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Speed Summary: The Ultimate Question 2.0

PaulMarsden — Fri, 06 Jan 2012 08:47:45 GMT

So the Net Promoter 2.0 conference is coming up in February (2-3) in SF, and many of you will have probably already read the new, revised and expanded edition of Fred Reichheld's business bestseller The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World, written with Rob Markey.

It's certainly worth reading; in my view the Ultimate Question 2.0 it is the single most significant business book recently published - both inspiring and practical it's a blueprint for business growth through 'good profits' - profits derived from enriching the lives of your customers.

But for the time-poor among you - and for those who want a quick pre-conference refresher as prep for the conference, here’s a ‘speed summary’ of the key points chapter by chapter

Chapter Summaries: The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World

by Fred Reicheld with Rob Markey (Harvard Business Review Press 2011)

Preface: The book shows a path to true business growth through sustainable ‘good profits’ derived from consistently delivering a customer experience worthy of loyalty. Whilst there are many paths to growth, none are as sustainable as consistently delighting your customers and reaping the rewards of enhanced loyalty and advocacy. This book shows how to use the Golden Rule - treating others as you’d want to be treated - to do this and thrive in a customer-driven world through profitable customer relationships.

Introduction: From Score to System The Net Promoter System is a management approach to business through ‘good profits’ - ethical profits from enriching lives instead of ‘bad profits’ that exploit customers. It’s about building customer relationships worthy of loyalty by treating customers so well they become loyal promoters of your business. It’s about, in the words of Zappos’ Tony Hsieh, consistently WOWing customers so they come back for more and tell others. Put simply, it’s about happy customers talking. And for leaders, it’s a leadership tool for making happiness your business model, and joining a quiet revolution for building a legacy built on ‘good profits’. As an open-source adaptable and flexible system for generating good profits, many companies have adapted the NPS to their own needs and with their own labels (fast-food chain Chick-Fil-A calls it the Raving Fan Index), but successful implementations all share three key elements;

Systematically categorising customers into promoters and detractors to produce a net score that monitors the quality of customer relationships, and communicating this throughout the organisation
Creating 'closed-loop' learning and improvement processes to increase promoters and reduce detractors at an operational level. If your NPS score drops, investigate the source of bad business - and put it right
Treating the creation of more promoters and fewer detractors as mission critical at board level. Developing relationships worth of loyalty is either a strategic priority or it isn’t. If it isn’t NPS is not for you.

Part 1: The Fundamentals of the Net Promoter System

Chapter 1: Bad Profits, Good Profits and the Ultimate Question Customer-centricity is the path to growth because it drives customer loyalty, helping make a company mission-driven as well as profit-driven. Companies know, believe in and can recite the catechism of customer-centricity: “Why do we want loyal customers? Because loyal customers come back more often, buy additional products and services, refer their friends, provide valuable feedback, cost less to serve and are less price sensitive”. Bain & Co found that the Loyalty Effect could boost 25-100% profit boost by increasing retention rates by 5%. As a proxy for whether customers believe you are worthy of their loyalty, NPS score monitoring can help drive growth via loyalty. For example, market leaders such as Apple, Amazon and Costco create high NPS scores around 80, whilst average firms have a NPS score of 10-20%. Overall, NPS leaders in the US (companies with the highest NPS scores in their category) grow at over twice the rate of the category average. And whilst only 9% of US companies surveyed by Bain & Co have registered sustained profitable growth of 5%+ over the last decade, those 9% have an NPS score 2.3 times those of industry averages.

Chapter 2: The Measure of Success A key challenge of building a business around ‘good profits’ - derived from delivering expectation-building experiences worthy of loyalty, is that you need a simple way to measure customer happiness - and then link it to performance. It’s got to be simple, practical and actionable. This NPS ‘Ultimate Question’ - propensity to recommend - is useful because it is both intuitive and adds a critical emotional dimension to the monitoring of loyalty. It also takes into account the referral value of customers. It is a good proxy for business made by smiles created. It’s better than measuring behavioural loyalty because behaviour alone (such as retention rates) might hide a trapped 'smile-free' relationship; whilst willingness to recommend (advocacy lies at the top of the loyalty ladder) is indicative of emotional loyalty. Asking about willingness to recommend is also an easier question to answer than asking about abstract concepts like loyalty. But it’s not perfect; firms must establish a question that best links to customer loyalty, and can serve as a proxy for whether their business is built on good or bad profits (or losses).

Chapter 3: How NPS Drives Profitable Growth The Net Promoter System is only useful if it drives action - specifically investing in customer relationships to build loyalty. Every company would want better relationships with customers if these relationships were free, but high-quality relationships are not free - they require investment, and reducing reliance on bad profits. So a key step in refocusing a business on customer relationships is to make the business case for doing so; how much is it worth to turn a detractor into a passive or promoter, what would it be worth to raise our relative NPS by 10 points? To make the case for good profits, you need to know the value of loyalty, and that means estimating the lifetime value of your customer segments - promoters, passives and detractors. Promoters are worth more because they have a higher retention rate, are less price sensitive, have a higher annual spend, are more cost efficient (they cost less to serve than complaining detractors) and refer more. But how much more are they worth? To know this, companies need to segment customers by customer type, measure on these dimensions and then compare the outcomes. Bain, for example, found that a promoter has a lifetime value (LTV) worth $9500 more than a detractor to a US bank.

Chapter 4: The Enterprise Story - Measuring What Matters Enterprise Rent-a-Car has grown to become the number 1 rental car agency in the US with a singular focus on using the Golden Rule (treat customers as you'd want to be treated) to generate good profits. It attributes much of its success, growing from $2bn in 1994 to $7bn in 2004, to a single question monitoring system to track customer delight (replacing a lengthy an ineffectual satisfaction survey suffering from question creep), that has allowed the company to drive customer loyalty. Through experimentation, identifying and learning from best practice, closed-loop on-the-spot fixes, ranking branches by the quality of experience delivered, and making quality experience a precondition for promotion, Enterprise has reduced neutral and negative experiences from 12% to 5% since 1994, whilst building growth from loyal promoters.

Chapter 5: The Rules of Measurement Driving growth through loyalty requires an agile loyalty monitoring system - NPS score monitoring can help. Experience shows that effective NPS score monitoring follows certain principles: Principle 1: Ask the Ultimate Question and Very Little Else, Principle 2: Choose a scale and stick to it, Principle 3: Avoid Confusion Between Internal Scores ('Bottom-Up' or ‘Touchpoint’) and External Scores (Top-Down, Benchmark or ‘Relationship’ Scores), Principle 4: Aim for High Response Rates from the Right Customers, Principle 5: Report and Discuss NPS Data as Frequently as Financial Data, Principle 6: Learn Faster and Improve Accountability with More Granular Data, Principle 7: Audit to Ensure Accuracy and Freedom from Bias, Principle 8: Validate that Scores Link to Behaviours.

Part 2 Getting Results

Chapter 6: Winning Results with NPS The Net Promoter System is about driving change through a strategic prioritisation and operational focus on customer loyalty - creating more promoters and fewer detractors - by applying the Golden Rule (treating customers as you’d want to be treated) - throughout the organisation. Based on experience of NPS adopters, there are three keys to NPS success

Embracing the goal of customer loyalty as a mission-critical priority at CEO and board level, and understanding the economic, inspirational and moral imperative that a focus on driving loyalty offers
Hardwiring NPS monitoring feedback into key decision processes and integrating it into operational priorities throughout the organisation to create closed-loop learning and improvement. In other words, not treating it as a metric, or parallel program is critical to success
Adopting NPS as solution for driving long-term customer-centric cultural change, rather than a short term program or initiative, and realising the change must touch every part of the organisation

Chapter 7: Economics and Inspiration: The Dual Imperatives The Net Promoter System is like an arch built from two pillars - one economic and the other inspirational. Both are needed for success for driving growth through good profit. The economic pillar is about understanding the business case for investing in customer loyalty, and requires calculating the return on investment on creating more promoters and fewer detractors. It requires having the CFO embrace NPS, and understand why investment in loyalty makes good business sense - and why good profits are more valuable than bad profits. The inspirational pillar of NPS is about helping organisations enrich peoples lives by providing a simple decision rule or ‘heuristic’ - the Golden Rule - for taking decisions across the business, as well as a simple feedback solution - the NPS score - for monitoring how they are living up to this mission. By putting the Golden Rule - ‘is this how I’d want to be treated?’ - top of mind of the business, the NPS makes customer-centricity personal, drives loyalty creation, as well as simplifying complex issues whilst making ethical business decisions communicable, measurable, and actionable.

Chapter 8: Close the Loop with Customers Key to success in driving cultural change and customer-centricity through a focus on customer loyalty using the NPS a core part of daily workflow and core decision processes within the company. Most organisations want to become more customer-focused and the Net Promoter System is a simple solution for achieving this cultural change. Not only does the NPS provide a simple decision heuristic - the Golden Rule - that can be used be used to inform decisions across every level of the organisation, the NPS also hardwires the voice of the customer into the organisation by providing creating customer feedback loops at the front line, mid and senior management levels. Closing the loop at the front line involves monitoring customer experience with NPS and then following up with as many detractors as possible, ideally within 24 hours of the experience. Insights and learning from this ongoing exercise are then pooled, and shared with frontline staff and used to inform decisions. Closing the loop for mid-level managers requires using NPS feedback to create products, services and processes designed to attract and retain high value customers. Closing the loop for senior executives involves setting up a forum for senior teams to talk with customers, and setting NPS targets as a strategic object for business units.

Chapter 9: Organise for the Long Journey The payoff of NPS - a customer-centric organisation generating good profits through a single-minded focus on customer loyalty - can be substantial. But the commitment required is substantial too. Based on the journey of successful NPS companies there are 7 key requisites of success: 1/ Assign the Right Leaders and Position Them for Success. 2/ Pull The Organisation Together 3/ Reorganise Around the Customer 4/ Hire & Fire the Right People 5/ Be Careful About Linking NPS to Compensation 6/ Don’t Skimp on Support from the IT Department 7 / Never Give Up

Chapter 10: The Road Ahead Building a Golden Rule business thriving on ‘good profits’ is a long road with opportunities and challenges. Two key opportunities include using NPS as to monitor employee experience and loyalty, as Apple, Rackspace, JetBlue and Bain, and developing new NPS monitoring tools using social media; Facebook and Zynga have adopted NPS internally, can their platforms be used to monitor NPS? However there are some key challenges too; dealing with legacy systems not built with customer-centricity and the prioritisation of customer loyalty in mind, overcoming internal and external resistance from those with vested interests, and ensuring score reliability. In dealing with these opportunities and challenges it is important to keep front of mind the purpose of the Net Promoter System - as a solution for creating a customer-centric organisation that prioritises customer loyalty with decisions that enrich lives, rather than diminish them.

P is the most important letter in NPS

PaulMarsden — Fri, 04 Feb 2011 23:16:01 GMT

Up on stage we have an inspiring talk from Philip’s Arne Van de Wijdeven, Customer Experience Director for the electronics giant.

His message is simple and compelling – focus on Promoters not the Score.

Find the customers – and employees - who enthusiastically love you and recommend you – your Super Promoters, and listen, learn and leverage.

Sure, you need to resolve issues with your detractors, but by focusing resource on your promoters you open up an invaluable source of insight, develop a smart sounding board for innovation, and activate the best marketing resource you can get.

But most of all, a focus on Promoters humanizes the Net Promoter system.

Ultimately customer experience is about people not metrics – it’s about smiles not scores. Promotion is about emotion not closed loop systems. Your super promoters are passionate customers who have the power to energize, motivate and align internal teams behind a customer experience-led growth strategy. Harness them, treasure them and grow with them.

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How to Leverage Promoters for Business [and your Career!] - Kathleen Stringfield: Lawson Software

PaulMarsden — Fri, 04 Feb 2011 19:56:28 GMT

Want a good career enhancement trick using Net Promoter? Then use this simple trick from Kathleen Stringfield of business software giant, Lawson, who presenting some smart ideas on how to leverage your promoters - customers who'd recommend you.

Simply drop a copy of The Ultimate Question (version 2.0 coming out later this year) on the desks of all your C-Suite colleagues – with a little personal note in the inside jacket.

Before you know it, you may find yourself Global Director of Customer Experience, managing your company’s newly set up Customer Experience Office.

You could also do far worse than adopt Kathleen’s practical tips for delivering a promoter-first customer experience program that drives business improvement (NPS increase 13% in 12 months):

Keep it simple: 2 Question Survey for 4 Business Areas (Overall Rating).
- How likely are you to recommend Lawson [Products, Training, Professional Services, Support, Overall) to a friend or colleague?
- What is the most important improvement that would make you rate higher?

Focus single mindedly on delivering a superior customer experience (not a good experience, but a better (and different) experience (than competitors)

Leverage Promoters in two ways
- Listen to them (set up advisory groups, initiate a voice of the customer initiative, create a customer experience officer)
- Activate them - turn promoters who would recommend into promoters who do recommend
  - Understand the dynamics of influence (Cialdini) to turn promoters who would recommend into promoters who do recommend
  - Systematically collect promoter testimonials and integrate them into customer reference programs

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Influencing who Matters: Your Three Point Plan

PaulMarsden — Thu, 20 Jan 2011 19:59:23 GMT

Lenin once remarked that human history could be reduced to the simple question "who-whom?", who's influencing whom; whether that influence be coercion (use of force), persuasion (argument) or suggestion (example).

I doubt we'll see many card-carrying neo-Leninists at the upcoming NPS conference in my home city Miami, but I am honored to be chairing the Day 2 conference track "Influencing Who Matters", with three great speakers from Allianz (Mary Currier), Lawson (Kathleen Stringfield), and Philips (Arne Van de Wijdeven). Without revealing the content of these sessions - we hope to see you there - here's a quick jargon-free primer and 3-point plan for Influencing Who Matters.

In the world of customer experience, there are three kinds of people you want to influence as a matter of priority.

1) Your Profitable Promoters - these are your existing customers who love you and spend the most on you. They are the people who fund your pay-check each month; they're happy so they keep coming back for more, and because they are happy, they're less price-conscious, and they cost less to service. Moreover, and perhaps more importantly, they are a lean-mean customer acquisition machine, your advocates - a volunteer sales force who influence others through recommendations based on their own true, credible, and trustworthy experience.

That is why you should - where possible - ensure that your own employees are also your customers; they make for the most powerful promoters. And how do you influence your profitable promoters? You give them an expectation-beating VIP experience, like Starbucks who give their most loyal customers exclusive early access to new coffee beans, before other customers. 'Happy customers talking' is the gold-standard deliverable of any customer experience program worth its salt.

2) Influencers - these are the people who get listened to when they advocate your product and service, they might be industry leaders, the IT guy that has the CEO's ear, or as in the case of a dental gum manufacturer we worked for, the spouses of dentists. The point is that influence only works when someone is listening, and some people are listened to more than others. So as consumer giant P&G advocates, the game of influence is to 'influence the influencers'. But how do you find influencers? Try the 'Key Informants' approach adopted by, among others, toy manufacturer Hasbro. Hasbro who sent out a team to video arcades, skate parks and playgrounds to identify kid influencers - 'alpha pups' as they called them. The strategy was simple, go up to a random boy in the target 8–13 group and ask ‘Who’s the coolest kid here?’ When they got a name from the young ‘informant’, the researchers would then approach the cool kid and ask the same question, who would point to another, and so they would continue up the local hierarchy of kid-cool until someone finally answered ‘Me!’ Once they had identified the influencer/alpha-pup, Hasbro gave him ten new pre-release video games to enjoy and share - a product seeding strategy that created word of mouth for the product that got listened to and drove sales.

3) People Who Want to Buy - it sounds so obvious, but you'd be surprised by the number of companies who spend considerable sums trying, and for the most part failing, to influence people not actively in the market for what they sell. Turning the disinterested into buyers is like turning water into wine - you'll need a miracle. Far better to influence people actively looking to buy, and this is where social media, online media that supports social interaction and user contributions, is a powerful customer acquisition and customer experience tool. Dell, Nespresso and others have set up social media listening centers to identify prospects based on social media conversations, and offer pre-sales advice. A good test of whether is company is focussed on customer experience is their reactivity to questions shared on social media. So, here's a neat trick, you yourself can use to choose an agency or consultancy - even a customer experience partner - to see if they walk the customer experience talk.

First, go find the various suppliers on Twitter and gather up their Twitter handles. Then schedule a tweet to each of them at midnight “@AGENCY_NAME – If I were one of your clients and had a problem RIGHT now, would you help in the middle of the night?” Then wait for the responses.

The thing about social media, online media that supports social interaction and user contributions, is that is is real-time media, and that's 24/7/365 real-time media. That means customer experience is a 24/7/365 enterprise. Just over a year ago, Eurostar, who operate the train under the channel between France and the UK, got lambasted and vilified because they took until the following morning to respond to tweets from passengers about a blocked train the previous night. So make sure your CX partner GETS customer experience and is responsive as you, and your customers, would expect.

For more on 'Influencing Who Matters', we're looking forward to meeting you on Day 2 on the Miami Net Promoter Conference at the Eden Roc hotel on Feb 4, at 11am. Lenin badge optional.

Social Media and NPS: A Strategy for Retailers

PaulMarsden — Wed, 21 Jul 2010 14:47:43 GMT

We're seeing retailers move into social media in a big way in 2010, deploying 'pop up' social media f-commerce (Facebook Commerce) stores to create word of mouth buzz around new products (Disney, P&G, NineWest, Rachel Roy), whilst giving their e-commerce stores a social media makeover, adding customers ratings, reviews, Q&A's and forums to make their stores sticky and stimulate word of mouth.

From an NPS perspective, the key value of social media for retailers is that it activates the referral value of promoters (from 'would recommend' to 'do recommend'), and allows them to monetize that value with hard sales and new customers. Social media also allows retailers to offer their customers an expectation-beating retail experience that not only activates promoters but creates them too. So here's a short downloadable presentation on an NPS approach to social media for retailers - comments welcome!

Net Promoter and Social Media - A Strategy for Retailers

Social Media + Net Promoter = ROI

PaulMarsden — Fri, 12 Mar 2010 20:13:25 GMT

Should Leboutin's new cosmetically-enhanced Barbie be our Net Promoter mascot? Read on to find out...

Head over to the online Barbie store and you’ll no longer see Barbie’s infamous fat ankles. Thanks to recent laments by celebrity bootmaker Christian Louboutin, the offending ankles have been mercifully subjected to plastic surgery.

What you will find over at the Barbie site though is some smart use of social media (online media that supports social interaction and user contributions). Specifically, you can go “social shopping” and co-browse the site in realtime with your remote Facebook friends and Twitter followers to share shopping advice and recommendations.

The result? An expectation-beating e-commerce experience that drives sales. Brands using social media to enhance the online customer experience have seen sales jump by 10%+ (see here for a fabulous compendium of evidence). In fact, a recent test of the social media feature on the Barbie store saw sales rise by 15%, with a 50% rise in average order value.

With its Barbie store, Mattel is part of the vanguard of brands using Net Promoter logic with social media to drive sales. The logic is simple - use social media to offer an expectation-beating online experience (the key variable driving your Net Promoter Score) and then monetize the result immediately with e-commerce.

It’s simple, it’s smart and it solves two challenges faced by Net Promoter and Social Media. First, “How do I get ROI on my Net Promoter investment fast?” Second, “How do I monetize my social media investment?” The answer, fusing social media with e-commerce and Net Promoter logic to deliver expectation-beating experiences that can be immediately monetized through e-commerce, may turn out to be your ROI solution.

Not all social media experiences can be monetized directly, and nor should they, but where they can they provide a fast business case for social media and Net Promoter investment. Take a look at how other brands are using “social commerce” (social media + e-commerce) with Net Promoter logic to monetize social media and drive sales, and ask yourself a simple question: How could we make social media pay with Net Promoter?

P&G, Nine West, and Best Buy walking the customer-centric talk and beating expectations by making e-commerce convenient and social with Facebook stores
Dell, beating their followers expectations on Twitter, by offering exclusive deals on their "Deal Feed" - and selling $7m+ of gear
Carrefour, the world's largest hypermarket retailer doing the same thing in Facebook, offering expectation-beating exclusive deals on their Deal Feed to their fans
Burberry showing how luxury brands can harness social media, with a ground-breaking Art of the Trench "user generated, brand curated" gallery linked to their e-commerce store
The Limited US fashion retail chain offering the ultimate in customer convenience, enabling people to buy directly from their social media newsfeed, with a newsfeed store on Facebook
Dell again, with Dell Swarm beating expectations with a nifty Group Buy feature - buy together with your social network - the more people who buy, the cheaper the price
Amazon beating expectations again their new Universal Wishlist service and Tag-Based and Contrast Reviews

Now, get over to the Mattel site and check out Barbie’s ankles with your friends....

Social Media / 10 Brands Doing it Right

PaulMarsden — Wed, 19 Aug 2009 19:30:39 GMT

How much time do your colleagues spend chatting with friends on Facebook, brushing up their résumé on LinkedIn, perusing photos of last night’s party on Flickr or just tweeting t-shirt slogans at Twitter whilst wiling away the hours on YouTube?

Social media. It’s a business bane, a time-bandit guaranteed to suck productivity and focus from your organization. Remember that first rule of corporate survival? Don’t make me responsible for what I can’t control. You can’t control what happens on social media (content sharing) or social networking (contact and information sharing) sites, so just don’t go there. And forget any upside; if Google can’t make money from it’s social media video sharing megasite YouTube (it can’t), what hope do the rest of us have. Better block those sites.

Sure, a healthy dose of business skepticism is advised in the faddish world of social media and social networking (remember MySpace or Friendster anyone?). But by donning our Net Promoter goggles, a viable and sustainable business model for social media begins to emerge.

From a Net Promoter perspective, business success is driven by delivering expectation-beating experiences that result in increased loyalty and referral value of customers. So if social media can either help deliver remarkable expectation-beating experiences, or help customers share those experiences, then there is real commercial value in social media.

So, here, for your inspiration and delectation, are 10 brands that are walking the social media talk in what I believe are remarkable - and commercially savvy - ways:

1. Amazon: Boosts sales with a deal of the day tweet on Twitter that, when remarkable, gets re-tweeted around the people-powered twittersphere. Combine this with allowing buying advice for customers by customers on their site, you have a veritable social media sales engine. Now head over to DellSwarm to see where this social media powered ecommerce is going.

2. Accenture: Value. Delivered. Lead generation, social media style. By posting free business advice in a useful presentation format on presentation sharing site slideshare.net, the consultancy establishes expertise and draw prospects to their sales funnel.

3. Nike: Boosting loyalty by offering runner support for runners by runners, Nike+ is the place for runners from around the world can come together to share performance stats, aching limbs and running tips. All under the Nike brand. In the words of Wired Magazine’s Jeff Howe, the key to social media is to ask not what the community can do for you, but what you can do for the community.

4. Charmin: Out in town and you need a bathroom, and you need it clean. Charmin to the rescue, the tissue brand sponsors sitorsquat.com, a user-powered information sharing site and mobile social app of public convenience locations - with reviews - around the world. If a toilet tissue brand can make social media work...

5. Hyatt: Customer Service for free for guests by guests through Hyatt’s opinion sharing user-review site Yattit. Guests offer each other concierge services on local places to dine and drink. Hyatt saves on bills. Smart.

6. Blendtec: Utility value is not the only social media game in town, entertainment value can work too. This small blender manufacturer tripled sales by posting homemade and highly entertaining “will it blend” ads on video sharing site YouTube

7. P&G: Teen support for teens by teens. By hosting a subtly branded forum BeingGirl where teen girls can connect, discuss and share girl stuff with each other P&G reach a difficult-to-reach demographic - and measure the results to be 4x as effective as TV advertising.

8. Starbucks: Business improvement ideas for free through opinion sharing open idea blog, mystarbucksidea where users can post, vote and comment on each others ideas for how to make the coffee brand better. Coffee ice cubes and free wifi anyone? (Dell, Bestbuy, Asus, and Microsoft are doing the social media idea blog thing too).

9. Threadless: Outsourcing. The hipster apparel brand uses social media to outsource t-shirt design. Site visitors submit designs, share opinions and vote in monthly open outsourcing competitions. Winning designs go into production - and sell out, every time.

10. Apple: eCommerce. The future of social media is mobile, and Apple is profiting today by hosting a social marketplace (App Store) where third party developers can post mobile applications for the iPhone, get them rated by customers, and sell them. Apple of course takes a healthy cut, whilst cutting its own application development costs to a healthy zero. Forget eCommerce, welcome to the world of social commerce - WeCommerce.

So forget ignored ads on social networking and social media sites, undiscovered and unused branded widgets, and ghost town groups haunted only by the desperate, lonely and compulsive (cat litter community anyone?). The real commercial value of social media is as a value delivery channel powered by user contributions and facilitated by you.

Lenovo: Happiness is Your Business Model

PaulMarsden — Fri, 19 Jun 2009 17:39:44 GMT

Sometimes the term Net Promoter can seem to get in the way of a really great idea - the idea that happiness is a business model; that the best way to grow your business is to make your customers smile.

Yes, smile. Forget for a moment arcane discussions about the metric itself or the corporate babble-speak around associated business processes. And look at Net Promoter for what it is; a business ethic that is based on the simple premise that doing business for good (delighting customers) is good for business (organic growth).

Take Chris Askew, from Lenovo who is up on stage now, talking about Lenovo’s Customer Delight Program that has substantially increased the number of smiling customers (NPS up 16%) all whilst trimming costs by 15%. Chris’ words could be those of the great philosopher John Stuart Mill, author of On Liberty, and who developed “the greatest happiness principle” - that when faced with a choice, we must first consider the likely consequences of potential actions and, from that, choose to do what we believe will generate most pleasure. This is the moral code that Lenovo follows - and as a result Lenovo is growing their business by making customers happy, and receiving some 39,000 gifts per month from happy Lenovo users. And it is also this moral code (utilitarianism if you want a label) of maximizing customer happiness that is at the heart of Net Promoter.

So, take the cue from Lenovo if you want a cocktail party version of what Net Promoter is all about - it’s about making happiness your business model.

Satmetrix: Answering the Ultimate Question

PaulMarsden — Thu, 04 Jun 2009 19:52:53 GMT

So Richard Owen, Satmetrix CEO and co-author of “Answering the Ultimate Question” is boiling down six years of research and experience in implementing high-impact Net Promoter customer loyalty programs into 10 key insights. Sweet.

Of the 10 insights, noted below for your delight and delectation, #7 is the one that I'd like to comment on - Word of Mouth Trumps Advertising.

First, my take-outs from Richard’s wisdom in a nutshell

Winner Takes All – Your goal should be a Best-in-Class Net Promoter Score. Why? NPS leaders grow faster and keep customers longer. Compare Verizon with Sprint: Verizon NPS = 40%, growth = 13%, churn 1.1% - Sprint NPS = -15%, growth = -13%, churn = 2.4%
Inertia is the True Enemy – The biggest obstacle in growing your NPS to grow your business is internal resistance to change. You need to cultivate internal momentum with top management sponsorship to make it happen
Relative Performance is All the Matters – Your NP Score is utterly meaningless – in isolation. It’s your score relative to your (local) competitive set – and your past performance that makes Net Promoter meaningful
Pick Your Battles – Using Net Promoter to grow your business usually involves delivering a differentiated customer experience that underpins a key reason to recommend. Few brands can be great at everything, find your inner experiential strength and build on it. (Amazon – logistics, Virgin – culture, First Direct – service)
Frontline Staff Are Key– A key driver of successful customer experience redesign is where humans meet humans. It’s difficult to overestimate the role of customer facing staff and partners in driving experience
It’s How Customers See You – 80% of senior managers believe their brands deliver a superior experience, 8% of their customers agree. Customer Experience Management begins with the customer experience from the perspective of the customer.
Word of Mouth Trumps Advertising – ‘Happy Customers Talking’ is the best advertising and acquisition tool you can get. Consider Amazon, Zappos, and Overstock – brands built on delivering *remarkable* experiences, not paying for ads. Advertising is the last recourse for the mediocre.
Understand the Economics – it’s all about money, the rest is just conversation. Unless you know the economic value of a Promoter and the cost of a Detractor to your business – and use it to build a solid business case your Net Promoter program is unlikely to get traction
Be Like Finance – It’s all about money, the rest is just conversation (2). To succeed, make your Net Promoter program CFO friendly, with language, processes, and rigor of your finance department. Excel not Powerpoint is your new best friend.
Don’t Confuse Simple with Easy – The goal of any Net Promoter program is simple – delivering customer delight. But just because it’s simple to get, doesn’t mean its easy to deliver. Consider the iPod and iPhone; years of development (perspiration as much as inspiration) underpin the elegance of simplicity.

So a useful 'reality checklist' for brands looking to walk the customer experience talk. And as the guy known as “Buzzman” in consulting circles, you can guess it’s at #7 ‘Word of Mouth Trumps Advertising’ when I started cheering.

It’s true, it’s true – just about every research study shows that word of mouth is more powerful than advertising. But the problem for brands is that you have to EARN word of mouth (by delivering a *remarkable* experience), you can’t buy it (word of mouth agencies notwithstanding).

But, and it’s a big but (and where I’d qualify Richard’s point) Word of Mouth trumps Advertising, but Advertising Activates Word of Mouth. Our own research shows that up to 50% of promoters are mute promoters – and that advertising can activate them and the Word of Mouth potential of a brand (transforming promoters from “would recommend” to “do recommend”). How? By helping promoters articulate the reason to recommend (think Sony Bravia ads and their creative focus on color).

The truth (as we see it) is that advertising and word of mouth are stronger together.

Purple Cows & Promoters

PaulMarsden — Fri, 03 Apr 2009 14:53:57 GMT

20 Questions to Brainstorm your Brand out of Recession

As marketers come under pressure to do more with less, here's a practical way that a Net Promoter perspective can help. Use the marketing logic of Net Promoter (what other people say about you is more important than what you say about yourself) to set up a collaborative workshop of colleagues, partners and promoters - and run a "Purple Cow" brainstorm.

A Purple Cow brainstorm - inspired by Seth Godin's marketing bestseller 'Purple Cow' (on the art of being remarkable) - has a single focus; how to make your value proposition(s) truly remarkable. The rationale is simple; most products and services are Brown Cows, that is, quite unremarkable - not worth talking about. But in order to cut through today's recessionary caution and marketing clutter, brands - more than ever - need to be truly remarkable, in the same way a 'Purple Cow' would be, truly remarkable. This is pure Net Promoter thinking, and backed up with Net Promoter evidence - in a pan-European multi-category study last year, we found that nearly 80% of all variation in Net Promoter Scores is explained by how remarkable your customers find your product or service experience. Which explains why 80% of the 30 newest entrants to Interbrand’s top 100 brand list owe their success to selling remarkable experiences rather that advertising clout. Experiential brains, not advertising braun is what you need to succeed in marketing today.

So here's 20 brainstorming questions, distilled from the Purple Cow, to help put the magic of being remarkable back into your brand. Try brainstorming with no marketing terms or jargon – it gets in the way of clear thinking about delivering remarkable experiences. Of course, a Purple Cow brainstorm won't replace the need for a systematic solution - like Net Promoter - for making your brand remarkable, but it might help as a useful catalyst for leading your brand out of recession.

Purple Cow Brainstorm

To warm up, imagine your product or service is a person, and you have to write a job reference for them – what’s remarkable and worth recommending and what isn’t?
Now draw up a simple customer wish list. Are there any gaps you could fill between what people want and what they’re getting today?
Make two lists, one of the top reasons to recommend products/services in your market and the other of top reasons not to recommend. Can you spot any opportunities?
Think about the current leader in your market – if you could change just one thing about it in order to make it more remarkable, what would that be?
Think again about what the market leader is doing, then focus on doing the opposite.
Make a list of very good products in your market. The opposite of remarkable is very good (because very good is bland), what would you do to turn these very good products into a truly remarkable products?
Take another look at the top ‘reasons to recommend’ in your market; these are what make products remarkable. What could you do to own one of these reasons to recommend?
Who currently makes the most remarkable products/services in your industry? What would they do if they were in your shoes to make your product more remarkable?
Focus on the two key groups who will drive your sales – your most profitable customers, and opinion leading customers. What would you have to do to make what you sell remarkable to them?
List all the customer suggestions and customer complaints you’ve heard, what could you do to address them?
Forget demographics for a minute – list the big social networks and communities in your market (associations, clubs, employers, institutions). Could you make a special edition of your product for one of these networks or communities?
Remarkable products are often controversial and outrageous – what would a really controversial or outrageous version of your product look like?
If you were going to make a parody or spoof of your product or service, what would it look like? This will give you a clue to what could be remarkable about your product.
Imagine you could get a world class designer to redesign your product, who would it be - and what do you think they'd do?
Packaging and presentation can make a product/service, and remarkable packaging and presentation can make a product or service remarkable. What can you do to make your packaging/presentation more remarkable?
Imagine you are your most loyal customer advocate - what could you do to make them rave even more about your product.
Think of ways you could build a competitor to your own product with costs 30% lower? If you could, why don’t you?
Imagine you are making a highly exclusive limited edition of your product for your 20 best customers – what would be remarkable about it?
Remember that convenience is king – what could you do to make buying, using or disposing remarkably easy?
Imagine you’ve woken up as a maverick, with no respect for the company way of doing things today – what the first thing you’d change about your product?

Web 2.0 and NPS - A Marriage Made in Heaven

PaulMarsden — Tue, 08 Jul 2008 02:44:25 GMT

We've all heard of Web 2.0, the database-backed social web. But how can businesses profit from Web 2.0? Social networks, social media and other social web services - so what?

But put on your NPS Goggles and see the world from an NPS perspective, and the value of Web 2.0 becomes clear; it's all about using the Web to add to your value proposition to beat customer expectations (the key driver of NPS).

Web 2.0 is not about what your customer can do for you, it's about what you can do for your customer.

So here's a presentation outlining three proven Web 2.0 strategies from an NPS perspective. (Click here for Dr. Marsden's presentation.)

The key insight - in a nutshell - is that Web 2.0 allows businesses to build web services rather than web sites that add to your value proposition, beat market expectations and therefore drive growth.

Think Nike+, think Lego Factory, think Apple's new Me.com.

Web 2.0 is about the Web as a Value Delivery Platform, not a Brochureware Platform.

Enjoy - and feedback most welcome!

Word of Mouth: Show Me the Money!

PaulMarsden — Fri, 02 May 2008 02:35:09 GMT

Word of mouth is all about the money, the rest is just conversation (pun intended). That's the key takeout of this roundtable on Net Promoter and word of mouth; tell me how much a recommendation is worth, and then I'll think about doing something about it.

Part of the attraction of Net Promoter Score is its link to hard financials, but the NPS itself measures propensity to recommend (would recommend), not word of mouth (do recommend).

As it happens, recent European research has found that only 50% of promoters (would recommend) actually do recommend.

There are some really cool and effective tools for activating the 50% of ˜silent" promoters that the average business unit has (such as online communities), but before time and money is spent, it's important to know how much a recommendation is worth in financial terms (see The Ultimate Question by Fred Reichheld, Net Promoter Economics: The Impact of Word of Mouth white paper by Satmetrix, and How Valuable is Word of Mouth white paper published by Harvard Business Review for calculating Customer Referral Value).

Only then can a business case be put together for activating promoter advocacy.

Promoters vs. Influencers: Follow the Money

PaulMarsden — Tue, 26 Feb 2008 21:14:05 GMT

So Yahoo's social network expert Duncan Watts, author of Six Degrees, doesn't rate 'influencers'. Armed with computer models, he's challenging the idea that innovation and marketing dollars work harder when they are invested with the trendsetting lead users in your category. Better to cast your net as wide as possible and cater to the mainstream majority ("mass seeding") rather than focus on fickle influencers and even more fickle network effects.

So what does this have to do with your Net Promoter strategy of achieving increased growth by putting the voice of the market at the heart of the business decision-making process? Well, it's all about deciding whose voice you should be listening to. Should you listen preferentially to lead users (influencers), because they act as gatekeepers to mainstream adoption, or should you listen to the mainstream majority because they make up the volume?

A case can be made for both -- but I'd add that it's the voice of the money we should really be listening to -- hardwiring the voice of your most profitable users (or the category's most profitable users in the case of new product development) into the business, rather than that of average or lead users. Why? Because it's profitable users, not lead users or average users that drive profits. If you want to segment further, then the Net Promoter Grid (below) will direct your listening to profitable promoters (because of the extra referral value they represent) and profitable detractors (because of the risk value of losing them).

An interesting example of putting this into practice is the leading UK cosmetic brand 'Simple', which has recently set up an online 'promoter panel' of high-spending brand fans to help them innovate.

Rather than try coolhunt influencers such as trendsetting fashionistas for the panel -- the company is following the money and putting the voice of profitable promoters at the heart of their business decision-making processes. Feedback (rewarded by an online e-shop selling Simple products at staff prices to panel members) has already led to the development and successful launch of a new product.

So if you get the opportunity to spend time with profitable users, lead users, or average users -- I say follow the money.

Paul Marsden: Building a Net Promoter Program Brick by Brick

PaulMarsden — Mon, 02 Jul 2007 21:54:00 GMT

Delegates are returning from a short coffee break – room is packed again.

Peggy Conley introduces her session by explaining LEGO adopted NPS two years ago as part of a turnaround strategy for company.

NPS has permeated LEGO company culture - focusing the business on customer experience (the key driver of NPS). Example of CEO receiving letter from customer asking for Space LEGO instructions - and replying personally.

Peggy is talking about critical success factors for NPS deployment:

1) Employees know the score

2) Employees are rewarded for improvements to score (10% of bonus on NPS improvement )

3) Employees feel they can personally have an impact on NPS

First step in building a Net Promoter Program for LEGO involved tracking NPS in surveys (which LEGO had been doing for several years - so they already had basic) benchmark data.

Measuring NPS is involves researching right consumers (core target groups), at the right time (after brand interactions), and right experiences (experiences over which business has some control)

LEGO measure user NPS as a customer experience metric across 5 key areas:

Product Experience (immediate post purchase), Online Experience, Store Experience, Customer Services experience.

The LEGO NPS surveys are kept deliberately short - four questions - to get impressive response levels.

Peggy is explaining how all monthly NPS data and actions are summarized on a single sheet that is distributed to the business departments.

NPS data is also used to feed into an affinity segmentation model to allow LEGO to build segment specific initiatives for improving NPS/experience.

Different methodology for different experiences - but goal of NPS research is to measure quality of experience and opportunities for improving it. Key is to turn data/info into actionable insights

Peggy is wrapping up by giving examples of how NPS research is driving business improvement initiatives.

how mood of customer services influences experience (NPS) - when engaging an fun experience quality (NPS) increases
how ease of finding instructions on the website influences experience - a site redesign increases NPS significantly
how search and navigation on online store influences experience - usability tests and “deep dives into open comments” identified how to improve experience
how packaging quality influences experience - improved packaging improved NPS
how delivery times for online sales influences experience - improving delivery times improved NPS

Paul Marsden: Building a Net Promoter Program Brick by Brick

PaulMarsden — Mon, 02 Jul 2007 21:54:00 GMT

Delegates are returning from a short coffee break — room is packed again.

Peggy Conley introduces her session by explaining LEGO adopted NPS two years ago as part of a turnaround strategy for company.

Peggy is talking about critical success factors for NPS deployment:

1) Employees know the score

2) Employees are rewarded for improvements to score (10% of bonus on NPS improvement )

3) Employees feel they can personally have an impact on NPS

First step in building a Net Promoter Program for LEGO involved tracking NPS in surveys (which LEGO had been doing for several years - so they already had basic) benchmark data.

Measuring NPS is involves researching right consumers (core target groups), at the right time (after brand interactions), and right experiences (experiences over which business has some control)

LEGO measure user NPS as a customer experience metric across 5 key areas

Product Experience (immediate post purchase), Online Experience, Store Experience, Customer Services experience

The LEGO NPS surveys are kept deliberately short - four questions - to get impressive response levels.

Peggy is explaining how all monthly NPS data and actions are summarized on a single sheet that is distributed to the business

NPS data is also used to feed into an affinity segmentation model to allow LEGO to build segment specific initiatives for improving NPS/experience.

Different methodology for different experiences - but goal of NPS research is to measure quality of experience and opportunities for improving it. Key is to turn data/info into actionable insights

Peggy is wrapping up by giving examples of how NPS research is driving business improvement initiatives.

i) how mood of customer services influences experience (NPS) - when engaging an fun experience quality (NPS) increases

ii) how ease of finding instructions on the website influences experience - a site redesign increases NPS significantly

iii) how search and navigation on online store influences experience - usability tests and "deep dives into open comments" identified how to improve experience

iv) how packaging quality influences experience - improved packaging improved NPS

v) how delivery times for online sales influences experience - improving delivery times improved NPS