Once a customer tells you he or she is a detractor, It's obviously important to understand why--and to find out in a reasonably efficient, cost effective way. How much of that information can be extracted from the open ended "why" answers customers provide on NPS surveys? It's a daunting challenge. Customers aren't always precise, or complete in their responses, for example.

Satmetrix Director of  Methodology Dr. Vince Nowinski provided some in-depth insights.  The Stanford PhD described how "comment intelligence analysis" methods allow you to make conceptual sense of such data, to see with greater specififity where problems are actually occuring and what the underlying issue may really be.

But users of NPS much be careful not to look at verbatim analyis as the end all.  Rather, my understanding is that it helps you formulate intelligent hypotheses about where the critical issues with detractors lie. Further analysis will typically be required, perhaps in the form of focus groups, follow on surveys to targeted groups, individual interviews etc before you actually get at root causes of the issues detractors have.

Think of it this way. Without verbatims, you could only guess as to what's bothering detractors.  With verbatims and the analytical tools described by Vince, you can formulate a very good set of hypotheses for further testing.

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Dr. Vince Nowinski, Director of Methodology for Satmetrix, discussed a newly completed assessment of how organizations are doing when it comes to Net Promoter best practices. Dr. Laura Brooks was originally scheduled to present this topic, but fell ill with the flu…we were lucky to have Vince already with us in New York, since he worked directly with Laura on development of the assessment.

From Vince’s perspective, many companies excel in one area or another. But they are asking, “How do I know where the gaps are?” That’s the question he set out answer today.

Vince described why Satmetrix calls the assessment Net Promoter 360. The feedback on internal practices includes viewpoints from the Executive Sponsor of NPS within the organization, the Senior Executive Team, and Program Sponsors who manage the feedback operations. Think of this as a 360 degree view of what’s going on with your Net Promoter program.

Who Participated?

Vince presented data from a group of 22 different companies from 12 different industries, with an even split of B2B and B2C business models. Most of the companies (about two-thirds) had over $1 billion in revenue.

The assessment itself was designed jointly by Satmetrix and Bain & Company.  Questions on the assessment capture a mix of internal attitudes, behaviors, and business results to assess a company’s maturity level in adopting the Net Promoter discipline. It includes questions like, “Does the organization invest resources? Do executives believe the data they have is reliable? Do they understand what the top customer priorities are? Do they have closed loop processes in place to address individual customer issues?”

How Mature Are You?

Vince separated the 22 companies into 3 groups, to understand different levels of maturity.

Level 1: Developing

Adoption of Net Promoter is limited to some parts of the organization. Data was not yet trustworthy, or fully used operationally within the business.

Level 2: Progressing

The biggest difference here was that NPS had wider adoption, and companies were regularly taking action on the data. This group also had a big focus on root cause analysis…indicative of a phase of adoption where tactical insights are being developed.

Level 3: Advanced

These companies had Net Promoter fully integrated with the decision making culture. They were focused on understanding relative competitive position, and had processes in place to focus both on limiting Detractors and, more importantly, generating more Promoters.

Some Key Differences

Ultimately, Vince pointed to the measures of customer centricity as the most linked to overall level of adoption. Many people describe this as “culture.” I like to think of it as passion for the mission of the company.

What really struck me was the internal NPS for the Net Promoter program itself. Advanced companies had 96% Promoters of their NPS efforts, with no internal Detractors. These are organizations where all the key executives and core team members are “on the bus.” In contrast, those at the developing stage had closer to 50-60% Promoters and a group of Detractors within the core circle that should normally be leading the rest of the organization.

Advanced companies (100% of them) felt that NPS was involved in the day-to-day operations of the business, while none of the advanced companies described it as a “research initiative.” I found this point interesting. What language does your organization use to discuss Net Promoter internally? I’m sure the advanced companies have “research” resources involved with the program, but they understand that the ultimate value of the research is its use in strategic and tactical decision making. The other word that jumped out at me was “initiative.” The advanced companies don’t think of it as a one-time initiative. It is part of the way they do business.

Finally, Vince turned to the big question: What’s more important, eliminating Detractors or creating more Promoters? Ultimately, companies need to do both, but we found that the more advanced companies were in their adoption of NPS, the more likely they were to be focused on creating more Promoters. That’s really the end goal, isn’t it? You may indeed need to focus on eliminating Detractors, but if that’s all you ever focus on, it can be hard to define a winning vision and sustain the motivation of your employees.

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Deborah Eastman – Satmetrix

It’s always a please to hear Deborah speak. In the past I’ve been fortunate enough to have her teach part of my NPS Certification class. One of the great things about Deborah is that she has really walked the talk. When she speaks it’s from real experience of implementing NPS programs in complex, international B2B environments prior to her joining the Satmetrix team.

During this session we heard a about Deborah’s time with Bearing Point and the successful NPS-based key account program she introduced. It was a really interesting insight to hear that when returning there some years later on a consulting engagement she saw exactly the same issues and customer feedback were still present in the business. They had been unable to leverage all the excellent feedback they had and move to action.

If there was one thing Deborah wanted us to catch it was the need to act.

Deborah outlined that B2B account relationships are complex. In B2C everyone is (mostly) equal but in B2B we have to focus on who is the decision maker, who are the influencers, who are the end users. In addition, often overlooked, your account management organization is often equally complex. Stitching those two organizations together in an operational program is really the key challenge:

• this complexity gives us multiple points of potential failure, that can impact the whole account. But also lot’s of opportunities to delight.
• We have to be cautious that without an NPS program we have a biased view of B2B relationships -> Account teams are not always facing the reality of the health of the relationships

In that context Deborah emphasized again that this is not a research project – it must be an operational program to open the dialogue, and one that’s not related to a sales opportunity or a service intervention. It’s not a survey to calculate a score; it’s a way in which you engage with customers in a continuous improvement cycle:

1. Contact selection and recruitment

2. Non-response alert follow-up

3. Team review and action planning

4. Account closed loop

5. Structural action and communications

Coming back again to the internal account team structure, Deborah then spent time highlighting that the account team is not just the sales organization – we have to include all the key players that interact with the accounts, e.g. service and support organizations, regional/general management, etc. Looking at the typical concerns amongst those different groups really gave an insight into how the success of the account is a shared responsibility.

Towards the end Deborah pulled out a few key points that we’d do well to track in our own programs:

• Active recruitment of customers into the program is key to drive response rates from the right contacts. Don’t drop a survey on them without warning. It has to be described in terms of how it’s part of the ongoing relationship, and that it is not just a survey.
• It’s about engaging employees to collect and exploit the feedback - not about having them sit on the side lines watching the score. Be cautious in tying compensation to the scores too early – it will just drive employees towards gaming the system
• Watch response rates carefully – less than 50% response rates means your teams are not engaging and you are not capturing a good picture of the real situation.But take care it’s representative of the different roles also (decision maker, influencer, end user) - it’s no good if all responses are from one population.

In summary:

• these programs are here to drive to growth (it’s not about a survey, so change your vocabulary)
• it’s about dialog not the score, the score comes from the actions we make
• action has to come at all levels throughout the organization to be effective at transforming the relationship

So, another great session and a good close to today’s B2B track!

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“People will forget what you said, people will forget what you did, but people will never forget how you made them feel.” ---- Bonnie Jean Wamund

Love this quote.  The act of service is just the starting point; passion is the key of to be truly customer centric.

There are three keys to accomplish this customer centric goal.

1) Ensure that there is executive commitment (we have heard this before—and rightfully so).  This C-level commitment will only come when you have strong business case. In other words, you need to show a direct connection between customer loyalty and growing revenue. This needs to happen not just with the CEO but with the CFO. And, with the CFO, it can not be a covert commitment. The CFO needs to be a vocal, exuberant supporter of the program. This is important because once you start down the path to being a customer-centric organization; you cannot turn back when the next quarter’s revenue forecast looks soft.

2) Thoughtful processes need to be in place to ensure success. That is, all customer touch points needs to be put into a process map. This map will allows you to define the best interaction (wow factor) for each touch point. Equally important to the process map is a system/portal to communicate the results. You always need a way to see if you are winning or losing.

3) Passion and tireless resolve will drive change into the organization. Obviously, driving change is a well documented discipline in its own right. However, from a customer service standpoint, this change starts at the frontline. If customer loyalty is truly going to be adopted, senior executives need to really, really understand the customer issues. When executives uncover these issues, it is quickly determined that these “customer service” issues are normally systemic organization issues that need to be solved in marketing, IT, finance or some other department. Until these problems are corrected, we are hindering our front line colleagues’ ability to impact how they “feel” about our service.

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Why is it that companies operate the way they do? What happens when new players enter an industry, or a major competitor changes the rules of the game?

Richard illustrated this with examples from several industries, and with a bit of economic theory too.

For example, why is it that hotels have fixed check-in and check-out times? Turns out, it’s mostly about the cleaning schedules. Yet the cost associated with cleaning is only a small fraction of the value of the customer’s stay. One company, operated by renowned hotelier Horst Schulze of West Paces Hotel Group, is innovating by doing away with fixed check-in and check-out times. Why not just organize your hotel stay based on your schedule as a guest? Now that’s an innovation.

Richard pointed out that most big changes tend to come from entrepreneurial companies and new entrants. But innovation isn’t just about products! The first three examples he chose were all, essentially, about distribution channels:

• Avon: Started by David McConnell in the late 1886, and first branded as Avon in 1928, was a major innovation in the sale and distribution of cosmetics...as Richard described the Avon model which leveraged personal networks and social relationships, I realized that social networking (just like word of mouth) is nothing new!
• Dell: Michael Dell decided that the notion of selling computers through dealers might not be the best model. This led to one of the biggest innovations in high tech distribution with Dell’s online "built to order" processes, that have changed IT purchasing and the computer industry.
• Amazon.com: Want to buy a book? If you’re my age, you remember the days where you had to call around to see which bookstores had the book you wanted in stock. Or you had to wait until they could order it from the publisher or from another bookstore. As Richard put it, "Going into a bookstore had its limitations on choice, convenience, and price." Honestly, my kids wouldn’t have a clue what the fuss is all about. Amazon has changed distribution for books, and many other categories of products, by moving the shopping experience online.

But Richard’s biggest innovator accolades went to Wal-Mart. Walton’s original idea was to be an innovator in distribution. He used to fly his plane around the US, and look for small towns with lots of homes but no large stores. As Richard put it, "He brought choice, distribution, and price efficiency to lots of cities where this simply didn’t exist."

My Own Experience at Wal-Mart

After hearing Richard's talk, I was writing this summary and reflected back on my own experience with Wal-Mart.

I was in the midst of that revolution growing up in Oklahoma, not far from Wal-Mart headquarters in Bentonville, Arkansas. What Richard failed to point out was the incredible tension this created in rural communities, where the Wal-Mart store put many small retailers out of business. But even if you had friends in small town retailing (we did!), you had to eventually accept the reality that Wal-Mart simply offered a better overall mix of choice and value…which was what the customer wanted.

In fact, I experienced it first hand, working in one of my first jobs as a cashier at Sam’s Club, Walton’s warehouse retailing giant. I was always amazed at how far people would drive from surrounding communities to buy products at the Sam's Club where I worked. This was Walton out-selling himself! What the local town Wal-Mart couldn't deliver, they could get by driving to the nearest Sam's Club (even better prices as a member).

I even had the pleasure of meeting Sam Walton himself when he stopped in at the Tulsa store on 46th and Sheridan Road, where I worked…driving up in his pickup truck, decked out in a baseball cap and jeans (yes it is true what they say about him). He was already the richest man in America in those days, thanks to his innovative approach to business, but I think he stayed true to himself. And he understood what the average person in a small town needed.

Richard Discusses Exceeding Expectations (aka The Zone of Tolerance):

As Richard noted, Walton had 10 rules for doing business, and rule number 8 was "Exceed your customer’s expectations. Give them what they want, and then give them a little more." It’s similar with Net Promoter. The only way that you can really create lots of Promoters is to redefine what people expect in your industry, or by significantly exceeding their expectations so that the customer notices.

Richard illustrated this idea of "exceeding expectations" by asking two volunteers up on stage. As research has shown, expectations are grounded at a certain level based on what consumers know from an industry, and there is also a higher level that defines what consumers really want. Researchers have called this the "zone of tolerance." But this range of expectations moves around. It moves with Price, first of all. It also moves based on what people experience from other companies.

In most industries, the players sit in the center of the zone of tolerance. But what happens periodically, is that companies completely redefine what people want by delivering a new type of experience, and this is a key factor in generating legions of promoters. This is what major innovators like Avon, Dell, Amazon, and Wal-Mart have done in their day.

Richard also went into a discussion of Game Theory, and how the interactions between companies tends to lead everyone to the "middle" of the zone, generating lots of passives. Think of this as a sort of, "lock in" with standard operating procedures, making it hard for companies to break away from the pack. Even if you try to make a big change, it can be incredibly hard to get your operations to adopt the change.

But occasionally, this balance is disrupted by an entrepreneur (from the outside) or (more rarely) by a major change from the inside. He used GM as an example of a company in crisis that has had the impetus to start major change. They are working on two major innovations right now. The first is a money-back guarantee. This is common for some smaller purchases, but it’s a big change for auto purchases. He rated this one with a thumbs up.

The second innovation they have tried is to sell cars online, using an eBay auction. They ran this experiment for 6 months recently (click here for Richard's blog about it when it was first announced), but it didn’t pan out well.

What went wrong? Richard believes this failed primarily because they didn’t complete the innovation…they just routed people into the dealership, and it was back to standard operating procedures again. This illustrates the difficulty of making change happen.

Bad Baggage

The airlines seem to be moving in the opposite direction, by charging for bags. "Is it a race to the bottom?" Richard asked. Luckily, not everyone is playing the game. As Richard pointed out, "Southwest now can create Promoters by doing absolutely nothing at all!" "Bags fly free" is now a differentiated experience, and Southwest is advertising about it.

Other great innovations Richard pointed out included:

Reed Hastings founded NetFlix because he hated the fact that Blockbuster was making money off of him by charging late fees. So he innovated in the other direction, redefining what people expect from home movie rentals. I've got some more thoughts on NetFlix in this blog post.

Online dating websites: why limit your choices to people you happen to meet through your personal network? Online dating websites have changed the paradigm for this completely.

Richard ended with a challenge for conference attendees in their own businesses. What is happening in your company and your business that relies on industry status quo? Are you a victim of living in the zone of tolerance? How will you break out of it? That’s some food for thought as we kick off the conference.

Sam Walton quotable quote (courtesy of Richard):

"Swim upstream. You should go the other way and ignore the conventional wisdom."

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