David Henry, Chief Marketing and Customer Experience Officer; Rory Dooley, General Manager, Control Devices; Glenn Rogers, Director of Customer Experience; Moderated by Fred Reichheld, Author, The Ultimate Question

Logitech closed the day and the conference with an excellent discussion of using NPS in product innovation.

CMO David Henry introduced the company and their customer experience approach to us. This is a company with strong (very strong) roots in both product development and interaction design. David summed it up for me when he said, “we are focused on the interaction between the technical platform on the one hand and the human being.”

They are using NPS as a key measure to understand how they are doing with us humans that use their products. And it seems to be working pretty well so far, 18 months into their journey.

They started by creating a new approach and organization within the company…putting together under one group the following functions: marketing, quality, customer support, and (a new one) customer experience. The common denominator is the customer, and NPS is the metric that helps them know how they are doing with each new product release.

As David described the Customer Experience (CX) vision, I jotted down a few words on a scribble sheet…

…attitude…promoters…love…share…long-term relationship

For a company focused on making great product, they certainly seem to know what emotions they want to engender from their product users.  But how do they plan to get there?

One very practical, and meaningful, process change stood out. They have introduced a new step in their product development and release process, called “Gate X”. Gate X happens when the product is basically done, but not yet approved for mass production. And they couple Gate X with final consumer acceptance testing. They ask consumers for feedback using the recommend question and have threshold Net Promoter Scores as part of this signoff process.

What’s a good score in the Logitech world? They would like to see all products one day scoring in the range of 75% NPS. But the relative scores also tell them something. They showed for major product categories and explained that the products ranked #1 by NPS in each category were also #1 in revenue for each category.

David told the story of their first product that didn’t pass. It was a multi-million dollar delay to get it right, but the entire panel was in agreement that the additional investment was worth the delay. And, perhaps more important, it sent a signal to the organization that customer experience was truly important, and management was prepared to act on it in major decisions like this.

It was clear to me as we went through the discussion that customer feedback was not the only source of innovation. The company’s engineers and product teams also play a critical role. Rory Dooley, who runs the Control Devices group, elaborated on the importance of using the customer feedback to overcome strong, often differing, internal perspectives. That’s the best of both worlds from my perspective…leveraging your internal creativity and ingenuity, with the voice of the customer front and center to focus the discussion.

The good news is that most of their products pass Gate X and hit the mark with consumers. But I don’t think these guys are ready to rest on their laurels.

Footnote: I’d like to personally thank our audience member who requested free giveaways of Logitech products on the Oprah show. Feel free to write in to Oprah and suggest she have Logitech on the show to talk about their cool stuff and NPS. My personal vote goes for the illuminated keyboard (cool idea, I work late all the time!). While you’re at it, let’s ask Oprah if she uses Logitech webcams for her Skype interviews? Maybe the eBay folks in attendance (thank you eBay for your involvement!) can get us an in there!

That’s my final post for the conference. I learned more than ever this year, and want to thank Logitech and all the great speakers for being part of it.

Laura DeSoto, Experian; Dr. Laura Brooks, Satmetrix; Desirree Madison-Biggs, Symantec; Diana Dykstra, San Francisco Fire Credit Union

“The customer is always right.”

Wrong, according to this panel. That’s how our first session of conference day 2 began. Our panelists did not agree on all topics, but on this one they seemed united on the idea that a much better mantra would be “Do the right thing for the customer.”

Seems like a subtle distinction, but it’s not. As Diana Dykstra pointed out, you can certainly have customers with unreasonable demands. What matters is that the employee does the right thing for the customer.

The panel discussed several different topics, but I’ll highlight a few of the big ones here:

First: Break the shackles of corporate policies.

Desirree Madison-Biggs of Symantec talked about how Symantec had created a “Myth Busters” website to help employees let go of old policies and corporate myths about what was and was not acceptable. From my perspective, it’s sort of like cleaning up your desktop. When you are driving change into an organization, make sure you don’t just hit “delete” on the obsolete files, but also be sure to “empty trash” and then restart the computer.

Diana Dykstra agreed. Get rid of the policy book. Her policy for employees is to do the right thing for the customer. They have 4 core values: Creating Elationships; Be the Member; Done in One; and Listen, Learn, and Innovate.

Laura Brooks commented on how action oriented and descriptive those value statements are, and I wholeheartedly agree. Don’t underestimate the power of good, descriptive language…especially when they see leaders and other team members also living it out in their actions.

Second: Hire or Train for Customer Focus, but Do It

Hire or train? We had different opinions on that. Laura DeSoto of Experian rightfully pointed out that “you’d better hope you can train for it,” because most organizations already have a lot of great employees on board, and you want to leverage their knowledge and expertise. Diana Dykstra took the other angle. At her company, they hire for it. And she admitted that when they were changing the culture, a lot of employees who didn’t fit with the new values left over time…which allowed them to bring in new people who were more naturally inclined to customer-focused behavior.

Whatever your strategy, be sure to do it. You won’t get change if you don’t invest in different hiring practices, training, or both.

Third: Get Leadership Commitment

Employee behavior follows cues from company leadership, especially when you are trying to make change happen. An audience member asked, “What do you do if you don’t have leadership on board.” And Desirree Madison-Biggs summed it up nicely in her response: you’re hosed! I couldn’t have put it better than that. Companies try to dance around this topic, especially passionate customer experience advocates at mid-management level who really want to make Net Promoter work in their organization. But ultimately, long-term success is intimately tied to having your top management on board.

Desirree made the point that showing execs the economics of promoters and detractors can sometimes help to sway opinion. But ultimately, most executives either have a belief system that lends itself to believing in customer first, or they are likely to remain skeptics. Find the right exec to spearhead this.

Fourth: Tell Stories

All the panelists agreed that stories were an extremely effective way to drive home the importance of customer-focused behaviors, both to make change happen and to reinforce behavior and culture.

Laura DeSoto told a story about Experian’s CEO, Kerry Williams, who personally followed up with a disgruntled detractor. The purpose of his call was simply to confirm that the account manager had closed the loop already, but when the customer said “no,” the next call was a personal one to the account manager. What drives change faster…a couple of stories like that, or a corporate email memo advising account managers to close the loop with detractors? You get the point. Stories matter….a lot. As do actions from top management.

Desirree Madison-Biggs explained how Symantec uses peer awards to get the stories out there. Not necessarily for “grand” heroics, but for the day-to-day heroics that represent a regular rhythm of customer focus in the operations.

For Diana Dykstra, the employees at San Francisco Fire Credit Union evaluate great customer-focus stories, and how they fit with the organization’s core values. Moreover, their entire performance review process is based on the core values, which drives home the importance of these stories to the company’s culture.

Fifth: Compensate, At the Right Time

Laura Brooks closed the session with a hot topic of debate: should you link compensation to NPS or not? We got three very different answers…from “yes, I did it right away” to “it took us 6 years,” and one smack dab in the middle.

I was waiting for Laura Brooks to chime in and break the tie…but we ran out of time. What was obvious from the discussion, and what we teach in the Net Promoter Certification, is to make sure you have trustworthy data and buy-in before taking this big step. Tying compensation too early introduces a lot of risks, including gaming, an overly strong focus on “the score” instead of changing customer experience, and the potential for a major crash and burn if the underlying response rates and data quality are not representing the customers or segments who matter most to the business.

Tony Hsieh, CEO, Zappos.com

Tony Hsieh has been speaking a lot lately at conferences. And when you hear the story of Zappos.com and it’s rise from $1.6 million in revenues in 2000 to $1 billion in revenues at the end of 2008, you can understand why people want to hear about it.

What was refreshing for me was the amazing level of openness that Tony conveyed in his talk. They are so confident that they are building a great company, that they are not afraid to open the kimono.

I introduced Tony by sharing two personal stories that point out the power of Word of Mouth for the Zappos.com brand. I’ve actually never bought anything from Zappos personally, but my house is full of empty Zappos boxes, as my wife is a big promoter of their selection and service. I also shared a photo that one of our Satmetrix employees gave to me from his first visit to their facility in Henderson, Nevada, outside Las Vegas. The company gives tours of the facility, and ends the tour with a nice surprise. I won’t spoil it for those of you who have yet to visit there. I may check it out next time I’m in Vegas.

The brand simply inspired storytelling, and Tony explained that this is not entirely by accident. They focus deeply on the company culture (which is all about being the very best at customer service). And as Tony said, if you get the culture right, all the other good stuff follows…including good Word of Mouth and high Net Promoter Scores. Their NPS as measured internally has been running between 80-90%...which is pretty remarkable. But the balance of the discussion made it clear that they do a lot of specific things differently to generate so many promoters.

Tony talked about how “everyone is a little bit weird.” I personally identified with this a lot. I’ve got my quirks, and most of the people I know and love do to. People who don’t have quirks, or who mask them, are honestly not that interesting to me. That’s a big part of what makes us real and human…and I think it’s a bit of secret sauce in how Zappos is connecting emotionally with their customers.

They embrace this “differentness” in everything they do.

First of all with employees. Employees are encouraged to be themselves. They spend a lot of time selecting the right employees, making sure their values are customer service oriented. Then they put them all (everyone) through the same 5 week hands-on training program. They even offer to pay employees a sort of “departure bonus” after the first week of training if they don’t believe Zappos.com is the place for them. Tony explained that these practices help to get really committed individuals who are wired to fit with the company’s service-oriented culture. And it also allows them to unleash that creative energy at every point of customer interaction (without lots of complex policies and procedures). Now that’s different!

Process was next. They obviously do have processes…but again they seem to think of it differently. For example, they call their customer service team the “customer loyalty team.” That’s the ultimate goal right? You may service an automobile, but with people your goal is to make them loyal. How to do this? Well, their support team doesn’t “upsell,” they don’t measure call time, and if they don’t have the product in stock, the members of the loyalty team are encouraged to check 3 competitor websites to help the customer get what they want. Different, right?

Marketing and branding is different too. I loved it when Tony said that they have their 800 number at the top of every web page on their site. This contrasts radically with companies who are thinking of customer service as a cost, and try to make it hard to figure out how to call in for service. As Tony put it, the telephone is the best marketing tool out there. You get your customer’s undivided attention for 5 or 10 minutes to make a connection with them, and to establish who you are and what your brand is all about. Different again!

He wrapped up by reinforcing the 4 core things that he thinks companies need to get right to have a successful strategy:

1. Vision: theirs is to deliver the best customer service. That’s it.
2. Repeat Customers (not advertising): This is a big connection to the Net Promoter philosophy. Tony explained that they were forced to focus on repeat customers early on because of the dot com bust, but it has turned into one of their core metrics. They have gone from 20% repeat customers in the first 12 months, to over 50% today.
3. Transparency: They are committed to being open and honest about who they are, and you can get a copy of the Zappos.com culture book (with messages from every employee), or connect directly with Tony online in blogs on twitter, you name it. They are committed to being open and honest.
4. Culture: Their culture is their brand, and so it is for every company. Tony believes they are just 2 sides of the same coin.

Well put, Tony. Thanks for an inspiring and different view of how a company can operate.

Use the link below to download the presentation from our Case Study Library:

http://www.netpromoter.com/netpromoter_community/docs/DOC-1041

(view case studies requires brief registration)

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.

We are trying something new this year to give you more opportunities to learn and interact with experts during the conference. On day 2 we will offer a breakout track called Point of View Q&A. The track is designed to give you an opportunity to hear from individuals with unique points of view on Net Promoter and customer experience. And it's a unique opportunity to get Q&A time with these folks. I'd like to introduce them to you in this blog post, because I have had the pleasure of meeting each of them.

The track will lead off with Aaron Cheris of Bain & Company. Aaron is a partner in Bain's San Francisco office, and works closely with Bain clients in the customer experience area, advising them on Net Promoter and customer strategy. I had the pleasure of meeting Aaron first about a year ago at Bain's executive discussion group called the NPS Loyalty Forum, which is run by Stu Berman who I have known for many years and who will be chairing a track with us on day 1 of the conference. Aaron will share his perspective on how you should be leveraging specific interactions with your customers to shape their overall opinion of the relationship they have with your company. This article from Bain touches on the importance of using NPS with specific front line interactions, particularly in sections 1 and 3. Aaron will explore the importance of this in more detail.

Another speaker in this track is Jeanne Bliss, who you will probably know if you read our monthly Net Promoter newsletter. Jeanne did a Q&A session with me at our last conference in Miami, and got rave reviews. She is back this year to discuss what she calls “Customer Love” in tough economic times. Get a preview of her thoughts on this subject by checking out her October blog post. She would like the session to be very interactive, so come with your questions in hand.

Finally, we will be joined by Bruce Temkin of Forrester. Bruce is known for his customer experience blog, and has done extensive research on the topic. In fact, about 2 years ago I met Jeanne Bliss at a Forrester conference in Miami, where she was being interviewed by Bruce about whether companies should have a “Chief Customer Officer,” the title of Jeanne’s last book. Bruce will be discussing this issue of how companies organize to get better customer focus, as well as the broader topic of where most companies are today when it comes to the maturity of their customer experience efforts. If you want to know more about Bruce, you can check out Bruce’s Customer Experience Matters blog and download a free copy of his "book" on The 6 Laws of Customer Experience.

The track will be hosted by another expert from the company side. Vivian Hairston Blade is responsible for the global NPS process at GE Consumer & Industrial, and was with us last year as a guest speaker. You can read the blog about Vivian's session from last year, or watch a short video clip of it by way of introduction. This year, she will be the one blogging, and I'm sure many of you will want to track her down to discuss what she has learned about making Net Promoter work for GE.

So that's a snapshot of 3 sessions, among the more than 30 that we have planned for you in January. If you have questions for one of these folks, feel free to post a comment here and I'll share it with them as they plan for their session.

As we move into 2009, a lot of new things are on the horizon including the next Net Promoter Conference at the end of January. Given the recent economic "nosedive," everyone is feeling nervous about the prospects for their business in 2009. But I think we have a lot to look forward to as people gather for the conference on January 26-27 in San Francisco.

My hope is that by late January, we will be ready to push the "restart" button on our economy, our businesses, and (if we haven't already!) on our customer relationships. I'll start with a few personal predictions of what that may look at a macro level. You can track me down at the conference to tell me just how right or wrong I was:

1. The US will have a new president by the time we meet at end of January, and no matter who you supported you are probably expecting some rapid "restart" action when it comes to economic policy.
2. The holidays will have passed, and we will know just how bad the holiday shopping season was... but it will be behind us and businesses will be figuring what to salvage and how to move forward in 2009.
3. No one knows if or when the stock market will bottom out, but my bet is that by January you'll start to see some glimmers of "restart" as sophisticated investors start to buy up undervalued investments in many sectors that have been hurt by the general malaise and economic downturn. I'm not saying the economy will have responded yet, but I'm betting that a lot of the bad news and expectations will have been aired by then.

OK, so that's the big picture. There has been a lot of discussion lately about "confidence," and how economic activity is just a reflection of our level of confidence to do business with each other. And there is no better way in my mind to build confidence for the future than by meeting with others face-to-face. That's the "real" economy...the relationships and interactions that happen between businesses and consumers. Economic statistics just try to measure this after the fact. So, a couple more suggestions:

• Meet with your customers. Yes, you should be reaching out to them personally or online... relationships that are forged in tough times with empathy can be stronger than purely commercial ones.
• Meet with your peers in industry. We are all dealing with the same challenges, but our business can't and won't just "stop". We need to keep moving the agenda forward.

And we will help you do that this year with what I believe is a truly one-of-a-kind agenda for the conference. This year, we will hear from several CEOs about their philosophy and strategy for putting customers at the heart of their business. We will also continue to push beyond the elegance of NPS as a metric, and get knee deep into the theme that was selected by our own community this year: "Driving Customer Focused Behavior."

We designed into the agenda a series of topics based on your more detailed feedback. For example, we have a specific breakout track on day 2 that is targeted at B2B practitioners, who often comment that their strategies and issues are unique. We also heard from many people that they were looking for more detail and examples of financial linkage for Net Promoter, so we have carved out a track on day 1 to address this specific topic. Finally, we heard how much you enjoyed interactive Q&A sessions with experts, so we have created the Point of View Q&A track on day 2, where you can get a unique opportunity to interact with customer experience experts like Jeanne Bliss (back by popular demand), and Forrester's Bruce Temkin, who writes one of the most popular blogs on customer experience.

That's a taste of what you can expect at the next Net Promoter Conference. I hope to see you there so we can "restart" 2009 in style.