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Fred Reichheld's Blog

2 Posts tagged with the apple tag

Do Opposites Attract?

Posted by FredReichheld Apr 19, 2010

It seems ironic that the wireless provider with the lowest NPS score in the business has teamed up with the highest-ranking hardware manufacturer. But there it is: AT&T’s exclusive contract to support Apple’s iPhone makes for one of the oddest couples around.

 

The laggard here is AT&T, which just won the dubious distinction of coming in dead last in the latest Satmetrix NPS survey of eight major cell phone providers. AT&T‘s NPS was barely positive at 9%—37% promoters minus 29% detractors. Contrast this to top-ranked Verizon with an NPS of 41%, 55% promoters and 15% detractors. (The disparities in subtraction are due to rounding.) The 32-point gap that separates the two typically reflects serious performance problems for the loser.

 

AT&T’s top-performing partner, of course, is Apple. Satmetrix’s survey of consumer electronics companies put Apple far in the lead: its NPS of 78% (81% minus just 4%) is 42 points higher than second-ranked Toshiba. The survey didn’t cover mobile-phone manufacturers. But given the iPhone’s dramatic growth and Apple’s overall scores, it’s a safe bet that the phone would get outstanding Net Promoter ratings.

 

Perhaps AT&T’s contract with Apple has helped it prop up results despite a substantial disadvantage in NPS. But at some point, Apple will almost certainly develop an iPhone for the Verizon network. And companies with top-ranked NPS typically work effectively together as partners, in large part because they share a cultural value of focusing on customers. So an eventual Verizon-Apple partnership is likely to lead to an abrupt shakeup in the wireless marketplace—a shakeup that AT&T’s investors and leadership team are not likely to find comforting.

 

How did Verizon generate such a lead versus AT&T despite its failure to win the iPhone? I happen to know that Verizon has been concentrating on improving its NPS for several years (see my blog from September 24, 2007  detailing my experience with Verizon). That work has paid off in handsome improvements in customer loyalty—witness Verizon’s climb to the #1 ranking in NPS. 

 

What should AT&T do to avoid calamity? Well, executives might look to some of the NPS success stories for lessons on how to make quick progress in creating more promoters and fewer detractors. Charles Schwab is the current champion, to my knowledge, with an astonishing improvement of 70 points—from -35% to +35%—over a four-year period (see my blogs of October 21 and November 13, 2008).

 

But this kind of change can happen only if the senior leadership team follows the Schwab example: making NPS a mission-critical priority that touches all parts of the business, from operations and finance to marketing and human resources. If leaders view NPS as nice but not vital—merely a customer service initiative—then progress will be modest at best.

 

Will AT&T realize that it needs to get serious about creating a customer-focused culture and improving its NPS relative to Verizon? Only time will tell. But one thing is certain: this case study will be written up in the history books. And it will become the legacy of the current AT&T leadership team.

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I grew so frustrated with my shopping experiences at Home Depot over the years that I vowed never to set foot inside any home improvement store with orange signage. In fact, I fully intended to make the company the subject of a blog-rant a year ago. However, I knew Home Depot was making a serious effort at improving customer service - someone even told me they had recently adopted Net Promoter - and I wasn’t sure one more loud complaint from me would be productive. Moreover, the primary reason for my unhappiness was my experience in the store nearest my home. At that store, there was never anyone available who could answer questions, and the self-checkout process was so deeply flawed that most customers failed to navigate it successfully without assistance. However, Home Depot has more than 1700 stores in the US alone, and my store outside of Boston may just be an outlier.

 

logo_52x52.gifSo last week I happened to be driving by a Home Depot on the way to our summer house on Cape Cod, and I decided to give it a try. As I walked in, I was greeted by a friendly rep who asked if she could help me find anything.  Indeed she could. I was looking for a water cooler that would match our white kitchen - and I had no idea whether the store even carried such an item, let alone where it would be located. Good news: she took me to the back of the store and helped me find an apparently ideal model in white. The checkout process (unlike at my home store) was painless. The checkout clerk made sure I noticed an invitation on the receipt to submit feedback. She warned that the survey would take 15 minutes but added that taking it would enter my name in an award lottery. Ordinarily, I never bother with these cash register receipt surveys because I have yet to find a real Net Promoter success story among their users. The tiny response rates create an enormous sample bias, so there is no fair way to hold store managers accountable for their scores.

 

Then came the bad news. When I arrived at our Cape house, I discovered that the water cooler inside the box was not white at all. In fact, the company website informed me that the coolers don’t even come in white - the only white unit is in the picture on the box.  So I thought to myself, what a great opportunity to give feedback. That rep, as friendly as she was, did not know the merchandise, and her bad advice was going to cost me an 80-minute round trip to return the item.

 

But the rep’s error seemed trivial compared to the mistakes made by the designers of the feedback system. The feedback process was much worse than my flawed shopping experience.  Frustratingly, there was no way to provide clear and simple feedback about my problem. Page after page of questions scrolled onto my screen, 40 or 50 by my count. Most were completely irrelevant to what I wanted to communicate. Skipping any question, however, made the screen freeze temporarily, and then brought a strongly worded rebuke in a bold orange font.  As I struggled through the labyrinth of questions, I realized that this survey had nothing in common with Net Promoter - in fact, it broke almost every rule in my book.

 

I can’t imagine who would actually finish these surveys. A customer must notice the invitation on the receipt, find the website, and log on with long password codes that link to the specific transaction. He or she must then navigate a 15-minute journey through questions unlikely to have much value to store managers. (They don’t need a customer survey to determine if the aisles are cluttered - they can just patrol the store.) In fact, if I were a store manager and my bonus was held hostage by this system’s scores, I would revolt.

 

What’s most frustrating to me is that it doesn’t need to be this way. There are several retail companies that are doing this right (Enterprise Rent-A-Car, Advance Auto Parts, and Apple Retail Stores, to name a few). It is distressing that the talented executive team at Home Depot can have such good intentions and yet get this so wrong. For the sake of the NPS brand, I hope they don’t refer to their approach as having anything in common with Net Promoter. Better yet, I hope they will re-read The Ultimate Question and follow its advice to make some fundamental changes in their feedback system.

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