Four Seasons: Impeccable. Deluxe. Personal. In Touch.

Those are words that loyal guests use on a regular basis to describe the Four Seasons. All hotels experience glitches. The water gets turned off, the fire alarm accidentally goes off at 2:00 am, light bulbs burn out, shower curtains fall down. At Four Seasons, they are crazy devoted to glitches. Employees report each and every one and they are rigorously monitored to make sure they are resolved in a timely manner. Ahhhh... sounds lovely.

Deborah Carlisle, Manager of Marketing Planning for 74 Four Seasons in 31 countries, has the best job. She sells experience. By listening to their loyal customers they are able to distinguish themselves among a very competitive market. Hotels are always in danger of becoming a commodity. Websites like Hotels.com perpetuate that. The Ritz Carlton, Hotel Intercontinental, and Four Seasons are all within $100 in their price range for a standard room. Word-of-mouth among the high end business traveler is especially valuable. And Four Seasons gets that.

Ricardo Acevedo, General Manager for the Miami Four Seasons knows the secret sauce in their culture is the people. Can you imagine that every position you have open in your company must go through a minimum of 5 interviews? Every job candidate from the maids to management eventually will be interviewed by Ricardo. He is the final test, and uses his intuition and sense of humor to see if they are Four Seasons material. "If I can't make them smile, they are probably not a good fit" explains Ricardo.

Dignity.

"I will not allow a manager to mistreat employees. If they do, they will be dismissed," Ricardo said emphatically.

Dignity can come in the form of a free meal, clean pressed uniforms that fit nicely and are fashionable, and an employee locker room complete with a hot shower. These are not just employee perks; in some countries these are luxuries that provide dignity and instill pride. It's nice to hear of a North American company that doesn't take advantage of the work pool in less developed nations.

Employees are asked to rank their feelings towards Four Seasons in an annual survey.

#1 - I am proud to work for Four Seasons

#2 - I have a feeling of loyalty towards Four Seasons

#3 - Our guests are very happy with the quality they receive.

Fred Reichheld was in the room during this presentation. Throughout the conference, he reminded just how simple and how hard it is to grow a business. You have to treat people so well, that they'll come back and bring their friends and family.

The Golden Rule is truly ingrained in the Four Seasons culture. Can you say the same of yours?

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David Hankin, Director of Business Consulting for Satmetrix, discussed how and why organizations should benchmark their Net Promoter Scores against their competition and account for cultural differences. Competitive benchmarking helps executives answer the question, "How do I know if we have a good NPS?" There are three approaches to competitive benchmarking that can answer this question:

1) add competitor questions to your own loyalty survey,
2) use an external industry benchmark and
3) build your own panel of customers across your industry.

Each option has different costs, benefits and complexities.

Option 1
The first, and simplest, approach is to include some questions about competitors in your loyalty survey. This is easy to deploy quickly, and can be done at a low cost. One key consideration is to carefully word the questions to make sure the respondent has had recent experience with your competitor. The other is to realize that your customers may not represent the total universe of your competitors' customers. However, the approach can provide directional, or relative, performance of your company in the market compared to your competitors. Clearly, this can be valuable information.

Option 2
The second approach is to work with an external industry benchmark provided by a third party. The way this works is that competitors in a market space agree to provide their customer loyalty data, confidentially and in aggregate, to the third party so that all of the market players can view low, high and average Net Promoter Scores for their industry. Competitive gaps also can be included, which enables the participants to view the effectiveness of their differentiation strategies, or perhaps, develop new strategies. The third party ensures confidentiality. Satmetrix provides several of these types of benchmarks, most notably in Software and Telecommunications industries.

It is important in this approach to identify the companies included in the benchmark. In some industries, one or more large companies refuse to participate in the benchmark and thus lower the value of the benchmark itself.

Option 3
The third option is rent or build your own competitive panel, but be warned, costs are high. Costs per completed interview can run over $50 each to get the right sample base. The key is to make sure that a representative sample base can be acquired, because without the right sample, your insights from the competitive assessment may be off the mark. If done correctly, building a panel of your competitor's customers can be an incredibly powerful method to compare Net Promoter Scores and identify opportunities to differentiate.David also discussed the impact of cultural differences on survey scores, and their implications.

Cultural bias can be easily understood as the different way a respondent may score the same survey based on where they live. According to the Satmetrix cross-cultural benchmark, people in Latin-America typically will report higher Net Promoter Scores than people located in some areas of Asia. However, organizations should be very careful of overstating cross-cultural biases. Adjusting the Net Promoter model is not recommended; i.e., avoid the temptation to make 8's promoters, or 6's passive in certain regions. In line with the general theme we have heard during the Net Promoter conference, David described how important it is to track the rate of improvements to NPS, rather than comparing the baseline Net Promoter Scores across regions.

David's final topic discussed how to set NPS targets and goals. The first step is to identify achievable targets based on your internal NPS and external industry benchmark. Not all industries are the same. For example, the Satmetrix benchmark shows that the average NPS in Telecommunications is lower than the lowest NPS in Financial Services. Customer expectations and competitive pressures vary by industry, and this is reflected in NPS ranges.

There is also a law of diminishing returns that shows the higher your NPS, the harder it is to make large percentage improvements. It is important to understand where your NPS baseline exists today, and what a good improvement in NPS would like. Targets can then be set which are achievable and will lead to significant growth.

Any questions regarding this blog can be e-mailed to paulp@satmetrix.com.

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Sage's Simply Accounting business has been using Net Promoter metrics for 3+ years now with good results, according to Scott Zandbergen and Margaret Dron of Sage. The company is serious about this: new employees at orientation learn about the Net Promoter Score (NPS) and the importance of focusing on customer loyalty.

They have created 3 Pillars of success:

1. Organizational buy-in -  getting support from exec level down and at every employee level
2. Regular measurement of NP score — they prompt customers at point of use to give their NPS
3. Take action on learning — e.g., pick up the phone and thank them and tell them they have acted on the information.

There is also a central team that's looking at NPS - appropriately called the "Good Profit team," - and they meet every 2 weeks to discuss the program.

Some results of this company focus: Sage has increased their NPS over 10% year-over-year — with direct input from the program resulting in product improvements such as enhancing user interface, improving ease of use and expanding reporting capabilities.

But it's not just about product improvements, it's also about improving the overall customer experience.

How did Sage get started? They formed a Customer Experience team made up of "change agents" within the organization. Great idea. They talk a lot about "passionate consumers, and finding those the employees who are passionate and have them lead the way and transform the organization.

That evolved and now all employees are on board. Are they motivated? YES. Like all great programs, NPS is tied into their annual performance objectives. What they have done is empower the front line.

Here are some other interesting ways Sage is making the extra effort:

• They have given the program a personal touch by doing road shows and hosting speakers series (experts on a certain topic) to educate consumers
• Also, they have taken the step to create an online support community where customers can talk with others about their experience and also provide feedback back to the product development team.

They justify the investment because they know that recommendations drive over 60% of new user purchases and 30% of their sales overall.

Also customers that have been touched by the Welcome team (a team set up to welcome first-time users of the software with a call to see how they are doing) have a 71% NPS, whereas members not touched have lower NPS.

When they have a high value detractor, these people get a call — "the simple act of a phone call makes a big difference."

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Lee Boykoff, Director, Digital Media Analytics and Distribution for A&E Television Networks shared an exciting presentation on their experience identifying promoters, engaging them in the content development process, and incorporating NPS into powerful segmentation that targets specific influencers with one to one marketing efforts to amplify marketing spend and jumpstart Word of Mouth.

Cable networks achieve success by developing  programming to niche segments vs. a mass market. A rating of 3% for any particular show can be deemed a success. In this model, generating buzz and energizing loyal fans is highly important. At A&E, Lee and his team began by creating the A&E Insider community, providing relevant information and exclusive content to members, while asking them a series of questions designed to profile them as promoters, super influencers, and understand their programming needs and preferences.

To entice the "right" members, A&E avoided mass market sweepstakes as incentives, but rather opted for niche promotions tied to existing programming, such as Gene Simmons or Criss Angel related prizes.

A&E leverages the membership base in various ways. First, they measure NPS vs. the brand and individual show to find out how strong the relationship between the two might be. Directionally, higher rated shows tend to have high NPS scores, and vice versa for most of the lower rated programs.

Next, they engage the thousands of community members to provide input into potential pilots. In a case study shared by Lee, one show, Paranormal State, received unexpectedly high NPS scores, particular among "influencers." The show was aired and it was a complete success -- the highest rated show in 3 years. Other comments and ideas are collected during this review process and members are kept abreast of launch dates and the show's development process.

Third, Lee's team uses customer data collected via the community to subsegment promoters by their propensity to actually promote. The intent is to find the customers who really will share advice on the brand and individual programs, and prioritize marketing spend against them.  In another case study, Lee shared the details of a recent Holiday Mailing campaign, where gifts cards were given to reward avid members.  Rather than send small dollar-value cards to all members, A&E leveraged the segmentation to target a "WOW" gift to super influencers. Using this approach, A&E estimates it reached an incremental 1.4 million customers by targeting super advocates with a higher estimated propensity to promote.

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In the session by Marina Hannaford, Consumer Insights Manager for LEGO, we learned the Net Promoter Score (NPS) fits with the core of LEGO, including the company's philosophy of focusing on consumer experience from top down and their "only the best is good enough" motto. The the goal is to produce only the best to ensure positive Word of Mouth (WOM) and lifelong loyalty.

In 2004 their new CEO set a strategic plan to prime the company for organic growth. One of the main focuses was to improve core business. This not only meant great products, but also a premium consumer experience. As such, a division was formed to specifically focus on consumer experience. This group and every employee within it has a key performance indicator (KPI) and bonus linked to the NPS.

When do you set a KPI? LEGO recommend doing it when you have a baseline or some historic data. In LEGO's case it was having at least 1 year of data.

To LEGO a successful Net Promoter program is about measuring the right consumer in the right channels via the right tools and understanding key drivers to improving the score. To start, one of the things they did was map out all the consumer touchpoints to determine 8 NPS for "direct to consumer." They also need to understand the segments (kids, parents, adult fans, teachers) and the individual experiences for each segment at each touchpoint an NPS is measured. In their reports they can look at the key metrics and highlight areas that need immediate action. Real life cases included improving packaging materials and communications. In both cases, they saw immediate upswings in their Net Promoter Scores.

LEGO look at the consumers as buyers in the mass market or as indivuals in their connected community. The most influential of these is the "lead user" who belongs to their Ambassador Program or the Kids Online community called the Inner Circle. These are identified as passionate advocates that want to co-create with LEGO. They also know that the more connected a consumer, the more they recommend LEGO.

Key to success are their monthly reports with all the key metrics and insights, actions, plus identifying those people accountable for that NPS. Also, if someone wants more information, they can click on links to get more detailed reports. These reports are shared with all relevant people within LEGO, right up to the executive team.

Results for LEGO: increases in NPs directly linked to actions taken, record NPS in LEGO Stores and Consumer Services, plus 2007 Net Promoter scores are higher than those measured in 2005 and 2006.

Please see the LEGO blogs from the London Net Promoter Conference 2007.

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Rob Markey, Partner and Head of Global Customer Strategy Practice with Bain & Company, spoke about using NPS to drive organizational learning at three levels:

1. Executive or strategic
2. Management or process
3. Front-line employee

At the Executive or Strategic level, NPS results can be used for strategic segmentation to help pin-point a target market. Mapping customer segments by NPS and profitability, one can see which segments are profitable and loyal and which may warrant additional investment. The example was a top accounting and consultancy firm, which mapped clients on the NPS / Profitability grid and found that clients with complex business models were more loyal than simple businesses. This company used this data to focus resources on a more attractive target market.

At the Management or Process level, NPS results can be used to identify those touch-points along the customer corridor that have most impact on loyalty. Investments in these loyalty drivers can create a competitively differentiated experience. A frequently cited example is the "card-replacement" process for a credit card. This example also showcases the need for multiple functional areas to act in concert, ensuring the process is seamless for the customer.

The third is the Front-line Employee level. Here NPS results can be used to monitor and improve performance by reinforcing the feedback received through the NPS survey and the closed-loop follow-up process. NPS results at the granular level are a key coaching tool.

The overarching theme is that customer feedback can and should be used at multiple levels in an organization to improve performance -- at each level, employees can take action within their span of control.

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Kip Knight, VP of Marketing at eBay, talked about how eBay built an online community and how they are using NPS. eBay started in 1995 and now has 248 million subscribers from 37 countries around the world. It is now "The World's Online Marketplace." About 1.3M people make part or all of their living off eBay. eBay thinks of community as anyone who has a relationship with eBay Inc. Community is core to eBay. It is a strategic differentiator, a unique asset to eBay, builds loyalty and retention, and community members are more valuable.

Kip says they constantly think about keeping their community vibrant. They have a set of community values that have existed from the beginning. eBay stays involved with the community by many different means. Online has forums and a Voices program, as well as member workshops and news and blogs. Offline has Voices (in-person/calls) and town halls, in-person visits, and radio. Voices is probably the most unique program. It is an ongoing advisory group that was begun in 1999. In-person sessions are held with members of the community about 4-6 times a year. The attendees sign NDA's, so all topics are fair game. Over 400 members have been involved since 1999.

One key loyalty tool at eBay was the feedback system. It is very simple and effective. So, why does eBay need NPS? The feedback system wasn't really telling eBay what was driving loyalty and what they needed to focus on to keep growing loyalty.

They expect NPS to be a global best practice. It could also be a *red alert* system for their buyers. They think it will heighten competitive awareness, and help focus investments on the right areas. It will also help with root cause analysis on promoters and detractors. In summary, NPS helps eBay go places the other tools don't.

eBay will implement top down and bottom up feedback. Top down is to all customers, bottom up is focused on key segments that eBay wants to focus on and when they interact with eBay. They tried the "recommend" question, but it didn't work across sellers and buyers. They finally decided on "Intent to buy" for buyers and "Intent to sell" for sellers.

One challenge they have is how to make employees able to participate and drive loyalty. Globally, they are going to look at trends, and not compare regions. It also will drive a Red Alert program focused on the top buyers. If they rate 6 or lower, then actions will be kicked off.

Kip waited a year before he rolled out, and he doesn't regret waiting at all. He used that time to make sure that the program and company were ready.

I think the key message from Kip's presentation is that, even for a customer-centric company like eBay, you can always improve and this is really a continuous journey. The fact that eBay is just embarking on an NPS journey shows how we all continue to evolve all the time. It is also interesting that they found a question that works for their business, but will leverage some of the best practices around the Net Promoter discipline. I wish eBay the best of luck on its journey!

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