transforming promoters from “would recommend” to “do recommend”).  How? By helping promoters articulate the reason to recommend (think Sony Bravia ads and their creative focus on color).

 

The truth (as we see it) is that advertising and word of mouth are stronger together.

0 Comments Permalink Tags: buzz, remarkable, answering, london09, conference09, owen, word_of_mouth, satmetrix
JohnAbraham

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.

0 Comments Permalink Tags: answering, satmetrix, methodology, london09, owen, conference09

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