Blog Posts From Richard's and Laura's Blog Tagged With nps

Oh, Dear Diary

info@netpromoter.com — Fri, 02 Nov 2012 02:30:40 GMT

Oct 28, 2012

Dear Diary:

I’ve finally cracked it. I’ve been looking for a way to grow companies that doesn’t involve creating promoters. It must be some unique form of advertising model, because companies spend so much money on advertising that it must work better than customer experience, right? Otherwise, it would make sense to plough the money into something boring like better product, shipping, service (yawn). Nowhere near the fun of showing us a catchy Super Bowl ad!

It’s going to involve some kind of enticement to get customers to try products at a massive discount. Once through the door, they will convert to full paying, profitable lifetime contributors. It’s like advertising – doesn’t rely on flakey word of mouth – only different.

Fingers crossed for the Giants tonight!

Oct 29, 2012

Dear Diary:

Despondent! Turns out (as usual!) someone thought of it before me. In fact, worse than that, several people did and convinced investors to give them hundreds of millions of dollars! That could have been all mine! Can’t believe my bad luck. Some company in Chicago called Groupon and, worse still, they seem like they already went public.

Oh, insult just gets added to injury. The have competitors that are doing the same thing. And it’s a brilliant idea: entice customers to club together to purchase at low price, then present the vendor with a whole group of customers all of whom are price driven, discount driven bargain hunters! Just one thing concerns me. I wonder if customers who are attracted by these deals turn out to be promoters when the deep discounts stop? Or even customers? Seem to recall some study that showed that credit card customers switch to detractors at the end of introductory discount deals. That doesn’t sound good. Well, no worries, that would be down the road anyway, as long as the initial group pours in, business looks good for now!

What a brilliant plan.

What about those Giants! Wish I understood baseball. Seems like cricket, but with older looking uniforms.

October 31, 2012

Dear Diary:

Well, wouldn’t you know it? Stole a copy of Dad’s Wall Street Journal this morning and it had some article (of course they charge money. Crain's Businessthey want you to pay for ( about how, apparently these kinds of companies are challenged to keep their business growing. What caught my eye was some comment the journalist-chappie made:

“In addition, it is still unclear if daily-deal customers can be reliably converted into repeat customers paying full price… the daily deal is more about promotion than changing the nature and productivity of online retailing”

Hard work writing these quotes out in full, Diary. But you get the gist. Maybe companies who create regular price promoters will realize more value, who knows?

Happy Halloween.

November 1, 2012

Dear Diary:

Woe is me! It feels like Day of the Dead around here. I ate all our Halloween candy (bought at a discount, of course) and have nothing to show for it except an upset tummy. At the least the Giants parade lifted my spirits. No school today!

It’s not only the athletes that are stretching

info@netpromoter.com — Fri, 17 Aug 2012 17:29:29 GMT

Well it’s over. Put away the Kleenex and start thinking about the football season starting (either side of the Atlantic) as an excuse to fill the hours of un-programed life left vacant by the closing ceremonies. As we look back at the games, what have we learned? My top three takeaways:

The athletes are looking younger every year
The rockstars are looking older every year
The Olympics have found some common ground with your net promoter program

Of course they have! We eat, drink and sleep this stuff so we have to find a connection or we couldn’t write a blog.

First, the gaming. Even in a super-ethical, values based “organization” like the collective Olympic athletes, the boundary between gaming and cheating is pretty fuzzy. If there are high stakes, if people care, there will be gaming. In your organization I’ll bet you have the equivalent of the Chinese badminton players who think that the technical interpretation of the rules is more important than the spirit of the program. There are many ways in which people can “go through the motions” in your program but ultimately it’s the “spirit” of the program that matters most – the culture of customer behavior – and technical compliance is not usually the failure point for customer experience initiatives.

The medals table dispute is also worth noting. Both the British and the Russians think they came in third, largely due to a lack of clarity around how exactly tables ranking occurs. The IOC doesn’t have a standard, so it’s left up to everyone to use their own. Some media sources rank by Gold medals, others by total medals, which leads to two different orders on the table. We know that stack ranking is an effective motivation tool, apparently for entire countries as well as the odd contact center rep, but this also reminds us that without central clarity it’s remarkable how many interpretations of data you see. If you have multiple countries independently measuring and managing their NPS, don’t be shocked if the same idea is implemented very differently with very different conclusions. Stack rank countries, and watch the disputes start. The moral of the tale is that, like finance, decentralized standards result in incomparable metrics.

Finally, the Olympics, for me at least, are all about passion. OK, so NBC (and the BBC to some degree also) lay it on a bit thick with the tug-at-the-heartstrings stories, but you can’t help thinking that the Olympics are all about passion for a cause worth believing in. I’ll bet that in your organization you have passionate customer champions that overcome adversity to make a difference every day. It’s not just about numbers and science, it’s much more than that and we need to stir up some of those emotions if we are to achieve success.

Congratulations to all the Olympians, organizers, volunteers, and indeed London.

Do NPS leaders dream of electric sheep?

info@netpromoter.com — Thu, 12 Jul 2012 20:47:29 GMT

I’m test driving a clever device called the “fitbit ultra”, an electronic pedometer that advertises “real time activity stats so you know how close you are to your goals”. The “ultra” designation refers to the fact that this version will actually exercise for you while you sit in the bar. At least that was my hope: when I hear that technology will help me lose weight, I cling to the notion that someone will solve the problem in a way that involves, well, less sacrifice on my part. Sadly, the fitbit merely measures my feeble efforts, it doesn’t even lie about them to me (another important design feature that I have thoughtfully submitted). Gaming the result is not supported.

One of the most intriguing features is an ability to measure my sleep efficiency. Up to now, I hadn’t thought of my sleep as being particularly inefficient, but in an era of hyper productivity, it makes sense that I should care, doesn’t it? So I eagerly awaited the results. After a trial of several weeks, I know with reasonable certainty that I have a sleep efficiency of 90% or higher. I will sleep well, knowing that. Or perhaps I won’t.

That’s the problem you see, measurement without context is not very useful. Measuring myself over time, I suppose that an improving trend would be a good thing. If my efficiency goes from 94% to 96% then it’s presumably better. Of course, if it turns out that an efficiency of less that 98% means the likelihood of narcoleptic-like shutdown on the freeway, than my scores should be a call for more drastic sleep improvement activities, such as watching CSPAN or reality TV shows.

What I really need to know is this: what is a good score? Is my 94% last night adequate to meet by goals? Is there some kind of linkage between sleep efficiency and overall health, so I know it’s a metric that matters? How volatile is it – should I expect major improvement or will it take me years to get that couple of % points?

Data without context, metrics without meaning. What gets measured may get managed, but measurement alone has value that is often less than zero. Sound familiar?

P.S. for a fascinating view on how mobile technology and data can change people’s behavior, with further implied learnings for NPS programs, read this wonderful piece in the Atlantic Monthly.

Back in 2012, when "real time" meant once a year....

info@netpromoter.com — Thu, 21 Jun 2012 21:34:40 GMT

“We know you have a choice in air travel, and you made a bad one”

Bender, “Futurama”, Fox Broadcasting Corporation

Remember the day when corporate leaders around the world watched eagerly to see the news break on their customer satisfaction scores? Remember the flurry of transformation activity that took place to address the major issues identified? No? We don’t either.

This week, the ACSI released its annual report on airline customer satisfaction and provided, with perfect timing, an illustration of how the world has been changed by technology. The ACSI approach is right in line with traditional measures of customer sentiment, comprising as it does a metric that doesn’t matter (satisfaction) with a process that provides a slow and infrequent result (once a year). It’s not much of a surprise that few corporations use this metric and an estimated 35% of large US firms use NPS; but it is a touch ironic that the leader in their survey, JetBlue, is a well-publicized adopter of Net Promoter.

But customer metrics wars are pretty much over. No, my point was that we can now all do so much better. Last week, we launched SparkScore, a social, global Net Promoter Score derived from real time social feeds. You may not like our methodology, or our logo, or any aspect of SparkScore, but I suspect that you would agree with the following statements. Firstly, a high frequency metric (monthly, weekly, daily) is a sight more useful than an annual metric that doesn’t fit a reality where companies have to operate in near real time. Yes, Jet Blue is a loyalty leader, but only when you look at high frequency data will you realize the hit they took from the “midair pilot meltdown” and how it impacted their social word of mouth. Secondly, social data has greatly amplified the word of mouth effect of poor or excellent customer experience, so, like it or not, it will have a disproportionate impact on companies economics.

We fully recognize the value of a once a year benchmark that helps businesses calibrate relative performance, providing of course, you are measuring something worthwhile. We rely on the same approach for our own NPS Benchmarks on the principle that it was the best solution available. But whether it’s SparkScore, or something like it, the writing is on the (internet) wall: real time NPS industry performance tracking is the wave of the future, and not before its time.

A Presidential Race to the bottom of the NPS rankings

info@netpromoter.com — Wed, 23 May 2012 21:12:16 GMT

Perhaps it’s because this is my first opportunity to vote in a US presidential election, I’m fast becoming a political junkie. Hence my excitement to see data on presidential Net Promoter Scores pop up from our friends at BigInsight the other week. I suppose it should come as no surprise in an era of a jaded political public, it’s still eye popping to see such low NPS for the two leading candidates.

According to the data, we have Barack Obama at -80.7% NPS and Mitt Romney at -59.3% NPS. If you are reading this blog and are unfamiliar with the methodology (hope springs eternal that people read this at all), the simplest way of thinking about these numbers is this: virtually (not quite literally) nobody would recommend either of these candidates. Marginally fewer people feel so negative about Mr Romney than they do about Mr Obama. To put in context, these scores are really bad. If they were businesses, we would invite them to speak at our conference just so we could figure out how they stay in business.

But for now, how about some idle speculation as to what this means?

First, we are not loyal to our political alternatives. If these politicians were a business, they would be losing customers so quickly that they would be out of business before you can say hope, change, or “I’m Mitt Romney and I endorse this message”. It means their customers (voters) are prone to switch choices if they get a better offer. Which leads to the next thought:

This is living proof of the importance of relative NPS over absolute NPS, or the “don’t outrun the bear, outrun the other guy” punchline. In the absence of customer choice, the least worst gets the business. -60 and -80 might be a race to the bottom, but a race it nevertheless is. As a side note, industries with such low scores typically yield low participation (unless they are monopolies), and here we have an effective duopoly created by significant barriers to entry. The NPS theory fits just fine.

We should not be surprised then, by low participation rates. Customers don’t want any product in this industry. However, and rather unique to this situation, participation might be driven more by a desire to avoid the other guy winning, so people are more likely to vote against candidates with these scores than for them. Unlike regular goods, there are, after all, significant “externalities” here. You can’t opt out of consumption of the product (government, taxes) even if you can opt out of the selection of the product (voting). You can try, but Wesley Snipes illustrated the challenge with doing that, and he even knows kung fu.

You might expect an industry with such poor existing vendors to attract new entrants. As I suggested, there are significant barriers to entry here, but enough negative NPS can force change. The Greeks, for example, have reacted to very low NPS levels of their politicians (we don’t have the data, but I don’t think I’m far out on a limb) by selecting an alternative form of government where you get to have multiple inconclusive elections, then dig up the old drachma printing presses. We wait with bated breath to see how well that turns out.

But for me, the implications of low NPS are the same for politicians as they are for businesses; the absence of promoters means you need to substitute adverting spend as a means to fill your leaky bucket of enthusiasm. In the last presidential election year, 2008, the two candidates (McCain and Obama) spent $587m on advertising, about half the spend of General Motors, one of the largest advertisers in the world. And GM had revenue to offset that spend; the political candidates have to raise funds like a charity would. GM has notably skipped facebook this year, but our candidates are embracing social media in full force, perhaps thankful that Mark Zuckerberg has not come up with a “dislike” button (creative design submissions welcome). What is the term for the inverse of “viral” anyway? I’m desperate to learn their sparkscores.

2012 will certainly be an interesting year, can’t wait to see the final NPS scores in November. Oh, and who wins the election might be interesting also.

The Ghost of Christmas Yet to Come

info@netpromoter.com — Tue, 13 Mar 2012 21:07:34 GMT

“Before I draw nearer to that stone to which you point,” said Scrooge, “answer me one question. Are these the shadows of the things that will be, or are they shadows of things that may be, only?”

If you care about NPS, you should care about your relative NPS. It’s that time of year – the benchmarks get published and you get a glimpse into your company’s future.

But before I prognosticate, a word on benchmarks. Your own NPS data is almost certainly different than the benchmark data that gets published. There are several reasons for this (all these are real examples)

Sophisticated reasons:

Sample differences, different mix of customers
Independent data collected by a third party might be different than when collected under your brand
Comparing transactional NPS with relationship measurements

Less sophisticated reasons:

You got the formula or question wrong (don’t laugh, it happens more than you might think)
You put the question at the end of the survey (ditto)
You extrapolated a 2% response rate as being accurate
You didn’t measure it at all as you don’t believe in NPS.

Anyway, the benefit of benchmarks are that the application of the same methodology ensures that at least relative if not absolute NPS scores are probably as accurate as you get. And looking at the trend over the years gives a stable picture. Furthermore – and I’m sure you already know this – it’s relative NPS that most accurately predicts industry growth and performance.

But the annual benchmark feast usually involves presenting the bad news to groups of execs whose companies are at the bottom of the list. And that’s where we need to remember the ghost of Christmas Yet to Come. You see, when you read the benchmark reports you are actually renting a crystal ball. OK, a crystal ball with limited capabilities; you can’t take a sneak peak at the eventual winner of the republican primaries or figure out who will pick up Peyton Manning. But you can predict the economic future of the companies on the list. Not at the micro level, where a few % points separate companies, but at the macro level – a company like USAA will almost certainly outperform… well, take a look.

But Scrooge had it right. It’s not preordained. The future can be changed to improve the outcome. Take a look at the data, and if you aren’t in the #1 slot, play the Ghost of Christmas Yet to Come at your firm and persuade your leadership team to change the future.

Is social influence the new black?

info@netpromoter.com — Tue, 15 Nov 2011 20:31:03 GMT

I recently saw a presentation from ad:tech San Francisco in which the following phrase was used: "Recommendation is the new advertising."

The substantiation for this claim was that 90% of online consumers trust recommendations from people they know more than any other source. This of course starts one to wonder whether advertisers have entered the world of recommendation, in which they can try to influence that recommendation to achieve business benefit. In considering this trend, I've also noticed that the window from Buy to Advocate in most of the advertising models shows this cycle as very short – meaning once someone makes the decision to buy, they immediately become an advocate. This may make for an interesting model, but we all know what happens in between buy and advocate: the customer experiences a company’s brand, product, services, support, etc. And along the way, perceptions are created that either serve to counter that initial buy decision or enhance it.

True recommendation comes from a positive feeling created through a multitude of experiences – it is a natural extension of these experiences, not a manipulation. Understanding these experiences – both online and offline – is still vital to any long-term customer strategy. As we know from word-of-mouth analysis, the value of a Promoter is both their lifetime purchase behavior in combination with their positive referral behavior. The combination of the two yields a total customer's worth. And we also know that the value of that referral behavior has exponentially changed through social engagement. Promoters are referring at greater rates across industries. Undeniably, social influence is growing.

Social media is opening new, unexplored avenues for influence, and permitting promoters to reach a broader audience than ever before. The social web is a critical channel for understanding the experiences that delight promoters (and mobilize them), gaining strategic insight about core issues being voiced by the market, understanding the influence of both active promoters as well as detractors, and prioritizing action accordingly. So as you look at your social media strategy, recognize that the total customer experience is a cumulative activity which manifests itself in positive and negative sentiment about your brand, product quality, and value. This sentiment not so surprisingly can translate to a form of social web "promoters" and social web "detractors" which forms the basis for something we call Social NPS. How Social NPS aligns or calibrates to your structured NPS will be the topic of upcoming thought leadership and technology innovation for us. I look forward to your thoughts, comments, and questions.

The Fourth Law: Understand how to Improve your Score

info@netpromoter.com — Tue, 13 Sep 2011 17:59:18 GMT

"Reality is that which, when you stop believing in it, doesn't go away."- Philip K. Dick

Economists have micro economics and macro economics. Net Promoter leaders have micro NPS process and macro NPS process.

Micro processes, or operational processes are all about closing the loop, activating promoters – they are focused on the individual, customer or business. It’s customer experience improvement based on the “don’t just stand there, do something” school of management – and it works. To an extent.

You see, customers love companies that show commitment. Remember the old adage that a well executed service recovery actually improves the customer perception of your business? Well, it works to the extent that customers don’t get exhausted by a company constantly executing flawless recovery of errors that shouldn’t have happened in the first place. After a while, they just want to see the “Maytag repair man” strategy (the guy who has no real job to do because apparently the hardware never breaks) and not the “we try harder” approach. They want Yoda – “do, or do not… there is no try.”

Companies that focus entirely on tactical closed loop execution for detractor recovery risk making the same error in judgment that the lookout on the HMS Titanic made when he bragged “just wait until you see the turning circle on this baby at full speed”. Tactical execution just isn’t enough.

So companies need to figure out the macro process; how to identify the major shifts in their business that will be required in order to generate high levels of promoters. They need analytics, they need insight and they need data. They need root cause.

It’s a common misconception that NPS philosophy is deeply ambivalent around the issue of data analysis and diagnostics. While there are some - very few in my experience – companies who never go beyond asking one or two questions of their customers, the vast majority of NPS practitioners develop techniques for mining diagnostic information in one way or another. These tools range from the traditional - a few insightful diagnostic questions embedded in a survey, to the absurd - dozens of complex questions that look more like a college entry exam, to the edgy - data mining of social media data to determine trends and meaning.

As a technology company we have our own preferred techniques of course, and we think you can get quite a lot for quite a little (burden on your customers). But the big point here is that you need to understand what you will do to change the existing dynamic of your business. And there is an art to this; attitudinal data doesn't lend itself to easy interpretation as, say, financial data sometimes does. It feels closer to "reading the tealeaves" rather than analyzing data and goes some way to explaining why there is a market research industry in the first place.

I must have witnessed over 100 strategy sessions around action planning. The only observation I can make with certainty is this: any strategic insight with a sporting chance of changing your enterprise is better than relying entirely on closed loop, or micro NPS techniques exclusively. You really need to know if there are "Detractors, Dead Ahead!"

The Third Law: Benchmark Against the Competition

info@netpromoter.com — Mon, 22 Aug 2011 10:47:12 GMT

"All the women are strong, all the men are good looking, and all the children are above average."

Garrison Keillor, Lake Wobegone Days

Most performance measure in business are relative. Market share, growth rates, earnings. We benchmark against others all the time. But with NPS, many companies don't really know where they stand, and where they stand could be the ultimate measure of performance.

Several years ago, Bain and Company did some great research to understand how profit pools got divided up by industry, and how NPS played a role in that. They found that every industry had a “bright line”, an NPS score which separated winners from the pack, and that those who entered the winners circle (so to speak) enjoyed a disproportionate share of the profits in their industry. This shouldn't surprise anyone; in most industries profits are not linearly correlated to size or even market share. It's not a fair game - it turns out it's rigged in favor of NPS leaders.

What's really interesting to me, however, was that the bright line that separated the leaders was not uniform across all industries or geographies. Rather, it varied significantly by industry. This should come as no surprise: we usually see that Business to Business NPS results are often significantly lower and less variable than Business to Consumer. We also know that customers compare and formulate perspectives based on their expectations, which can vary according to prior experience and price. We teach customers what to expect in our industry, then we give them relative pricing to help set their expectations around our role as discounters or premium players.

Companies spend precious little time thinking about issues of comparable performance, which seems odd given its importance. After all, knowing what your score is only matters if you have some sense as to what it should be. This disconnect ripples through the corporation in multiple ways. Companies without a clear sense of NPS “situational awareness” will struggle to set appropriate goals, compensation metrics or process. I'd even go as far as to say that measuring NPS without a clear sense of target is worse than not measuring at all.

Part of the problem is the challenge around getting good benchmarks. We do publish benchmark data, so for those industries we cover, you can get an accurate sense of where you should be (and an independent view of where you are trending). But that data will never be detailed enough for some, so they often find themselves doing specific benchmarking studies. Others tell me that they make a benchmark of the data that is published in the book. While I agree it's aspirational to try and reach USAA's lofty NPS goals, it's probably neither feasible nor even desirable, assuming you are not a major insurance provider. Nor is it practical to simply target the top quartile and straight line trend your own NPS towards it as a goal setting technique. You are pretty much assured of falling short initially as NPS just doesn't improve in a straight line.

If you are determined to avoid detailed target setting and outside benchmarks, there is still hope. Stack ranked employee, or region or segment performance provides you with the opportunity to challenge the lower performing segments to raise their game to the average. That alone improves your score and starts moving you in the right direction; although it doesn't help you understand if your entire organization is on track for financial success.

One other thought. Absolute NPS does matter in one important way. Industries with low "threshold NPS" - a low target that gets you in the winner's circle - have fewer absolute promoters than those where only a high score wins. The absolute number of promoters can be thought of as word of mouth capacity, so their absence reduces the overall positive effect for industry participants and the industry in general. By all means, out-run the other guy for success, but to get real organic growth you still need an army of promoters.

Part Two: You DO NOT talk about NPS (The Five Laws of NPS)

info@netpromoter.com — Wed, 10 Aug 2011 15:57:36 GMT

“The second rule of Fight Club is: you DO NOT talk about Fight Club!” - Tyler Durden, Fight Club

The Second Law of Net Promoter is “You MUST talk about NPS!”

Well, maybe not, but not far off. Actually, it’s more like “you must act immediately on customer feedback”. This is a little unkind because everyone acts, to some degree, on customer feedback. And “immediately” is quite subjective, isn’t it? But it's the spirit of the second law that we should focus on.

If you asked people what they least liked about taking surveys, they might come up with:

“Too long. I successfully cultivated a small stalactite cave while filling in the answers”
“Stupid questions they should know the answer to already. Did I stay in a hotel that they are asking me to rate? If I didn’t it was an amazing lucky guess on their part”

But, in the context of this blog:

“What’s the point?”

Sure, we say we are grateful for their feedback. But we don’t reciprocate. Worse, we have trained people to expect nothing, so why should they invest in us? In ancient times, before 140 character limits meant something to a writer (yes I’m that old) researchers would gather data by making lots of phone calls. Consumers would welcome these calls, as this coincided with a low point in domestic culinary expertise and the decline of quality TV journalism, so having your dinner or TV show interrupted by a stranger was a welcome break. How the hours would fly by, helping the hapless researcher (for it is they) understand exactly why we could use a firmer door latch on our Frigidaire Rollermatic. We would end the call confident that our opinions would be represented in the form of a detailed annual report that, in a pinnacle of decisive momentum, the CEO of the firm would pound the table demanding action or heads would roll!

This never happened.

In reality, we have systematized the lack of serious action around customer feedback. Not through deliberate neglect, although I’m sure there are cases where this happens, but partly through process, and partly through the genuine difficulty in making the kind of hard decisions customer feedback entails. The process problem stemmed from the original, research driven goal of voice of the customer data. Even in a good research process, the transmission mechanism from feedback to action is too slow and disconnected for your average customer to perceive. In an era where systems respond within minutes, or days, these processes often are simply too slow. Watching the Google+ beta in action show us just how incredibly responsive a company can be to making changes in their product in response to feedback – in close to real time. That’s the kind of bar that we have trained social media era customers to expect.

Data gathering and analysis – along with the insights that come out of it – is well designed to turn a big ship slowly in very deliberate and well reasoned moves. Customers want instant gratification.

The good news is this: customers are still so impressed with a company that indicates any responsiveness to their survey input that they will forgive much of the lack of content in the response. In other words, you can still get points for trying! Of course, this is not my prescription. If you don't have a plan to respond rapidly - hours or days, not months - with some kind of indication of learning, you are probably best not asking for feedback at all. But absent a good answer, at least provide evidence that you are listening. It's respectful at the very least.

This will change. As systems become more responsive, expectations will adjust. The other day, I sent an enquiry for a demo to salesforce.com. Now, we are already a customer, so this should have set off a whole series of interesting actions - and it did. Within an hour I had a voicemail and email from a sales rep making sure I had what I needed. If companies can be that responsive to a sales opportunity, we had all better be ready to be that responsive to feedback.

P.S. note from the year 2015 to myself in 2011: being hyper-vigilant and hyper-responsive to tweets but un-responsive to solicited feedback didn't sit well with customers in the long run.

Great Expectations

info@netpromoter.com — Thu, 21 Jul 2011 11:20:41 GMT

So, Los Angeles survived Carmageddon. Unworthy of any movie plot where LA is usually reserved for the most heinous destruction, (does that say something when those who live there constantly make movies destroying their city?) the 405 freeway opened ahead of schedule. Or ahead of expectations, at least.

It’s tempting fate when so many civic projects go so horribly wrong to ask the question, but have we become a nation of sandbaggers?

My flight gets in on time. We left the gate 20 minutes late. I guess we have the pilot, Captain Dan Dare, to thank for this heroic act. Did he go to the mat with air traffic control to get us a faster route? You can imagine the cockpit conversations:

Co-Pilot: But Dan, think of the fuel burn! Don’t you realize that Jet-A fuel is up 40% in the last year? Think of the profitability per passenger seat, for God’s sake man!

Dan Dare: Dammit, Mike, we can’t let these customers down. The wheels of commerce; families ripped asunder; just think of our NPS! Push the throttle to 11 and let’s get them there on schedule…

When “on time arrival” became an important metric, the airlines simply added time to the schedule so in-bounds performance became an early arrival. They sandbagged. Does anyone think that the contractors on the 405 were shocked and surprised by how well it all went? It’s safe to say that their plan called for the project to be complete well ahead of schedule. Hitting the schedule would have been a failure!

If customer experience is all about expectations, surely this is the way to go. Lowered customer expectations take pressure of the entire system and have the effect of claiming victory where average performance is all that happens. What’s wrong with that?

In the competitive market space, it’s a dangerous habit. The market has a tendency of revising expectations suddenly and radically, often through new entrants. Establishing a low bar creates a culture of mediocrity and comfort. In an environment where, as Andy Grove* famously put it, “only the paranoid survive”, this seems a high risk approach.

So, by all means, manage customer expectations. Buy yourself some breathing room. But don’t lose sight of the real nature of performance and become consumers of your own mythology. Set the internal metrics higher, expect great performance. We should see a lot more projects completed ahead of schedule.

*Andy Grove is a Hungarian-born American businessman, engineer, author and a pioneer in the semi-conductor industry. In 1968, he co-founded Intel Corporation. During his tenure as CEO, Grove oversaw an increase in Intel's stock value by 2,400%, making it one of the world's most valuable companies. As a result of his work at Intel, and from his books and professional articles, Grove has had a considerable influence on the management of modern electronics manufacturing industries worldwide. He has been called the "guy who drove the growth phase" of Silicon Valley.

Five is Right Out* – Part One

info@netpromoter.com — Mon, 18 Jul 2011 13:30:16 GMT

“Three shall be the number thou shalt count, and the number of the counting shall be three. Four shalt thou not count, neither count thou two, excepting that thou then proceed to three. Five is right out.”

Instructions for the Holy Hand Grenade of Antioch - Monty Python*

We all spend a lot of time dealing with the sophistication of Net Promoter but it’s worth, on occasion, reminding ourselves of the merits of getting the basics right.

With this in mind, and with all humility, I offer my Five Laws of Net Promoter as a starting point for discussion. If we need a simple compass to program success, I hope this may help us stay on the right track. Or, you may decide that “five is right out”.

The First Law of Net Promoter: You need to know your score, and it needs to be trustworthy
The Second Law of Net Promoter: You must act immediately on customer feedback
The Third Law of Net Promoter: You need to know how you rank against others
The Fourth Law of Net Promoter: You need to understand what to do to improve your score
The Fifth Law of Net Promoter: Your organization needs to be accountable for their score and improving it

Well, there you have it. Simple enough?

Let’s start today with The First Law of Net Promoter...

I will bet that any competitive manager who reads just about any article on NPS will have this question pop into their head: what’s our score? It’s part of our makeup to want to keep score and if you buy into the potential value of NPS, you are drawn to this question like an accountant to a GAAP** statement. For many companies this is where the pilgrimage starts and, for a sad few, where it ends. Because this deceptively simple first law is a bear to follow if you are really ready to trust your data.

Trustworthiness defies a numerical definition. Response rates don’t get you there: many consumer packaged goods companies make major decisions on the basis of 10 people in a focus group. If 9 out of 10 people in your largest account respond but the CEO doesn’t, you may still consider the data untrustworthy. And for skeptics, no customer data is good enough for decision making.

No, it’s a subjective measure. Your data is trustworthy when you are willing to make major decisions based upon it. And only you, or your management team, can figure out exactly where the bar is set. For some, the plural of anecdote is data – a handful of customer comments is sufficiently affirmative to drive a revolution in their business. For others, years of statistically sound data won’t get them there.

We do know that corporate data is a quagmire. Large sophisticated corporations whose CRM systems are chock full of inaccurate or outdated information and for whom customer profitability financials are out of sight – these are the rules, not the exceptions. 30 years of information technology have left us often more confused than when we started. For these companies, their Net Promoter data might, in fact, be the only data they can trust at all. At least they know there is a human being at the other end of the survey, and someone who cares enough about them to provide an opinion. I’ll take that over a GAAP statement any day.

So those are my thoughts on the First Law. Laws Two to Five to follow soon!

*”Five is Right Out” is a quote taken from Monty Python and The Holy Grail, a British comedy film from 1975 that takes an irreverent look at King Arthur and the Knights of the Round Table. The quote refers to the usage of the Holy Hand Grenade of Antioch. To use the grenade, you counted to three, before throwing it. Five was right out – as in too many numbers, too long a count. Other highlights of the film include the coconut-shell horses, the black knight, the knights of Ni and their fondness for shrubberies.

**GAAP: Generally Accepted Accounting Principles refers to the principles used in accounts throughout the U.S. The principles allow a fairer and simpler comparison between the financial positions of different companies. Several organizations contribute to the development of GAAP, most notably the Financial Accounting Standards Board. Though GAAP is not legally binding in itself, the Securities and Exchange Commission requires that all publicly-traded companies follow the principles.

Konichi-wa, and would you like a bowl of Miso with your cash withdrawal?

info@netpromoter.com — Tue, 26 Apr 2011 12:38:56 GMT

I wrote this a few weeks ago, but with the events in Japan it just didn’t seem right talking about customer experience there when there are so many, more important, issues facing them. Revisiting it, however, I’m reminded that the quirky nature of business in Japan (to western eyes) is one of the most endearing aspects of the country for me. So we publish this blog with all possible respect to our friends in Japan and our best wishes for their recovery from this tragedy.

Time-warp back to 1990…walk into a bank in Tokyo, hoping to get cash, and your experience is something like this:

Stand in line.
Greet the teller.
Fill in a form.
Watch (and you can watch, it’s all in plain sight) as no fewer than 5 different employees move your paperwork around the back office.
Enjoy a steaming bowl of Miso. Ok, so this part isn’t true, but you do have time.
Your “documents” arrive back at the teller who will hand you your cash.
Everyone will bow profusely. They will be extremely polite.

They will, on short, demonstrate exemplary customer experience, Japan style, circa 1990. You will be a promoter.

Then something disruptive happens. The ATM arrives.

When you think about it, the ATM has two basic advantages:

It’s fast.
It’s available 24-7.

The Japanese might argue that having a digital version of a “cash-okemon” character based on a cute 10,000 yen bill, bowing digitally and singing the company song, might also be a plus. I beg to differ.

So when the ATM was introduced in Japan, in the 1990s, naturally the retail banking industry saw this as a huge opportunity for customer experience innovation. Customer self service! Reduced cost, streamlined process and a sharp increase in customer delight, all based on a simple proven technology and proven business model. They instantly transformed their industry…

Oh no, they didn’t!

They put the ATMs inside the bank, effectively subjecting them to bank opening hours (hint: the Japanese banks did not have a liberated view on banking hours) so effectively neutralized advantage #2

They put bank staff in front of the ATM to help customers, and protect them from a dangerous and difficult encounter with a rabid touch screen, effectively neutralizing advantage #1

Of course this is old news today but illustrates the fact that technology alone can’t convey advantage in customer experience; culture rules supreme. Ask Japanese bank employees why they do it this way (I did at the time); the answer was not what I expected. No stubborn notion of change resistance for the sake of it. No job protection (no need, banks never let anyone go anyway but that’s another story). Nope, these folks didn’t capitalize on the technology because they believed, in their hearts, that good customer service was all about what we, today, would recognize as lousy customer service. And worse, if asked, their customers would agree. Right until someone offered them the alternative.

Is there, you might be thinking, a moral to this tale? Or even, heaven forbid, some lesson about Net Promoter?

Innovations in technology lose out to culture.
Stubborn change resistance is easy to overcome compared to moving people’s beliefs, even if they are, as it turns out, misguided.
New entrants (in Japan it was the US banks) have an advantage over incumbents at trying new approaches for these reasons.
Customers don’t always tell you they are about to mass migrate because they haven’t yet experienced a radically superior experience. Their expectations are fixed in the short run.
Innovations in Net Promoter philosophy tend to play out exactly as above in established above.

Ganbatte kudasai!

Net Promoter Predictions for 2011: Part 3

info@netpromoter.com — Fri, 07 Jan 2011 12:38:50 GMT

"The Americans have need of the telephone, but we do not. We have plenty of messenger boys,"

Sir William Henry Preece (1834-1913)*

You will not have seen these last two predicitions anywhere else…or, at least, I predict that you haven’t!

5. Rethinking Customer Rankings: Big Brother has a Product Endorsement for you!

Customer rankings may have been pioneered by the likes of Amazon, but they have become pretty mainstream. Entire sites (think Tripadvisor) have built their business around the notion of an open pulpit for customers to opine on products, services, hotels - you name it. And it’s valuable stuff. You can’t help but be drawn to the advocacy – or lack thereof – that comes attached. We have learned to live with the natural limitations of the medium – significant sample bias for example – because it’s just so authentic, and we do love a strongly argued opinion. On just about anything.

Right now, you can read 101 customer reviews on Amazon of a PNY 1GB SODIMM Memory Module; yes, an add on memory chip for your computer. You would think this would be a pretty binary post; it either works or doesn’t. But you would be very wrong. There is alot to comment on (and most of it very positive, by the way).

But the novelty can wear off? How useful is this information?

When it comes to matters of personal preference, not very. Take hotels for example; a popular hotel depends a lot on your budget and definition of “luxury”. To some, a cheap clean budget hotel is going to be #1, for others it’s nothing short of the Ritz Carlton that will do. Both customers could be right, but both could be wrong in the context of what makes the best choice for me.

What we need is published customer feedback in the context of our own personal tastes, and the good news – if you can call it that – is that we are furiously populating the web with information about our personal tastes. Social media sites already have enough information about our tastes and friends to be able to filter details about products and services and provide us with a customer ranking from people just like us. Or at least what we declare to Facebook is “just like us”. Expect highly personalized guidance on purchasing as commerce guidance, based on customer reference, has the potential to replace significant advertising resources on the web.

6. As Economies start to Recover, Business will risk Forgetting the Lessons of Customer Loyalty in a Recession.

Tough times have a habit of getting you to focus on basics. If customer acquisition is hard, companies naturally focus on customer retention. Does that mean that, with economic recovery a possibility, acquisition will become easier? If it does, will we stop worrying about retention?

At a macro level, it seems unlikely that we will return to the “go-go” acquisition years of the 90s (the Chinese market being an exception). But for many individual firms, a strong rebound in business is likely to take management’s eye off the retention ball. Loyalty is a longer term leading indicator; if short term business is good, it’s human nature to shorten horizons. At the level of an individual company, customer loyalty has a habit of becoming counter-cyclical with the economy.

On the other hand, we are experiencing a generation of managers who lived through “the great recession”. There is every reason for them to remember the lessons learned; to use better economic circumstances to build a solid foundation for good profits. An improving economy is exactly the time to create loyal customers.

Best of luck with your Customer Experience Program in 2011!

* Sir William Henry Preece (1834-1913) was a Welsh electrical engineer and inventor. Preece was an empiricist, relying on experiments and physical reasoning in his life’s work.Upon his retirement from the British Post Office in 1899, he was made a Knight Commander of the Order of the Bath (KCB).

Net Promoter Predictions for 2011: Part 2

info@netpromoter.com — Thu, 30 Dec 2010 05:15:07 GMT

"Who the hell wants to hear actors talk?

H.M. Warner, Warner Bros.,1927

Continuing my predictions for 2011, with the general theme of “hopefully you haven’t heard this one before”.

Number 3: The (IT) Empire Strikes Back

Information technologies are a big part of the success story behind voice of the customer programs in general. Trying to engage thousands of employees and hundreds of thousands of customers (in any kind of coordinated exercise) is generally considered to be, first and foremost, an exercise in technology enablement. Net Promoter as a discipline puts the Information Technology cat amongst the data pigeons by suggesting that everyone on the front line with the customer will be getting context specific real time reporting and closed loop support. And that’s just for starters.

Net Promoter data will create a major information resource for corporations that provides segmented attitudinal data in a scale and detail that companies have never had before. Heck, this could be the best database the company has; after all, unlike your CRM database, you know these customers exist as they replied to your survey! Data mining will suddenly seem very exciting, as will the opportunity to finally connect all those CRM data sources to your NPS data to our social media data etc etc.

Of course, all of this is non-trivial, and a lot of it will require IT assets from within the firm that have previously been out of the loop. NPS program leaders who effectively outsourced IT to their Software-as-a-Service vendors in the past will find they need a lot more internal support if they are going to make all these systems work together. And, with perfect timing, IT organizations are becoming increasingly aware that those “in the cloud” systems that their internal clients are buying outside their controls are becoming part of the information lifeblood of the business.

It’s a marriage for sure. Shotguns optional.

If you are running your Net Promoter program, expect a lot more IT department dependencies, involvement and complexity as your program becomes a mainstream information systems initiative.

Number 4: Some things won't happen

It should, in theory, be easier to predict something won’t happen than predict it will. After all, there are a finite series of things that will occur, and an infinite list of those that won’t. But there is something to learn from looking at good ideas that just don’t seem to gain traction so I’m picking a couple.

Employee Promoter Score is my first. Don’t get me wrong, I’m all in favor of employee loyalty, and just about every program should care about employee adoption of NPS. But formal employee loyalty process stays in the sidelines for most companies as they either go through the motions, or just skip the idea altogether. I know I’m going to get upset emails telling me about how great your employee loyalty program is, but all I can say is “well done, thanks for sticking with it”. My bet is you are a minority.

Equally egregious will be the lack of investment in reference programs. I love reference programs; I keep thinking that every b2b firm should have a sophisticated approach that takes known promoters and funnels them into a database which then… well, you probably get the picture. Some of the case studies are exceptional. People won’t fund it sufficiently.

Please feel free to prove me wrong on both these.