Richard Owen - CEO Satmetrix Co-author of Answering the Ultimate Question

Richard started us off with a view on the economy and what are the most important steps companies can take during this slow down.  I think Richard asked a good question, “Is flat the new up?” But really, the most important thing companies can focus on is their customers.

Key things companies should look at:

1. Are you focused on customer retention which is a lot easier and more cost effective then custom acquisition
2. Are companies making the right cuts, rather than cuts that will hurt customer loyalty long term
3. Do you understand the economic value of Word of Mouth (WOM) or your promoters for your business.

Let’s Look at Advertising vs. Word of Mouth: Today Can advertising really be effective for long term growth? Companies can’t advertise their way out of trouble they have to focus on the customer’s experience. You can see this hold true when you look at the US auto industry and companies like Sprint both of which spend large advertising dollars but it has not resulted in increased sales. Today, the best customer service is now online retail where companies who invest in the customer experience, not advertising, are leading the way.  For example look at companies  like Overstock, Amazon, and Zappos.Deploying a Successful Net Promoter® Strategy: One theme that is consistent among the leading companies is that Net Promoter is really about a holistic approach that is part of the entire organization, not just the score. To truly be successful implementing a Net Promoter discipline requires change across the organization. Based on our findings, companies that are able to implement change management will be successful with their Net Promoter programs. Companies need to move away from business processes that do not work for them and learn how to create a radical shift in the organization.

Click here to download the presentation.

Scott Baker, President & CEO, Paul Davis Restoration

Don Peacock, Franchise Owner, Paul Davis Restoration

Pairing a franchisee and a franchisor certainly made for an interesting session.  All day I had heard stories of hard-won lessons and triumph about what it meant to implement Net Promoter within four walls; I was really interested in learning how the team at PDR was able to pull it off with franchisees!

As always, it all starts in making the choice to “go NP”. Baker mentioned that the reasons that Net Promoter was ideal for PDR were:

• the system is simple
• it serves as one, single “trackable” metric for busy franchise owners
• although they had tried to improve customer loyalty, they weren’t able to make a big enough improvement – and they didn’t want to be satisfied with the status quo
• it’s a way for franchisees to show differentiation without spending a lot of money on advertising
• he felt the goal of Net Promoter would really resonate with franchisees

Once the decision was made, the PDR team set the goal of getting the homeowners themselves to recommend PDR to their insurance agents and adjusters.  Along they way, by using Net Promoter, they were able to make some correlations and learn some lessons it would have been very hard to learn or they may not have ever learned, like; a surge in sales sometimes results in a decrease in their Net Promoter Score –especially during an emergency or disaster. This is reasonable because during trying times the focus turns to helping as many needy people as possible and as a result some of the elements that drive Net Promoter Scores are not as prominent. They were also able to discern the top three causes of the creation and existence of detractors AND promoters.

Some causes of detractors are:

• lack of communication
• lack of timeliness and
• challenges with quality of service and workmanship

Some causes of promoters are:

• professionalism
• timeliness and
• quality work

No real shockers there, but it’s always good to identify what’s driving your NPS scores.

Team PDR decided to address some of the core reasons behind detractors by creating The Paul Davis Customer Experience Manual, which outlines the PDR keys to customer loyalty:

• First contact is made with caring and compassion (many of the people who contact PDR do so because of a natural disaster or some other personal or family crisis)
• Engagement (this is where they begin the process of developing a long term relationship with the customer)
• Commitment (when they get the customer’s permission to proceed with the restoration work as outlined)
• Fulfillment (when PDR gets an opportunity to actually do the work they’ve outlined and deliver on their promises)
• Completion (the opportunity to create a long lasting relationship with the customer)
• Continue (essentially “lather, rinse, repeat”)

But, the main cause of Net Promoter success at Peacock’s franchise is in requiring that everyone attend some sort of customer service programming for at least one hour every week.

Baker was careful to express that participation in Net Promoter is not mandatory for franchisees, but he was clear about stating that having a franchisee like Peacock to tout the benefits of using NP could not be paralleled.

To close the session, Baker and Peacock shared some lessons learned:

• Golden Rule Behavior and Net Promoter appeals to candidates who want to do the right thing so when hiring employees, if there’s not a fit it’s obvious right away
• It’s a good idea for franchisees to have their own awards ceremonies – it shows they’re committed to the process
• High NPS scores have the potential to mask other problems, so don’t be lulled into complacency because of high scores – always look for ways to improve on your improvements and always look for the not-so-obvious ways you’re dropping the ball
• Surveys that are sent closer to the actual time of the transaction get higher scores because the experience is still fresh in the mind of the customer.
• Oh, yeah, and when workers wear “dust booties” over their work boots when coming inside and when they ask for permission to park their trucks and use the bathrooms – those actions always lead to a higher NPS. As a woman, I can totally see the logic in that!

Michelle Robinson, Vice President and General Manager of Early Development North America, Covance

I couldn’t help but notice that there were subtle themes of conversion, confession, and salvation that ran through the conference this week.  Wait!  Did I attend a fundamentalist tent rally?  No, but what I learned is that taking a good hard look at the way your company treats customers can be as revealing as a religious experience.

Of all the track presentations I participated in during the action-packed two days, the Covance story had the most profound effect on me. Part of that effect was caused by the rich and dynamic content shared.  But just as impactful was the poise, passion and humor in which Michelle told their story. As she skillfully related the journey she embarked upon several years early, this thought struck me; at one level the journey to a higher standard is a company story, but in the end, it’s deeply personal.

Michelle began her story with the admission that when she was hired and truly understood what is they wanted her to do, she was reluctant to embrace the task. After all, she was an experienced GE certified six sigma black belt with an MBA armed to the teeth for serious business. Now they wanted her to help the company live out its values?  Puleeeeese! But after seeing the result of the work the teams produced, she is now a true NPS convert and has taken the spirit and methodology into her new role as a business unit VP. (She took minute to pause and give credit to one of the key players in the Covance story, Laurie White.   She shared sad and sobering news from which she was still in shock. Just the weekend before, the pioneer of creating a client focused culture on her team had suddenly and unexpectedly passed away. Her contribution and spirit accounted for much of the team’s success and would be deeply missed). Truly personal.

It’s difficult to summarize the in-depth work this team did in three short years, so I encourage you to look through the entire presentation for details. In short, Covance is a drug development company for big pharmaceutical clients. They have long cycles and deal in big numbers. It’s a high stakes game for all involved. Clients measure them on Speed and Quality. A missed deadline may mean a client doesn’t go to market in time and is beat by the competition. Not good for creating loyalty.

With that as a back drop, they set about creating a culture that would engender client loyalty through service excellence. Their program, called Signature ClientService took their lead from a book written by Jim Clemmens and Barry Sheehy called ‘Firing on All Cylinders’. It had 3 key components:

1. People – everyone from the chief bottle washer (yes, they have those on the team!) to the scientists, doctors, technicians and account managers had to understand their line of sight to the customer and what they contribute. They had to create a compelling environment in which people could do their best work.
2. Process – using Process Improvement and Six Sigma methods, tools were available for everyone to use.
3. Signature ClientService – Enhanced service that is fostered through understanding and exceeding customer expectations, supportable processes that make it easy to do business and a robust measurement system.

What was critical to making this all happen?  Again, it’s personal.  It takes individual leadership commitment and trust. It takes employees engaged in the rigor and fun of doing things different for the right reasons.  It also takes transparency and accountability.

Standards and measurements are rigorous and leaders encouraged and rewarded to hold to them. An example of this is that teams were encouraged to escalate issues through the CAIR process (Corrective Action Issue Resolution) which Michelle’s team facilitated. Every week this list is reviewed during a meeting for if and how well the issue was resolved. Leaders are measured not on how few issues were escalated but how MANY were. My favorite measure they use is the Do/Say ratio. Did the team do what they said they would do in the time they said they would do it?  All of these measurements are to encourage truth in reporting and create an environment excellence is valued, not perfection.

Results conclusively show this strategy works. The operating units with the highest CAIR numbers also consistently have the highest operating margins and NP scores. On top of all of this, employees are encouraged to participate in improvement efforts and create ways of wowing the customers in their roles, improving their everyday work environment. Accountability is also expected at the highest levels. While in her role, Michelle attended every Board of Director report to give them a status on how the company was doing with their client relationships.

The program continues to live on vibrantly at Convance, a testament to efforts of all employees to win the hearts and minds of their clients.  In the process, I suspect they have created a culture of which they are proud. Is the journey to a higher standard personal?  I think so.

Deborah Eastman, CMO at Satmetrix

Deborah Eastman has a wealth of experience in running Net Promoter programs, from being both a direct practitioner and also helping clients optimize their own programs.

Deborah started off by reminding us that business buying decisions are complex – much more so than B2C experiences – since there are often so many more people involved in the buying decision.   Understanding the strength of those relationships can be challenging when so many people are involved.  When B2B customers leave, it’s often a big surprise; an effective Net Promoter program will fix that.

Create a Program, not a Survey. Customers don’t care about surveys.  It is critical to show them that you care about the relationship and that you and the account team will take action.  In determining from whom to get feedback, Deborah advocated taking a hard look at the 80/20 rule: Since 80% of revenue often comes from 20% of customers, it’s important to give bigger customers a bigger voice.  And also make sure to understand the word-of-mouth effect inside a company – for example, end users are often important influencers of any buying decision and might have something important to say.

Part of a programmatic approach is to establish when the surveying process will take place.  In general, getting feedback only once a year is not a good practice as the approach fails to drive customer-centric thinking throughout the organization.  So Deborah instead has found that by splitting up the customer base into segments, and surveying “slices” of each segment (keeping in mind to not over-survey individual customers) on a regular (e.g. quarterly) basis.  This approach drives stability in the NPS while also ensuring NPS is top-of mind for all employees.  And role-based surveys, for example to differentiate end users from executives, are another important dimension and segmentation strategy to get he right feedback from the right people and drive the right results.

Deborah next advised that a communication strategy be a critical part of any NPS program.  Communicate both internally and externally what is happening, how the feedback will be acted upon, and how employees will be engaged in the process.  For example, by taking this approach within Satmetrix’ own Net Promoter program, account teams are much more engaged in the process, and so are clients.  Effective internal communication should ideally highlight the “wins” from the program:  Since account teams benefit from a Net Promoter program through improved relationships and generating cross-sell opportunities, it is critical to make sure everyone knows the real-world examples of where the program has produced new sales wins.

You’ll benefit from high response rates by recruiting responses through effective communication from both account teams and executive.  Effective recruiting includes:

• Positioning the intent – why are you soliciting feedback?
• Setting expectations about what you’ll do with the feedback

And finally, don’t forget the closed-loop process as a key part of the program.  An effective follow-up process drives action both operationally – within the account – and structurally – across the organizational silos – to prioritize overall investments.  Alerts from surveys generate the awareness for urgent operational follow-up, and then allow the account teams to improve relationships that ultimately improve your account teams’ top-line.

Effective governance drives effective behavior

There’s a tendency to link compensation to NPS, yet it is critical to make sure that gaming is avoided by instilling the value of the program vs. individual performance management. Deborah advised a strong focus on getting the contact data right and driving high response rates, and that this is balanced with using the data for employee performance management in order to avoid gaming (or, in fact, de-prioritizing the employee performance aspect in the early stages).  Don’t be tempted by linking NPS to compensation too soon – find the behavior you want to influence, and link accordingly to avoid gaming.

At the end of the day we care about revenue more than scores.  Link Net Promoter Scores to the value of the customer in order to know where to optimize the relationship by applying the right resources to the right accounts.

Deborah shared a few examples programs done right:

• Orange Business Services realized a 150% increase in orders from accounts engaged in the program
• Another large B2B company found a 39% improvement in follow-up meetings (sales opportunities!)
• And HP found a 2x increase in sales from the participating account teams

While a Net Promoter program is not an easy task, the phenomenal results like these certainly provide the pay-off!

Vince Nowinski - Net Promoter Economics - Teleco/Wireless Industry

We know that loyal customers repurchase, buy more, refer, and give constructive feedback.
Still many companies struggle to determine the value of customer loyalty.

What is the power of word of mouth (WOM) and what does that mean for your business?

Word of Mouth is accelerating across industries making the dynamics of WOM even more important. Studies have shown that word of mouth is 9X more trustworthy and that 60% of customers trust the info they get from on-line reviews.

WOM is not just an extension of your advertising program. There needs to be something compelling for people to share or you can’t get them talking about it.

Like with anything the more positive the experience the more likely that the WOM would be positive and that negative experiences will result in negative WOM.

If the customer experience aligns with the message in the marketing then there is a synergy that can drive WOM. But traditional market methods do not tend to impact WOM. So companies should be looking at the natural way to apply WOM.

• For more details on the specific methodology please download this whitepaper Exploring the Relationship Between Net Promoter and Word of Mouth in the Wirless Industry

Click here to download the presentation.

How My M&Ms has bucked the trend and grown their business

Speakers: Tom Kehler, Satmetrix, and Claudio Pugliese, MARS Direct

How do you get your customers to feel that your brand is important to them?  Claudio Pugliese, who manages the Customer Care center for MARS My M&Ms, found first-hand that by genuinely engaging your customers in a conversation, your brand becomes more important to your customers, you create more Promoters, and the business grows.

When My M&Ms first started their community reading the Detractor comments was “emotionally” difficult, but they were full of insights. And the comments from Promoters were also invaluable, yielding improvement ideas for both product and go-to-market. The critical element in both cases was around engaging their customers in dialogue, and to demonstrate through effective action and communication that they listened to customer feedback. Taking action – and then demonstrating that they listened – is critical to their success.

The results My M&Ms has achieved from taking action on feedback speaks for itself. Over 8 time periods since they started this approach, My M&Ms not only improved their NPS from 25% to now 58%, and even more significantly they’ve significantly grown sales. They’ve found that creating a superior customer experience leads to:

• Enlisting more brand Promoters
• Building brand loyalty
• Activating positive Word of Mouth

Bottom-line is that by listening to the feedback from their customers they were able to grow their customer base (which also ordered more!).

As illustrative examples, the My M&Ms team implemented a few changes based on customer feedback:

• They listened to customer complaints about pricing and adjusted it, resulting in larger orders per customer
• They responded to customer requests for higher quality by introducing new inks and new capabilities
• They adjusted their service policies, for example “no-questions-asked” returns

They started off averaging 14% repeat customer-order rate per period, and that has now grown significantly to a 25% repeat rate. More customers are ordering more, and in this economy My M&Ms has grown where their competitors are losing money.

How do they do it?

1. My M&Ms established their online community with the important element to enable customers to join a club of influencers. And by demonstrating that the company listened and took direct action, customers talk more and provide further insights. Once you’ve established the relationship with Promoters, you have the ability to influence many more through those indirect connections
2. NPS is part of everything they do. It tells them where to invest marketing dollars to get the greatest returns. It tells them which employees are creating Promoters. And it tells managers where to invest to ensure they are keeping their employees as Promoters.
3. They are constantly looking at how they create more engaged customers, and they know that this is a measure of how important My M&Ms is to the customer.

In other words, Claudio tells us that they found that customers are looking to influence the companies they do business with.  If you talk to your customers they will talk to you.  Through their online community, My M&Ms has created a direct-to-consumer experience that allows them to engage. This works by asking open-ended questions and allowing customers to contribute ideas or select the ideas of others through the community platform.

Tom Kehler reminded us that engagement with your customers drives three major benefits:

• Better products that your customers want to buy
• Better marketing by letting your best customers tell you what resonates
• Better word of mouth from engagement

Incidentally, Claudio started his talk by stating a critical success factor: “Make it easy.”  Claudio also closed his talk with a similar comment:  “Work across the internal organization, and make it easy for them to work with you on this important effort.  Put the information into terms that they need and understand.”

Well said.  Congratulations to the My M&Ms team for driving real business results through Net Promoter!

Our morning breakout track here at the NetPromoter Conference on Developing Customer Focus in Service Operations created a full house. Even though the speaker was Lindsay Notwell from Verizon, the room was full of customer zealots and NOT the Verizon Network folks that you see in their ads. If you, missed this session then you missed a great talk.Lindsay and the Verizon team are deeply engaged with NPS. They started just last year and have listened to over 2 million customers and have followed up with 750000 calls. The title for the presentation was “Getting Customer Religion: The Virtuous Circle of Listening and Delivering Great Service”, listening is really a key point. Lindsay made the point several times that if you survey, you must follow up and call back those customers who took the time to share their opinions. If they took the time to complain, then they want to help you improve. This is a great tip on how to turn detractors into promoters.
Lindsay pointed to some key success factors that seemed to also be a theme for the conference.  His key success factors were:

Beyond the survey, Lindsay noted that the hard work continues with the tactical work efforts that includes gaining employee engagement via training, consistent messaging and integration in all communications. The program also needs to be sustainable and cannot be viewed as the ‘program du jour’. NPS can’t be just the program for THIS year, or quarter or month, it must be durable.

He pointed out that the NPS score is not the goal, it is a symbol that helps you decide what to focus on to improve the customer experience. Using the verbatim, the actual words from the customers, is a powerful tool that allows everything from direct employee coaching to creating the rallying cry for the organization. Focus on the customer experience and the scores will come.

Does it work? Verizon uses NPS as a benchmark tool for a very competitive industry. They top the benchmark and recently have shown impressive financial results that match. The competition who does not hear you now and is at the bottom of the benchmark is leading the pack in losing customers, losing money and losing jobs. So, while NPS and customer experience is hard work, it seems to be worth it for Verizon.

Click here to download the presentation.

Richard made a pretty compelling call for investing in customer experience rather than advertising, especially with the economy in a shambles.

Sprint was one of his main examples: a company that has had trailing Net Promoter scores in the telecomm space for several years, and is now investing heavily in trying to turn the company around under its new CEO. Most of us have seen the ads, right? The problem is, Sprint’s NPS is negative, and they are trailing the leader in the space (Verizon) by about a 50 point gap, as Richard pointed out. In fact, Satmetrix recently ran the U.S. Net Promoter Industry benchmarks in December 2008 (they aren’t released yet, but my group runs them, so I got a preview of the data which I’ll share with you here). Sprint is still trailing Verizon by over 50 points on the NPS scale (remember, the scale goes from -100 to +100), but even worse, they are trailing the next best competitor by more than 20 point. So the story hasn’t changed much in the telecomm space over the last 2 year, despite their advertising efforts. As a former Sprint customer, I do have to them credit for one thing. About a year ago, I had a customer service problem, and then was asked to complete a short survey to give them my feedback. Guess what…I actually did receive a call back from their customer service group. And it’s an experience that I won’t forget. I was not a detractor for Sprint…more of a passive. And the reason we moved our family’s plan off of Sprint really had nothing to do with their service. It was because my wife got an iPhone!

The next story Richard told was that of the defunct retailer. He pointed out how retailing is increasingly moving online. Moreover, 3 of the top 4 retailers in customer service, according to one industry, are online retailers Amazon.com, Overstock.com, and Zappos.com. Richard highlighted that these companies focused primarily on great customer experience, service, and product selection…NOT on advertising.

Zappos is speaking later this morning, so I’m looking forward to hearing more about what they are getting right.

Finally, Richard turned to the topic of change management. I work with Richard, so I know that he is an avid pilot. And he wrote a blog back in December that compared FAA training for pilots to Leadership of a major corporation. If your pilot lacks the skill to prevent the plane from getting into what he called an “unusual attitude,” then it is very UNLIKELY that the pilot can recover from it. So it goes for leadership too. Can leaders who institute bad profit policies and get companies into a mess with their customers really be expected to fix the problem. Or do you need new leadership?

Our next presenter may give us a view into how this transpired at Charles Schwab.

Steve Dee - Senior Vice President and Head of Client Loyalty- Swiss Reinsurance

Swiss RE’s Net Promoter® program is focused on its largest B to B customers. The challenge is how can they show results  and demonstrate the differences between promoters and detractors when the stake holders do all the big deals.

Probability and growth

Swiss RE started by determining the over all Net Promoter® Score (NPS) baseline for all clients. From there they looked at the NPS for each individual and then measured rate adequacy by client against the NPS. So based on the number the respondents from a client they can look at how many are a rate adequacy as a promoter or detractor.

Once they spend the first year getting a real good baseline they began to look at what they could do to grow their numbers and determine the strengths and weaknesses across various touch points.

Today, Swiss RE primarily evaluates the NPS by business teams, but they also find it useful to overlay against product lines. The client teams identify any detractors or clients that request a follow-up and these clients are automatically called usually with in 48 hours.

Swiss RE has found that attribute analysts becomes more important for ensuring trustworthy data and to drive change in the organization.  They examine closely the NPS of their core clients to determine the key drivers.  To improve the knowledge base of their account teams working with key clients, they have increased the time they spend in front of clients.  This has resulted in increasing knowledge and expertise 25 points in a year.

Swiss RE has found that using Net Promoter and the Satmetrix operating model is the absolute way to be best in class in Net Promoter implementation.