Domenico Azzarello, Bain & Company

Domenico, partner in Bain's Paris office, kicked off the afternoon with a discussion about the importance of Net Promoter economics, and approaching it as a transformation program. He highlighted the important connection of Net Promoter with key economic factors including:

1. customer tenure
2. level of spend
3. recommendations
4. price premium

We had some discussion earlier in the day about how companies can figure out how much impact word-of-mouth has in their business. Domenico showed a good example of positive and negative word of mouth economics, which led to some good questions about how you go about quantifying the WOM factor in your business.

Domenico did a great job of de-mystifying the whole exercise. When someone asked, "How do you go about figuring this out," he said, "You just ask them!" My colleague at Satmetrix, Vince Nowinski, has recently published some WOM economics studies for personal computers, credit cards, and cell phone providers in the US (available in white paper format), and we are planning some related presentations for our next major conference in San Francisco also.

Next, Domenico turned to several excellent pieces of advice that we should all consider. I'll summarize a few of them here.

One key idea was to define a clear "client promise" or "value proposition." How do you figure this out when you have so many different needs within your customer base? He highlighted the importance of understanding customer segmentation. If you start by segmenting, and focusing in on those customers who represent the majority of your profitability (the 80/20 rule), then you can put a much more focused lens on the type of value proposition that you should target. Once this is done, you can zoom in on the key moments of truth that matter for this well defined segment, and make the promise come to life in the way your employees deliver the customer experience.

Next he came back to the idea of separating hygiene or satisfaction factors (those things that will create detractors if they break) from WOW factors that have the potential to delight the customer and create a promoter. These WOW factors are things that really will surprise the customer if you do them well. He showed a great 2x2 matrix, contrasting interactions that can create a detractor, versus those that have the potential to WOW the customer. Where do your various touch points fall within this 2x2?  And how frequently do the touch points happen (the ones that are more frequent give you a better chance of touching more customers, making a bigger impact with one investment in the customer experience).

Now here's an example that struck me. Domenico discussed how companies like Four Seasons make a huge difference, just by the way they welcome customers personally on arrival (in fact, when I was headed out to dinner last night, I walked right by the Four Seasons in Paris, which is just next door to the Prince de Galles where we are today). Four Seasons has spoken before at our Net Promoter conference in Miami last year, and I bet you've heard about their amazing personalized service. It's almost legendary, and when you hear how their general managers run each hotel and how they hire and train employees, it's no surprise that they stand out!

So here's a question for you...how many KPI's do you use in your company? Domenico made the important point that you can't have too many targets. They basically will get washed out if you are trying to hold people accountable for too many things. So if you start to consider how to hold people responsible for the client experience, you need to skinny down the number of metrics...and you probably only need one key metric to keep focused on the client.

What I hear many successful companies do is to choose one key metric to know how they are doing financially (something like EBIT -- earnings before interest and taxes), one key metric to know how they are doing with the customer (this could be NPS), and one for the employee (lots of people are starting to experiment with employee NPS for this).

If you read my blogs from this morning's sessions, you might just guess what company just came up (yet again) as a great example of loyal customers! I think Nespresso has got something amazing going on when it comes to word-of-mouth in France! This is the third speaker of the day who mentioned them, and I know that our speaker this afternoon from Weber Shandwick is going to tell us more about it... I'll watch out for that later today. And thanks to Domenico for starting off our afternoon on such a rich note!

Click here to download the presentation