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CenturyLink: Communicating the Big Picture in Small Increments

JohnAbraham — Fri, 03 Feb 2012 22:37:08 GMT

Renee Karson and Brad Hughes of CenturyLink shared with us the details of how they aligned a large and disparate set of internal teams, post-merger, around one common Net Promoter concept and program.

What was interesting about their journey with Net Promoter is that it all started within the Qwest team before the merger with CenturyLink, Embarq, and Savvis. Former Qwest CEO Ed Miller, who had come from Williams Sonoma, started the focus on placing the customer at the center of corporate strategy. Renee and Brad then worked closely with CenturyLink EVP of Corporate Strategy, Stephanie Comfort, to extend the strategy to include all of the CenturyLink businesses post-merger.

Starting with Insights about the Customer

Renee shared with us 7 key insights that they uncovered through a lot of research at Qwest, prior to the CenturyLink merger. These 7 insights formed the basis for their transformation efforts within the business.

1. It's about the experience, not the technology. As Renee explained, customers say "I want a higher speed broadband because I want to download the movie faster." It's not because of the broadband speed itself.

2. People are information-savvy, and use new ways to get more of it. The customer is becoming much more knowledgeable, so CenturyLink realized that the way they talk to the customer needed to change.

3. Technology feels fragile, threatening and confusing, which creates reluctance to change.

4. People feel disappointed and abandoned during the experience. Renee gave an excellent story from their ethnographic research. They found that almost everyone had a "cord drawer" with all the old cords that were left over from previous devices in the home. The cords were an analogy for how complex and confusing everything had become.

5. People feel like they are treated like a number, not a person. This came through in subtle ways, such as the scripts and processes used in call centers.

6. People don't feel they are valued for their ongoing relationships with service providers. Many companies suffer from this challenge: they are focused on acquisition of new customers, while ongoing customers were not getting all of those benefits.

7. The baseline for good service is broken; expectations are vey low. This, ultimately, was where they saw a huge opportunity. When they spoke to customers, they simply were asking for things to go as expected....expectations were really low, so CenturyLink viewed this as an opportunity to exceed expectations and delight customers.

From Transactions to Relationships: Like Dating to Marriage

As they reflected back on these challenges, it became apparent that many of the underlying challenges came from viewing everything in the busienss as a transaction, instead of a relationship. "It was like the difference between going out on dates, versus getting married" as Reneed pointed out. They believed they needed one over-arching approach to break down the silos and help them get to the overall relationship that would lead to the business outcomes they wanted.

To make this come to life for the organization, they developed proof points based on NPS that linked to customer churn and word of mouth.

Churn and renewals: People who were severe detractors were 3 times more likely to churn than promoters. They have been looking at this for many quarters, and they find that this pattern holds true in the business consistenly over time. So they were confident that by reducing the number of detractors, they would reduce churn significantly.

Word of mouth: They also studied word-of-mouth, and found that nearly all of the negative word of mouth was coming from detractors, especially those scoring 0-4, and the positive word of mouth was skewed toward the passives and promoters, especially the promoters.

Re-Selling the Complete View

Brad Hughes explained how they communicated the value of the Net Promoter program to the new executive team.

Brad pointed out that it was critical to explain why a complete program, including both relationship-based and transactional feedback, was key for success. As Brad explained, if you are only looking at transactions, then you are missing the big picture. The converse is also true: if you are only looking at the relationship, then you may have difficulty understanding the details behind the key touch points that are the opportunities to delight.

When it came to getting people on the bus, they focused first on groups that were most engaged, to help develop case studies of internal success. For example, the service assurance (repair) group was very engaged, and they were able to collaborate with this team to identify and understand key drivers that were correlated with the touchpoint NPS. But they went one step beyond this to try to anticipate issues by reaching out to customers who had not yet complained. For example, they reached out proactively to customers who they could tell were not getting the pomised broadband speeds. They contacted the customers, helped them remotely, and even sent out technicians proactivley to ensure service quality. These efforts led to a major improvement in touchpoint NPS, and demonstrated management's commitment to the vision of customer-centricity.

They also developed systems to proactively share relevant data with managers around the company, through "push reports" including monthly scorecards and weekly verbatims, as well as quarterly presentations and access to the Satmetrix portal for deep dives into performance trends and attributes.

For internal communications, they use a combination of leadership communications, management reinforcement, and front line rewards and reinforcement. These programs include sharing of customer feedback in the "pathways" program, a management-led program that shares on a monthly basis the key themes that are most critical to the business. And at the front line, they have included awards and recognition to congratuate representatives for creating promoters, rather than focusing the closed loop activity solely on detractor follow up.

Renee and Brad showed some of the intial results of these efforts in terms of the touch point NPS results, which were all moving in the right direction. Their approach came across as extremely thorough and thoughtful, and it shows the depth of planning and effort that sits behind effective transformation efforts.

Philips Healthcare: Aligning Systems and Processes to Enable the Net Promoter Method

JohnAbraham — Fri, 03 Feb 2012 21:31:39 GMT

Regina Hancher joined us form Philips Healthcare to explain how she used Net Promoter in conjunction with Xperience software from Satmetrix to develop a complete Net Promoter system across their software customer service business.

Background on Philips Healthcare and Net Promoter

Philips is in many businesses, from consumer lighting to shavers and televisions, through to high-end machines for medical imaging. Her division provides software to manage information assoicated with medical imaging. The division had grown through the acquisition of several independent specialty software providers. They had 15 products, 7 support organizations, and 10 unique office cultures worldwide.

From a customer feedback perspective, these diverse acquisitions brought with them multiple systems for getting feedback: different surveys and key metrics, different scales, and different processes. Regina established a 3-person customer experience team to align these various efforts to introduce organizational and cultural change for service excellence associated with their software products.

While all of Philips had been using NPS as a key KPI at the corporate level for some time, each division operates with relative independence, and was at a different stage in their adoption of Net Promoter. Philips corporate had been conducting annual top-down surveys to benchmark the business performance across all units. So when they launched their full operational Net Promoter program, their challenge was to ensure that the entire methodology of Net Promoter best practices was understood as something different from the annual research benchmark.

Aligning Around the Net Promoter Methodology

Gina explained three key steps they followed to align their organization around the Net Promoter Methodology, all with a goal of driving improvements in software renewals, which is one of their key financial metrics.

STEP 1: They started by partnering with all of the key internal stakeholders, including their executive sponsor and the functional management teams. They integrated the survey process with existing workflows and involved the "consumers" of the data in designing the reports they would need to manage their business.

STEP 2: They mapped their customer lifecycle next, by interviewing the service and maintenance employees to identify the key touch points and interactions. Based on this, they were able to describe the full software customer lifecycle and link key touchpoints to transactional surveys.

STEP 3: Once the customer lifecycle was well defined, they focused on aligning the questions on their survey to ensure consistency and efficiency in the data collection process.

To measure their success, they asked internal stake holders how helpful their previous survey platform had been, then went back to them 6 months later and asked the same question. The median response moved up from 4.5 to 8, so they knew they were on the right path. But they felt that the goals and alignment among leaders and managers had not yet converted into changes in behavior at the front line.

Focusing on Customer Experience Improvement

To kick-start front line changes, they started by assessing attitudes at the front line. They learned that front line employees didn't think that management was behaving in a customer-centric manner, and most of the issues were related to lack of communication. It turned out that senior management was very focused on customer loyalty, but they were not communicating this effectively to the front line.

With only 3 people on the program team, they found that they were spending almost all of their time on data management and processes. This left little time for soft skills training, trending analysis, root cause analysis across the different businesses, or a relationship survey to understand the overall experience.

To improve their effectiveness and focus time in the most critical areas, they moved their system to the Satmetrix Xperience platform, which automated much of the work that was happening manually using Access, spreadsheets, and manual intervention with ad-hoc survey systems.

In the new Xperience system, they are able to access the information directly in Microsoft Outlook for closing the loop. They can also easily trend data and drill down to specific ad-hoc queries to explore questions and ideas raised by management. They found it a "breath of fresh air" because it allowed them to shift their focus on the most important actions that were needed to improve their customer experience.

The Results

They are trending higher on both Net Promoter overall and transactional measures of service quality. The reports and trends that they see internally now give them an advance view of the results they get from third parties that track the service quality of all vendors in their space, and they have re-gained the leading position in one market thanks to active closed loop efforts from the business team leading that product line.

They now include their service quality index, which is their internal name for NPS, in all of the employee goals to improve visibility. They are also getting requests from other parts of Philips Healthcare organization to share their experience.

We are delighted that Regina was able to share her experience with us at the conference, too.

MetLife: The Proof is in the Program

JohnAbraham — Fri, 03 Feb 2012 19:34:12 GMT

Sanjay Mehra of MetLife discussed how they used Net Promoter as a tool to help assess the effectiveness of new direct channels for purchasing life insurance, and how this program within one division has served as a proof point interally to support a broader rollout and adoption of Net Promoter across the MetLife organization.

As background, Sanjay explained the challenge facing his division. Historically, ownership of life insurance has been declining since the 1970's. MetLife set out to understand how to make the life insurance purchasing process more customer-centric to grow in a declining market. They built and launched a new direct product for term life insurance in late 2009, and have used Net Promoter to track their progress.

When they started this program using Net Promoter, there were a few other pockets of NPS experimentation within the company. But their story has received particular visibility because of the importance of this new initiative and success they have had. After starting in late 2009, the business quickly grew in 2010, their first full year of operation with the new product line. Then in 2011, they tripled sales over 2010.

How have they done with Net Promoter?

From a starting point of 5, they made a variety of improvements to move up to 25 and are continuing to focus on further improvement in an industry which typically garners quite low scores. In addition to feedback following specific interaction points during purchase, they also follow up for feedback 6 and 12 months later to understand the ongoing policy ownership experience.

Sanjay offered some perspective on how they used closed loop processes to identify improvement opportunities. In their first year, they focused primarily on detractors to identify process and customer experience improvements. Every single customer who comes in through the direct sales channel gets a survey within 2 weeks of purchasing the product. They survey by email with a completion rate around 15%. When they have detractor responses, they are routed directly to a customer retention representative who calls back within 24 hours.

But before calling, the rep does research in their CRM system on everything the customer has done throughout the purchasing process, combined with the feedback provided on the survey. In addition to the primary focus on resolving the customer issues, the representative also documents what was learned. This database gives them a rich catalog of learning to define and implement improvement opportunities to drive better experiences.

They have also focused the organization on creating more promoters, and leveraging the promoters to drive growth. Internally, they have run quarterly contests in the sales department to award agents who get the most 10's. And from the customer perspective, they have introduced the option for promoters to "like" them on facebook after completing a survey, and they have found that 65% of promoters click on it.

Finally, Sanjay described how the U.S. business is now rolling out this process across the business, with the following goals:

to create a state-of-the art closed loop VoC process with Net Promoter as the key measure of success
to identify and act on "quick hits" to enhance the current U.S. customer experience

The new system will include all customers and intermediaries at all touchpoints, moving way beyond the initial pilot in the life direct sales channel.

Thank you, Sanjay, for sharing your experiences with the group. We wish you continued success as Net Promoter rolls out across the U.S. business at MetLife.

Net Promoter – What’s new about it?

JohnAbraham — Thu, 26 May 2011 01:20:07 GMT

As we approach our 5th annual European conference in London, I’d like to extend a special welcome to the many delegates who have been working with NPS for a while now, and who may be coming back wondering, “What’s new about Net Promoter”?

The good news is that the core principles of Net Promoter, both the score and the key business processes we teach in our official certification, have not changed radically since the early publications that put NPS on the map in 2003 and 2006. Instead, we have seen more and more companies gravitate toward Net Promoter as a standard way for measuring customer loyalty, and developing processes to improve and differentiate.

That said, I do think there are some important new trends, milestones, and even controversies going on in the world of Net Promoter and customer experience. Here are a few that come to mind:

More mid-sized businesses hearing about and implementing NPS because they learn about it from their business partners, or because talented NPS gurus move jobs and bring the concept with them to their new company.
An increased focus on employee motivation, behaviors, and process improvement as companies with a longer NPS track record realize that small operational fixes can only get them so far.
A greater focus on competitive benchmarking of NPS. If your organization is a mature user of NPS, you might be thinking: “We made changes, but didn’t see a substantial move in our NPS. Why is that?” It could be because your competitors are also improving, and you need to think about bigger game-changing competitive moves to make an impact with your customers. We expanded our Net Promoter benchmarks for Europe this year to cover even more consumer sectors in the UK, France, and Germany, and you will hear more about this at the conference.
Controversy and “buzz” about new metrics being compared to the NPS standard. The two most common ones I have heard about are Customer Effort Score (which focuses on ease of use in customer interactions), and measures of “actual recommendations” versus likelihood to recommend (a focus in the marketing and social media sphere). The good news for NPS is that these new controversies only strengthen the centrality of NPS as a core measure. Get close to Customer Effort, and you will find a compatible set of ideas that underpin the core NPS measure when it comes to touchpoint interactions. Get closer to Word of Mouth analytics, and you fill find that the original NPS research encompassed linkage to both spending and actual recommendation behavior.
On the horizon, Net Promoter watchers can look forward to a new book on Net Promoter coming in September. Fred Reichheld and Rob Markey will release The Ultimate Question 2.0, a major update to the original text that launched Net Promoter into mainstream business thinking. You’ll hear from both Fred and Rob at this year’s conference, and will get a flavor of the concepts and new learnings that will be part of this new book.

What else is new?

Every time we hold a conference, I learn something new about innovative ways that companies are using NPS to drive change and customer loyalty. So the presentations you will hear at this conference are truly “news” when it comes to Net Promoter. More and more companies are adding to the development of the Net Promoter knowledgebase, and you are part of that journey as a conference attendee or presenter.

So please accept my warm welcome, and a special thank you to our return delegates, clients, and friends. I hope some of you will reconnect with others you know, and I also hope you will share your knowledge of NPS with the many new participants that will join us in London.

See you there!

John Abraham

General Manager, Net Promoter Programs

Satmetrix

Have you been to Chick-fil-A?

JohnAbraham — Sun, 23 Jan 2011 07:46:32 GMT

I decided to "Eat Mor Chickin" on January 20, on my first visit ever to a Chick-fil-A. I’ve heard a lot about this fast food chain from Fred Reichheld, who writes about the company’s customer-centric philosophy. But there are no stores yet where I live, so I jumped at the opportunity to try it out.

We were on a customer visit in Roseville, California, just outside of Sacramento, and as we exited the freeway two of my colleagues (Dave had lived in Atlanta, and Brent is from San Antonio) pointed out the Chick-fil-A restaurant right across the road.

I insisted that we stop for a snack after our meeting. It was time for me to see, first hand, what all the fuss was about.

Before we arrived, Brent started singing the praises of the Chick-fil-A restaurants in San Antonio. "When they have a long line of cars in the drive thru, they have people outside with headsets to take orders. And they bring samples out, either when you are waiting or when they have a new product coming out. They do Halloween contests, elementary school nights to support school fundraising. Community is huge for them."

Well, there were no lines or samples when we arrived after our business meeting. The restaurant was inviting from the outside. Nice and clean, and I could visibly see a play area for kids inside. But it was nothing unusual.

Some special touches appeared, though, when we went inside.

What I remember first and foremost was the smiling crew behind the front counter. When we arrived, there was another couple in front of us, but one employee at the counter was available, and she smiled and invited us to place our order. After ordering, Dave struck up a conversation with another employee at the front, Aaron. Aaron was one of those people who was probably born with a smile on his face. You know the old adage about it taking more muscles to frown than to smile? This guy proves the point. He was also well dressed with a tie on. We felt happy to be there, partly because we could tell he and his colleagues were happy to be there too.

The next thing that struck me was the chicken. It was tasty, yes, but the more important thing was the fact that it was real chicken. This was most obvious when I tried the nuggets that Brent had ordered. I bit into one, and you could tell it was real white meat. Totally different from the indescribable "chicken-ish" nuggets that you get at some other fast food chains. Another little plus on this point.

But the thing that sealed the deal for me was the fresh flowers. I didn’t notice them at first. But when I stopped in the restroom and washed my hands, I was surprised to see a huge bouquet of fresh chrysanthemums on the countertop. Then I noticed that, in fact, every table had a simply appointed vase with a fresh carnations in it—a small touch that was totally unexpected for a fast dining experience.

On the way in, I had asked another colleague, Chris, to take a few photos for me without being to conspicuous. But after the flowers and the great service, I felt my visit would not be complete without a

picture of Aaron at the front counter:

"Excuse me, could I ask a favor?" I started. "I’m going to be introducing Dan Cathy, President of Chick-fil-A, at a conference in a couple of weeks. Would it be OK if we took your picture?"

Back came that big smile. "Sure thing," he said. So as I thanked him for the favor, we caught a last snapshot and headed back to Bay Area, wondering…when we will be able to "Eat Mor Chikin" again?

Andy Lark, Dell – Customer Success in the Virtual Era

JohnAbraham — Fri, 04 Feb 2011 05:07:35 GMT

Andy Lark of Dell was on fire today…an exciting speaker on a truly hot topic. He approached the Net Promoter philosophy from a fresh angle, pointing out that the "virtual era" we are in today requires excellence at a new level. And having one thing to rally around is critical to keep organizations focused. When it comes to the customer rallying cry at Dell, that one thing is NPS.

Our Customers in the Virtual Era

Andy pointed out that the virtual era we are in the midst of today is truly transforming the way companies do business. He shared several insightful facts and figures, which prove that this isn’t just about trends among younger generations of buyers:

The average social network user is aged 31
The average social gamer is a 43 year-old woman
1 out of every 8 couples married in the U.S. last year met online
In 2007 87% of mobile customers were not online, but in 2011 80% of ARE online

In this environment, you can’t hide from customers and what they have to say. While businesses used to focus on key media outlets to drive sales, today’s audience of "influencers" is much broader. It’s the power of each customer to share their opinions with hundreds, thousands, or millions of other potential buyers online.

Andy inspired us to engage directly with customers to drive positive word-of-mouth and recommendations from your promoters. Dell understands the power of recommendations for their own business: revenue per visitor on Dell’s US websites is 134% higher when there are customer recommendations available on the site. In Japan, the revenue per visitor is 3 times higher when recommendations are there.

Connect Directly with Your Customers

Andy shared a variety of ways that Dell is connecting with its customers.

He described Dell’s "Ideastorm" website for getting customer ideas on how they can improve. But it goes beyond a virtual suggestion box. As Andy explained, you have to listen in an informed way. Innovation needs to occur in the context of knowing your company’s purpose.

This means creating value for your customers in the way they want to pay for it. Andy pointed out that most customers don’t want to pay for things like service plans up front, even though it might be in their best interest. As he put it: "For most customers, hope is a valid strategy."

This puts the onus back on the company to be honest when it sets expectations. The expectation setting step is one of the most critical aspects of getting a good NPS. As Andy explained, "There is an inherent gap in most companies because marketers oversell the expectation, and sales people reinforce that. The beauty of social networks is that it gives transparency to this. It reveals the truth of the experience."

Andy showed their command center for tracking the conversations about Dell. Approximately 22,000 online mentions are tracked every day. They have a team of people that respond to this every day, to show that they care. It also keeps them connected with the market.

To test this out, I posted a tweet during Andy’s session to see if anyone out there on the Dell team was listening. Sure enough: within about 10-15 minutes, I had a reply back. It shows the power of technology on the one hand, but most importantly, the enduring power of people…real people connecting with real people in a one-to-one dialogue and, in fact, a one-to-many dialogue.

Thank you, Andy, for an incredible "one-to-many" dialogue at today’s Net Promoter Conference. It was real. And it was a real pleasure!

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Richard Owen, Satmetrix – The Innovation Battlefield

JohnAbraham — Thu, 03 Feb 2011 19:41:15 GMT

Richard Owen of Satmetrix opened the conference on the theme of "innovation," by describing how disruptive innovation has, in fact, disrupted both industries and individual company fortunes. Richard also offered some suggestions on how established players can connect NPS with effective innovation processes.

The Opening Battle

Netflix versus Blockbuster. We all know who won the battle, but Richard forced us back in time first, to acknowledge the innovation that formed the basis for Blockbuster’s original success.

In its heyday, Blockbuster was an innovator: from its rental model to its innovative use of information technology. But these innovations were soon displaced by additional innovation, specifically from Reed Hastings at Netflix.

"The murder weapon might have been bad profits. The NetFlix takeover of the movie industry started from Reed Hastings being charged a late fee on returning a movie," Richard explained. This illustrates how the great opportunities for innovation can be hiding in your bad profits. Isn’t it better for you to address them first? Or will you wait until a competitor comes along and innovates past you.

In Blockbuster’s case, they did eventually recognize that late fees were bad profits. But only in response to the deterioration of their business. By then, it was too late.

Bad Profits and Expectations

The challenge most companies face, as Richard pointed out, is that even customers may not recognize something as bad profits until something that serves the customer needs better comes along.

Owen: "People didn’t used to complain about Blockbuster’s late fees because it’s what customers expected."

The same thing goes for banks and airlines. Late fees and constraining policies are what customers expect, but the big innovators go after what customers "want," not what they expect. Richard referred back to his presentation at last year’s conference, where he introduced this topic of understanding industry expectations and trying to exceed them. This is battlefield of innovators.

How Can Established Companies Innovate?

From Richard’s perspective, Netflix is unusual in its ability to innovate. Their second big innovation has been video streaming. But no one expected this of Netflix. "Who would have thought that a company whose core capability was inventory management and logistics could transform its business model to move toward the technologies required for video streaming?"

Richard pointed out that it is considerably rare to see one company disrupt an industry with this kind of innovation not only once, but twice. So, what other ways are there to "win the battle?"

He contrasted "the disruptive entrepreneur" with another model of innovation that large companies should become good at: that of customer-focused incremental innovation, developed through great listening.

Richard connected it to Net Promoter this way: "What if a competitor saw our Net Promoter data and could tackle things we do that customers believe are bad profits?" The answer to this question will help you uncover ways to innovate, and keep you ahead of customer expectations. It can help you get beyond what customers expect, to what customers want…and create a lot more promoters for your business.

You will find that there are groups of promoters who are committed to your business, and will help you innovate. But it’s not just the super-promoters who can lead you to innovations. The people who are super-detractors can also be great sources of innovation. When someone gives you a zero, it means they have very strong views on your business. And with the right people at your company listening, you might just win the battle, and the war.

Good listening, and good luck!

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Are we getting more social?

JohnAbraham — Thu, 20 Jan 2011 05:18:56 GMT

Welcome to the 2011 Miami Net Promoter Conference blog. With the conference just 2 short weeks away, I’d like to join the rest of the Satmetrix team to say “thank you” to all of the guest speakers, clients, partners, and community members who will make this event a reality. It’s an honor to serve as emcee for the conference again this year, and I look forward to meeting many of you.

Based on registrations so far, we expect this year’s conference to be the biggest ever with nearly 500 in attendance. Our certification course also filled in early January, so we made the decision to open up a second section in parallel, both running on January 31 – February 2. We are currently expecting more than 90 people across the two groups, which will be a new record. More than 1000 people have taken the course since it was first launched in Miami 3 years ago.

With all of this activity, I had to wonder…is it the warm Miami weather (we hope!), is it the fact that the economy is finally improving, or are we all just “getting more social”? And what does it mean to “be social” these days, both in a personal and a professional setting?

Being Connected vs Being Social

I was at dinner the other night with friends (12 of us, including kids), and I had a “déjà vu” from one of our recent certification courses. As we waited for our table, I noticed that the kids were unusually quiet. When I glanced over, I saw my sons and their two friends (ages 7, 9, 9, and 10) sitting ever so quietly in a neat row on the bench.

What was the magic? Two iPod Touch devices with games in full swing, and 8 mesmerized young eyes.

I had a flashback to a recent certification course. It was breakfast on day 1. Most of the group was meeting and greeting…but I noticed one quiet table of 5. When I went over to introduce myself, I found all 5 people experimenting with their new iPads. Connected, you might say, but in a totally different way.

There are times when “the device” is a handy distraction, occupying us while we wait, or making us more productive on the road. But I wonder how this will change the way that we socialize, both at home and at work. There is no question that people are more “connected” than ever, but what does this mean for our relationships with customers?

Social Keynotes

Two of our keynote sessions will offer ideas on this topic.

Andy Lark of Dell will explain how the company uses social media to stay connected to its customers. Dell was a winner of the Forrester Voice of the Customer Award in 2010 for its innovative use of IdeaStorm, and we are delighted to have Andy with us on February 3 to explain how the company is integrating innovative forms of social media with its customer strategy.

My colleague Deb Eastman of Satmetrix will continue the discussion on February 4, when she explains three specific ways to connect social media with a Net Promoter feedback approach by listening, connecting to closed loop processes, and activating promoters.

What US Consumers Have to Say

I’m also looking forward to sharing an early look at the 2011 Net Promoter Benchmarks when we gather in Miami. As part of this annual research, we included additional questions for US consumers this year about the sources they trust the most when choosing products or services.

I was especially interested to understand how consumer opinions posted online compare with traditional word-of-mouth recommendations from friends and colleagues.

What we found is that recommendations from friends, family, and colleagues top the list when it comes to trusted sources. Fully 50% of consumers rated personal recommendations as their most trusted source, compared with 15% who pointed to consumer opinions posted online. These numbers were, surprisingly, almost exactly the same as what we found in the UK last year when we asked consumers the same question.

But reality is more subtle.

It makes sense that people trust personal recommendations more than those posted online, from people they may not know. But those personal recommendations can occur in any setting: at the dinner table, at a conference, or via Facebook or LinkedIn. And while we trust personal recommendations most, it may be easier to find opinions online at the moment when we are looking for advice.

So, whether you think social media is a transformative wave, or just a new mechanism for communicating in a safe circle of friends., the fact remains that any word-of-mouth, ultimately, ties back to the real experiences of real customers. And that’s why Net Promoter remains as relevant today as ever for building customer loyalty. It’s only by creating more loyal Promoters that you can drive the right conversations…both online and off.

See You In Miami

Social media is just one of the many hot topics we will cover in Miami. So, as “Big Boss” says, pack your sunscreen and get ready for a great week of learning and networking in Miami. I hope to have a few moments to “get social,” myself, and look forward to seeing you.

Fred Reichheld: the Frugal “Wow”

JohnAbraham — Fri, 18 Jun 2010 19:11:13 GMT

Fred Reichheld, author of The Ultimate Question, kicked off our afternoon with a discussion of the economical ways that companies can delight customers. How do you get from a 20% Net Promoter Score to 80% without “breaking the bank”?

Fred explained that the best companies may not measure NPS any better than others. But what they do extremely well is to find systematic ways to delight the customer without spending a lot of money. He used examples from U.S. fast-food chain Chick Fil-A to illustrate the point. They do many things that are different from other fast food restaurants, including:

having the manager work in the front of the store
keeping umbrellas on hand for customers on a rainy day
refreshing drinks for free
stationing an employee outside at the drive-thru to greet people

Fred continued the discussion with a video from Internet retailer Zappos.com, which was developed to support Chick Fil-A with its own employee training. It includes some great examples of Zappos.com employees at work, having fun. And the culture was illustrated by quotes from their CEO, Tony Hsieh, such as these:

“My passion never has been about shoes. It’s about service and culture.”

And, showing his “desk,” which was an open cube, Tony commented “The best way to have an open door policy is just to not have a door in the first place.”

Tony’s comments also echoed the value of creating more Promoters in a business. Mr Hsieh’s thinking:“Let’s take all the money we would have spent on marketing, and instead, invest it in the customer experience so that customers will do the marketing for us.”

As Fred explained, Zappos.com was successful with this strategy. Last year, Amazon.com bought the business for $1.2 billion. Selling shoes online could be thought of as a commodity business. But by figuring out ways to “wow” customers, Zappos.com was able to successfully differentiate itself and grow.

Fred stressed the central role of the employee experience in making this work, with examples from U.S. airline company Jet Blue. He also shared some examples of frugal wow at American Express, which focuses these innovations at 3 specific points in their customer interaction: early engagement with the company, getting a replacement card, and making a merchant dispute.

Fred’s last example was from IT hosting company, Rackspace. He explained how Rackspace focuses its entire organisational structure around service. Not just training, but also the way they structure their service teams…in a matrix with all of the required resources to serve the customer’s needs working in a close-knit unit. We had several members of the Rackspace team in the audience, and Fred took comments from them and from other audience members who shared their own stories of frugal wow.

What’s your story?

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Travel Counsellors: the Perfect 10 of Trusted Relationships

JohnAbraham — Fri, 18 Jun 2010 19:24:52 GMT

We were lucky to have David Speakman, chairman of Travel Counsellors, with us today to share his humor and his thoughts on how to succeed through trusted relationships.

Before I summarize some of David’s key points, it’s worth highlighting that his team of independent work-from-home travel counsellors earn some of the highest Net Promoter Scores in the world at more than 90% (94% based on their most recent data post-travel). At this level of performance, they have the travel counsellors call up any customers with a score of 8 or below, and their standard for excellence is the perfect 10.

David’s entertaining speech gave us a glimpse of how they accomplish this.

The Business Concept for Travel Counsellors

A serial entrepreneur, David started his career as a grocer, opened a couple of restaurants (one a great success, one not), and started another travel agency, all before the concept for Travel Counsellors was born.

When he decided to get back into the travel agency business, he designed the business model for Travel Counsellors from scratch. He didn’t want a big staff or lots of overhead and phone bills, but he DID want to inspire people and he wanted people to be their own bosses.

Their unique formula creates that autonomy for their independent travel counsellors to be successful, by getting the core support they need from a central team in the UK that provides training, systems, processes, and the other key business needs.

The company has grown from a start-up to a network of more than 700 independent counsellors that generate more than £310 million of sales turnover.

Hiring for the Right Traits

An opening video told the story of one travel counsellor who recounted her sense of pride in serving her clients. As David put it, “You have to spend the time to get the right people into the business.”

They have found that the best travel consultants are team players, they want to belong, and they are family-oriented. They learned through trial and error that the right profile was not someone who wanted to start their own business, but instead someone who is passionate about service and making a personal connection with the customer. What Travel Counsellors did was to remove all of the hassles of running a small business, and handle this overhead so that counsellors could do what they like best: build relationships.

Relationships Are More than Service – It’s about Emotion

David describing his philosophy for creating emotional connections that go beyond “transactional service” to the heart of what makes for a trusted relationship with the customer. In the age of our technology economy, David pointed out some of his favorite quotes, including:

“Emotion is the one human ability that cannot be automated.”

“Companies need to understand that their products are less important than their stories.”

They analysed what really makes the difference between the most successful travel counsellors and the average ones. From this, they developed a list of 13 Golden Habits. They have made these Golden habits part of the management software that is provided to every work-from-home counsellor, reinforcing behaviours that help them build and sustain strong relationships. The company also compiles a book of stories about the good work of its counsellors to further reinforce the Golden Habits.

But it’s not just about culture. Their management software also embeds and tracks the value of referrals. For each travel counsellor they keep track not only of the number of referrals they get, but also who those referred customers are, and the value of travel bookings from referred customers over time. This helps them to truly understand the network effect of word-of-mouth recommendations and referrals for their bottom line and for the travel counsellor’s personal business.

How to Differentiate: “Don’t super-transact, super-relate!”

David illustrated the difference between transactional vs. relational models of interaction with these comparisons:

Shopper vs. Customer
Demands customer service vs. Looks to trust someone
Short-term customer vs. Long-term customer
Fear of not getting the lowest price vs. Fear of making the wrong choice
Looks for price vs. Looks for expertise
Does not value your service vs. Pays what you are worth
Does not want a relationship vs. Wants a trusted friend

The bottom line: you want to create a relationship so that people trust you. “It’s not about the money” was David’s big message. If you do the right thing, then the money comes to you. If you get the relationship right, then you will get the money right.

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Life Financial, Experian, Verizon Business: Motivating Stories

JohnAbraham — Fri, 18 Jun 2010 19:05:31 GMT

Deborah Eastman, Chief Marketing Officer at Satmetrix, led a discussion about different methods for motivating employees to drive customer-centric culture. The dilemma…should it be about pride or money? Deborah illustrated the importance of non-financial motivation in conversation with 3 guest speakers.

Life Financial Group: the “Wow Branch” Mentality

Deb started by interviewing Irina Chichmeli of Life Financial, a network of Russian retail banks. They survey about 3000 customers per month, and the feedback goes directly to the branch manager who is empowered to take action at the branch and escalate requests to the central processing groups for systematic process changes. Life Financial never tried to tie NPS to bonuses for the branch managers. Instead, their focus was to educate the branch managers on how NPS linked to long-term financial results, and short-term measures at the branch such as new customer acquisition. Making this connection was all it took to get branch level buy-in.

Irina also explained the importance of employee recognition programmes. They award branches for overall performance, including NPS, and they give out “Wow Branch” awards. Each branch who gets this award is given money that they can use for anything from teambuilding to improvements at their branch to support customer experience. It’s critical to give the branch autonomy in deciding how to spend the money, which reinforces the empowerment they want to convey for branches to find ways of succeeding with their customers.

They also have a programme called the “Wow Differentiating” programme. This programme’s goal is to engage employees in finding ways to delight customers. This is different from solving customer problems. It is focused instead on anticipating customer needs and doing things to delight them. Irina gave several examples, including one branch that purchased complimentary passport covers to give out to customers when they had to submit passports for copying. This little extra was so popular with customers that they introduced the practice in other branches across the company.

Experian: Customer Context “is” the KPI

Doreen Byrnes and Jock Busuttil of Experian described how they involve all parts of their organisation in the customer promise by using a common language and a common set of goals. Accomplishing this started with a broad internal communication programme, and it shows up in all aspects of the day-to-day decision making.

Jock described how his product management team uses customer feedback to put KPIs into context. The KPIs themselves are just an outcome. It’s the feedback from the customer that clarifies what is needed to really move the KPIs in the right direction.

Jock told a story of a product upgrade that put pressure on a particular customer relationship. Most customers had moved over to the new version and the company was planning to discontinue support. While the customer was contractually obliged to move, their account manager, Ben, knew that the customer was a Promoter and didn’t want to spoil the trusted relationship that had been built up over the years.

Jock and Ben visited the customer to come up with a plan for making the transition, and they made the decision to extend support for the customer in the interest of their long-term loyalty. This is one small example of how they have been able to maintain retention rates of more than 90%.

Verizon Business: “One Team” of more than 200,000!

Paul Vincent of Verizon Business described how they drive a sense of pride across more than 200,000 employees who serve their corporate and government clients worldwide. How does such a large organisation go about creating a “wow” factor?

For Verizon, it all starts with 5 service excellence imperatives:

Deliver service consistently worldwide
Proactive, responsive, reliable support
Best-in-class service management
World-class customer enablement
Customer-centric continuous improvement

What really struck me was the consistent approach to employee engagement that Paul described. They have a very deliberate strategy to have the same roles and organisational structure worldwide. Paul called this their “one team” approach, which allows them to deliver consistent service to customers who, like Verizon Business, operate globally. He then elaborated on a series of employee award programmes that form the foundation for motivating their “one team” of “teams” to deliver customer delight.

The results are impactful. They have seen a 23 point improvement in their Net Promoter Score and 27% increase in sales of strategic services.

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Abbott Diagnostics: the Proof is in the Programme

JohnAbraham — Fri, 18 Jun 2010 11:08:06 GMT

Marc Berendes, head of Enterprise Solutions at Abbott Diagnostics in Europe, explained their journey rolling out Net Promoter in a business-to-business setting.

Abbott has 72,000 employees worldwide, with a broad range of healthcare related products from diagnostic instruments to pharmaceuticals. The company started its Net Promoter programme in Germany and the UK and has expanded it to 36 countries within the diagnostic division during the last 2 years, and now is using it globally.

Marc explained the process for building internal confidence and buy-in around Net Promoter. Getting key executives to buy-in was the first step. “I know my customers,” was often the first reaction. But they were able to overcome this by illustrating the importance of using NPS to motivate change throughout the organization. Each country’s General Manager selected an NPS co-ordinator from their team, and a network across the division was built up over the course of 8 months.

Then it was time to get to work. They started with a pilot programme focused on the service experience, but they quickly expanded to get a more complete view of the overall customer experience. They also put in place a follow up process for Detractors that engaged front line managers and process leaders. The country co-ordinators also stepped forward to work on systematic improvement opportunities and present to country leadership teams on improvement actions.

Abbott Diagnostics also found that sharing success stories internally was a key motivator. They built momentum by communicating about small, relatively easy changes that made a meaningful impact on the customer’s experience. For example, they implemented a simple change to their packing materials to make it easier for the customer to open the package. Customers also said that the product shelf-life was too short. But on further investigation, they learned that the real issue was delivering the right amount on a more frequent basis to ensure that products would not expire before the need for use.

Communicating effectively with customers during times of change was another key learning. When Abbott Diagnostics undertook a sales force reorganization, the first unit to implement it saw a drop in NPS of nearly 30 points. As they followed up, they learned that the real issue was not the organizational changes per se. Those changes were sound and were the right business strategy. The missing piece of the puzzle was communication. Customers were not adequately informed of the changes, and in many cases they had developed trusted relationships with their account contact and were concerned about what might happen next. They took this learning from the first country and used it to implement the reorganization in a more proactive fashion in other markets, with successful results.

O2 and Shaun Smith on Defining and Delivering the Brand Promise

JohnAbraham — Thu, 17 Jun 2010 23:41:07 GMT

Shaun Smith, founder of Smith + Co and author of three books on customer experience, joined Simon Groves, head of customer experience and strategy for O2 UK, to discuss the critical link between your brand promise and your customer’s experience.

Shaun opened the presentation by describing the importance of creating an emotional bond with the customer through the ensemble of your company’s interactions with them. According to Shaun, companies that are successful in creating both a functional AND emotional connection with the customer improve retention considerably.

Shaun returned to a brand we heard about this morning, First Direct. Shaun stressed that it is absolutely critical to be clear about what you promise. Here’s what the First Direct website says:

“Most banks are about money, First Direct is about people. We believe banking should fit around you, not us.”

According to Shaun, First Direct gets a new customer every 5 minutes through referral. In fact, 38% of their business comes to them through word of mouth. This isn’t just about their brand, it’s also about their people. Having employees that are passionate about working at the company is critical. He told a personal story of how a First Direct call centre employee helped him by faxing some extra documents as proof of identity when he needed a retail loan…no hassles, no waiting. When experiences like this reinforce the brand promise, you have a winning recipe.

Shaun described this as an overall shift in the marketing world from “branding and advertising” to “experience marketing.”

One First Direct competitor, Barclays, ran an ad campaign that won awards in advertising circles, but it fell mostly on deaf ears by Shaun’s assessment. “A big world needs a big bank” was the tagline. But as Shaun put it, “this just made customers feel small.”

First Direct, by contrast, asked its customers what they like about First Direct. Customers told them that they love the fact that they can get through any time of the day or night to an enthusiastic customer service agent. Many of these customers who gave feedback agreed to participate in an advertisement. By building their advertisement on these “real experiences,” First Direct not only saved a lot of money on its ad campaign, but also had a guaranteed receptivity to its message, as well as a natural link to the reinforcement they would get through organic word of mouth.

The O2 Story

Simon Groves from O2 followed with a short history of the O2 brand and customer experience journey.

When O2 first de-merged from BT as BT Cellnet back in 2001 and 2002, they were on a tough road both in terms of financial performance and customer loyalty. But within 4 years they had turned things around and were purchased by Telefónica for nearly £18 billion. How did they accomplish this?

O2 has tracked a customer satisfaction index going all the way back to 2001. That also use something similar to NPS to track advocacy, but the early years of their journey were really more about getting satisfaction right to build the foundation for more advocacy over time.

During the first phase of their programme from 2002 to 2005, satisfaction was lagging competitors. Their shift to a customer-focused strategy all started with intuition and a belief that doing the right thing for the customer would pay back handsomely. Some key executives championed this, and they went through to drive operational improvements and measure step by step. This was effective at that particular point in their history.

Metrics were starting to move in the right direction, but the market wasn’t standing still. It was becoming tougher to compete. Customers were saying, “there’s no good reason for me to stay with the network I am with,” “nobody is looking after us,” “they’re all as bad as each other.” How could they differentiate from this?

They developed a customer plan in 2004 in reaction to this feedback. They were determined to invest in the areas that customers valued. They couldn’t just spend more…they had to strip out things that were low value to put money into the right areas.

They developed a new brand promise that was about putting the customer at the heart of everything they do. Then, they drilled this down to specific plans that would underpin the promise. All the KPIs and measures linked to this, and they tracked it every quarter to reinforce it throughout the company. The plan had 5 points:

Become the customer champion by rewarding loyalty.
Invest in front-line service and sales experience.
Have the best range of devices for target customers.
Engage our people by making O2 a better place to work.
Drive efficiencies to deliver a better experience at lower cost.

From 2005 to 2006 this strategy moved them into a leading position on their satisfaction measures relative to their biggest competitors. And they reinforced these messages in their advertising, helping to move brand perception in the right direction, too.

Since this inflection point in 2006, they have worked hard to successfully retain a leading position and have been acquiring new customers faster than their competitors.

Where is O2 headed now? O2 is now focused on creating more “fans.” They are moving toward building a more emotional connection with their customers. The rallying cry is to “create a million more fans.”

Ultimately , Simon summed it up this way: our goal is to get more customers that are happier and more loyal. That’s the heart of it according to O2.

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Bain & Company: Mining for Gold and Investment Returns

JohnAbraham — Thu, 17 Jun 2010 23:13:44 GMT

Christophe De Vusser, partner in Bain & Company’s Brussels office, kicked off the afternoon today with a fresh new angle on why delighting customers can delight investors too.

He gave us a view of how to use NPS to accelerate sales, in the context of private equity firms post-acquisition. The first half of his talk was a great introduction to the mindset of private-equity investors, and how NPS can fit as a strategic tool to build value based on operating fundamentals.

Christophe described the 3 main ways for private equity firms to make money from their investments.

Increasing leverage
Improving P to E multiples
Increasing earnings (either through top line growth, margin improvement, working capital management, or a combination of these)

For the past several years, while money was cheap, most private equity firms were making money using leverage and expansion of P to E multiples. But in the current environment, with debt being harder to come by and multiples being lower, this has focused investors instead back on the core business. Today, they need to demonstrate increased operating value based on the underlying business fundamentals.

This third strategy is not easy to accomplish, but it is now the critical driver for making a return on investments in private equity. Cutting costs is tempting, but this doesn’t typically give the level of returns that investors are looking for. The key, instead, is to demonstrate sustained relative market share growth, and to demonstrate that you have a repeatable growth model to sustain this.

NPS is an excellent tool to accomplish this according to Christophe. It usually starts by demonstrating how a change in NPS (by shifting more customers into the Promoter category), will link to underlying growth, share of wallet, and market share.

Christophe showed several examples of companies that have made this link between NPS and market share growth. One example he gave was of a company that was losing market share relative to its main competitor each year. By implementing an NPS turnaround programme the trend shifted back in favor of the company. They did this by understanding the criticality of showroom design in driving NPS and sales volume. Based on this insight, they invested in re-vamping over 1000 showrooms around the country, allowing them to turn around market share growth relative to their main competitor.

NPS also helps companies decide where to invest internally to get the improvements. If a company wants to invest in sales acceleration, is the right answer to add sales people, to expand advertising, or to take a different approach? What will drive the fastest improvement in NPS and business outcomes?

Christophe showed a compelling analysis of “visit frequency” in a sales environment. They looked at how often sales people had visited each customer and found a very interesting relationship between frequency of visits and the customer’s NPS. Not surprisingly, the salespeople who did not visit got customer NPS values of -35% on average. At one visit this increased to 20% NPS, and with 4 visits the NPS increased further to 56%. Interestingly, when they reached 9 visits, the NPS dropped back to 38%. This insight helped them understand how much additional investment was needed in sales capacity, but also, how to balance frequency of visit and account loads across the sales team.

Knowing the drivers of NPS is key to accomplishing these turnarounds in performance. Private equity investors love this because it is about re-allocating spending within the company instead of having to make additional investments. Christophe stressed the importance of analyzing drivers, not in a vacuum, but relative to competitors.

How do these changes relate to investor returns? As Christophe explained, these fundamental trends in customer buying patterns and relative market position change the assumptions future owners will make when valuing the company. And there’s nothing like that to put a smile on an investor’s face.

Thank you, Christophe, for this fresh new angle on NPS economics.

Satmetrix: Richard Owen says to expect the unexpected

JohnAbraham — Thu, 17 Jun 2010 10:44:50 GMT

Richard tried to shake us from our corporate slumber by challenging us to exceed customer expectations in some unique way.

Entire industries tend to do things a certain way out of inertia, and find it hard to break out of these standard operating procedures. Why is that? Is it feasible to build massive competitive advantage by doing things differently? Richard suggests that companies can’t create this "game changing" type of innovation from day-to-day executional improvements based on customer feedback. It's a broader strategy about transforming what customers expect in your industry.

As we are in London, Richard used a London Tube analogy…how can you “mind the gap” between what customers expect, and what they want. Most companies operate around the level of expectation. Very few successfully get to what customers want, and even fewer figure out how to exceed that high bar.

Richard illustrated this with some examples.

He started by describing several companies that had changed their industry by creating “great innovations” in customer experience to exceed not only what customers expect, but what they can envision on their own as “something I want.”

But I thought the most intriguing example he offered was that of RyanAir. RyanAir CEO Michael O’Leary is, on the one hand, the poster child for bad customer experience. Richard quoted one of his extreme statements about the airline’s cancellation policy:

“Say my Granny fell ill. What part of ‘no refund’ don’t you understand?”

Richard asked, “Is he really the villain of customer experience?” Expectations can be shifted not only upward based on innovations in service or product, but downward by lowering price. Richard argued that RyanAir has been able to exceed expectations in a very unconventional way…by setting the expectations SO LOW based on rock bottom prices that customers are happy to get there safely and at a good value.

Then Richard turned to the UK banking industry. Most UK banks have negative Net Promoter Scores. It’s to the point where the government is discussing how they might legislate improved customer service. Has it really come to this? There are some notable exceptions, including First Direct, which has an NPS in the range of 40%, considerably higher than most other major UK banks. What is it that a company like First Direct can get right that is so difficult for much of this industry?

What’s the “industry standard” in your business? Richard gave these parting thoughts on how you might break away from the pack:

Understand your existing “zone of tolerance” and develop ideas outside of it.
Avoid Standard Operating Procedures that are based on industry practice, and instead focus on customer experience as a guide.
Think like an entrepreneur trying to attack and remake your industry through experience innovation.

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