Net Promoter Community

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.

A math quiz for my 11 year old son:

It is 419 miles from San Francisco airport to Las Vegas airport. And 2 miles from Las Vegas airport, terminal 2, to your hotel room. If the average speed of a Boeing 737 is 560 mph in cruise, and your average walking speed is 3 mph, how long will the total journey take?

Of course, it’s a trick question. The answer is, ALL NIGHT.

If you could walk from the terminal at Las Vegas to your hotel room, without being roadkill, it would only take you 40 minutes. Of course, you can’t do that. The airport planners, car rental companies and hotels work to ensure that, when Southwest airlines proudly announces that “the safest part of your journey is over” as they land, they could also add “the shortest part of your journey is over”.

Las Vegas, like many airports, has constructed a “consolidated rental car facility” which they proudly announced was “for your convenience”. This is great news, as I had been thinking that having the car rental facility within a short walk of the gate had been very inconvenient in the past. Now it’s located in a neighboring state, Kentucky, and is accessible by a bus ride (see prior postings on airport buses). By the time we arrived, Hertz was doing a cracking trade (at 11:30pm), and required 30 minutes of waiting time before service, during which they processed five other customers at their 3 desks. It’s hard to figure out what people are doing in these situations, but from the safety of the queue a well trained eye can hazard a guess:

The nice elderly couple wearing the “Visit Wisconsin” sweatshirt was negotiating a hostile takeover of Hertz Corporation;

The very young man whose brand of car should have been “Fisher Price” was clearly a mathematics genius building a simulation of his journey to optimize the returned fuel level under multiple traffic scenarios;

The couple at the front of the line was renting a fleet of midsize cars, one at a time. Upholstery choices seemed important to them.

Or something along those lines...

The hotel was not much better. In Vegas, it’s standard practice to provide a DNA scan as part of the check-in procedure, presumably so they can track you down if you dispute the Pringles weight activated sensor in your mini-bar. And yes, I’m still sensitive about the jury’s decision against me on that one last time.

But why is it so hard? What’s slowing us down?

Choice is one factor, information and trust is another.

Southwest Airlines really does understand this. They don’t have complicated offerings. I never have to figure out if I’m flying on a “J” class of ticket so I can understand my upgrade options – although having said that, I don’t even know why I’m asking, I already know the answer. They have a simple solution to a simple problem, moving people safely, cheaply and quickly from one location to another.

I can check in online. Boarding is simple and fast. They will even sell me a place at the front of the line – Business Select, although one such passenger arrived onboard to be shocked by the lack of “first class seats.”

“All seats are First Class” said the flight attendant. Beautiful.

For a de-humanizing process, i.e. flying, Southwest makes it feel, well, almost human and doesn’t make you feel dumb.

Car rental, by comparison, has too much choice, too little information, and too little trust. The eager renter faces difficult options: what class of car do you want? Surely not the same class you selected when you booked online! Is this your current address? Or is, by chance, your address the same address that you entered in your booking under the field “address”? We need to know!

Now for the tricky part. Her face a mask of concern, the agent informs me that I have insurance options. She cryptically adds “in case something goes wrong”. The insurance choices carry names that everyone would instantly recognize if they had a 30-year career in the insurance industry: Loss Damage Waiver for example. And there is a handy, laminated sheet to sub-reference the necessary legal clauses. To reinforce the serious nature of the contract you are entering into, the wall behind the agent has a section devoted to liabilities, and, of course, fuel choices. As usual, I declined the recommendation to take out short term “put” options on an exchange-traded-fund-tracking-light-brent-crude-oil. But keep those Black-Scholes* calculators handy kids!

The plethora of complicated options stems from the complexity of the legal transaction, coupled with the desire of the company to up sell the buyer. But it’s a mess. BMW only offers 2-3 choices of model for a $60k automobile, why do we need to make so many choices for a $100 rental? Choice has value in customer experience, but needs to be handled in a more effective fashion. Simple communication? Online choices to streamline “real time” processes?

Simplicity often wins the customer experience battle. Simple is fast. Simple is clear. Keeping it simple isn’t stupid, it’s hard work, but worth it. Over the last 30 years simple solutions like Southwest, Apple’s iPad, Google or Zappos have been winning the customer experience battle. As consumers, we are trained to believe that complexity is a cover story for bad profits – and often it is.

As I unlocked my rental car, the fellow next to me was taking photos of his rental choice, presumably to document the condition of the car when he took the wheel. He got the message.

*The Black–Scholes model is a mathematical model of a financial market containing certain derivative investment instruments.

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:

1. It’s fast.
2. 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?

1. Innovations in technology lose out to culture.
2. Stubborn change resistance is easy to overcome compared to moving people’s beliefs, even if they are, as it turns out, misguided.
3. New entrants (in Japan it was the US banks) have an advantage over incumbents at trying new approaches for these reasons.
4. 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.
5. Innovations in Net Promoter philosophy tend to play out exactly as above in established above.

Ganbatte kudasai!

You never get a second chance to make a first impression. If you are in the hospitality business, you might think that the first impression is at reception. Or perhaps you consider the visual impact of the hotel entrance as a starting point.

But in many instances, and to your eternal shame, it’s the shuttle bus.

For airport hotels, the shuttle bus is the transition from the tender mercies of the airport/carrier system into the care of the hotel. The airport doesn’t run the shuttle bus, the hotel does. And yet, the experience is so incredibly varied for such a simple idea. You just need to get me the last mile (or perhaps a couple) in safety, comfort and yes, a reasonable timeframe. Doesn’t seem too much to ask, does it?

Airport hotel customers are professionals. Think George Clooney in Up In the Air. They have high airline status so they can check in quickly. They fold their clothes with military precision so they can pack for a week’s travel and 3 climates in a rolling-cabin-case, all to save a few minutes in baggage claim (or a few hours depending on your luck). They are Hertz #1 club members. In short, they have business travel down to a fine art, all with the goal of minimizing down time. They don’t plan on spending more time getting from the terminal to the hotel than it took to get from New York to Atlanta.

Enter the hotel shuttle bus…but I’m getting ahead of myself. First, we need to think about airport hotels.

The whole point of the airport hotel is to provide quick and easy access to and from the airport. We’re not staying there for the luxury or breakfast-buffet options. If marketed as an “Airport Hotel” we may reasonably expect it to have fairly close proximity to the airport. Look – I can see it from the airport exit! Even better, from the runway as we taxi! It’s THAT close, I can almost touch it!

However, two universal rules always seem to apply to airport hotels.

1. However physically close, there must be no practical way of walking to the hotel. And if this rule is shamefully broken, there must be no smooth path to enable rolling luggage. Even Sherpa Tensing would give up on traversing the freeway/parking lots/swamp/minefield (mountain?!) that lies between the airport and the airport hotels.
2. To get there, you must take the shuttle bus. The local cab drivers, even if willing to break the rules and take such a short fare – “I waited 20 minutes to get to the front of the taxi rank – for THIS?” – must be coerced into refusing the journey. Some system of collusive rules must conspire to prevent any other option.

So that leaves us with the bus. Shuttle bus schedules operate in a system that has been modelled by operational research experts. The colder the outside temperature, the less frequent the cycle. Apparently, buses must slow down with cold weather. This ensures you only wait a long time when it’s too cold to wait a short time.

The routes are cleverly designed so that the bus will make multiple hotel stops and – here’s the sophisticated bit – will always reach your hotel last. This is designed to present you with all the alternative forms of accommodation that you declined because it was too expensive for your travel policy. I can now perform flash-card recognition of every entrance to Chicago O’Hare hotels in less than 15 seconds.

The bus must be driven either very slowly, à la Mr Magoo, or in the style of Mario Andretti, presumably to make up the time you spent waiting for the bus in the first place. There will be no seatbelts.

You probably have your own favorites. Mine is the “Hotel Hopper” system. Devised for London Heathrow Airport hotels, the transportation officer responsible has obviously never set foot in an airport, on a plane – let alone a bus! Is this the same Brit who, 100 years earlier, divided India from Pakistan without having been to India?

In a transport system that can whisk you to central London in 15 minutes on the Express train, it can take 45 minutes to reach a hotel visible from the runway. And you pay for the privilege because the buses seem to be run by the same people who offer double-decker bus tours of the city. Apparently, visiting 10 other hotels en route is worth a few quid.

Why should you care? If you run one of these hotels, your customer arrives cranky and frustrated. That’s the first customer experience they have of your brand. Aren’t you missing an opportunity?

"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).

“It would appear that we have reached the limits of what it is possible to achieve with computer technology, although one should be careful with such statements, as they tend to sound pretty silly in 5 years”
John Von Neumann (1903 – 1957)*

‘Tis the season to be making predictions, and I’m not going to miss out on the annual opportunity to be proven wrong and demonstrate the world’s unpredictability. As smarter people than I have already made most of the well thought-through predictions, I’m going to try a different tack; my challenge is to come up with predictions you have not already thought of, or at least not heard somewhere else. This of course, increases the probability that they are simply wrong. Anyway, there are seven of them… as always your feedback is welcome! Here are the first 2...'

#1 Net Promoter Fusion

This is a trend that I believe is set to accelerate in 2011. It seems too self serving to simply say that Net Promoter will continue to gain adoption in 2011 (which it will) so perhaps a more interesting observation might be that it won’t be as distinctly “Net Promoter” as it was in the past. I believe that more companies will claim to be adopting Net Promoter, but when we look at their programs they may have little in common with prior years. This is not your father’s Net Promoter.

This is in part because NPS has always been a big tent. Beyond the standard calculation, and the notion of promoters, passives and detractors, there isn’t much else that is absolutely “standard”. Lots of companies run their Net Promoter programs with lengthy questionnaires that look more like traditional programs; adopt focus groups in support of their understanding of loyalty and otherwise do stuff that they have been doing for years without the benefit of the moniker.

On the other hand, some of our favorite staples of Net Promoter Discipline are well practiced in programs that don’t care about NPS. Closed loop action planning, verbatim analysis, widespread distribution of data to front line employees etc. can still be executed with the most arcane and compounded set of loyalty metrics.

During 2011, companies who claim to focus on NPS may find themselves with more in common with those who don’t, than with those who claim a similar methodological choice. So what? Well, it’s a timely reminder that companies are wise to stay clear of perceived methodological purity solely in the name of a flavor of customer loyalty program. Get the basic principles established and stay true to them, but don’t be worried about being wedded to chapter and verse.

#2 The Social Media Sandbox

The majority of industry pundits point to the inevitability of social media as a lynchpin of your customer experience program. And certainly there are lots of firms willing to sell you solutions – many quite useful – to the “opportunity” presented by twitter, facebook and their ilk. But in 2011, significant corporations will continue to treat social media as a sandbox; an opportunity to experiment and learn in an (ideally) fairly safe environment. In short, we will make less progress than we imagine.

The hypothesis that social media is primetime for customer experience has lots of supporters and few willing to disagree. If you are selling solutions, your incentive to push the idea as mainstream is obvious, but lots of companies desire the publicity from being on the cutting edge – or at least making sure they are not seen as social media luddites. So a stream of exciting ideas and case studies is virtually guaranteed. Don’t read that as an indication that the kinks are worked out.

We can expect a few, well publicized examples of major brands engaged in sharp swerves, if not u-turns, based on micro-communities of vocal social media users. These groups are now quite powerful relative to their size and, once empowered, are hard to ignore. Only time will tell if the choices companies make will be the right ones. We can also expect companies to experiment with social media favoritism: you might get a more rapid response to a problem by tweeting than calling the established 1-800 number. The consequences of such service bias are hard to estimate. 15 years of call avoidance efforts around use of the internet might look silly if we just found a new route for creating calls, and many firms will be hoping that their customers don’t catch on to the notion that going through the support operation is less effective than micro-blogging your unhappiness.

What is a well intentioned customer experience leader to do? By all means join the experiment, try a few simple ideas and see what you learn. But it’s pretty tempting to let others do the heavy lifting and make the mistakes. 2011 might be a year to watch and learn.

* John von Neumann (1903 – 1957) was a Hungarian-born American mathematician who made major contributions to a vast range of fields, including set theory, functional analysis, quantum mechanics, ergodic theory, continuous geometry, economics and game theory, computer science, numerical analysis, and statistics, as well as many other mathematical fields. He is generally regarded as one of the greatest mathematicians in modern history.

If you, like me, track companies who publish their NPS you probably are developing an inferiority complex about now. Every day I log in to a constant stream of announcements about companies posting 50, 60, even 90% NPS. Precious few of these fall in the camp of public companies who are informing the street - the majority of comments seem to come from either smaller companies, or large companies through "unofficial" channels.

Oh, and there are fair number of "benchmarks" and "awards" starting to come out from companies who sell services into the NPS space. After all, nothing picks up search engine hits better than "Large Company X gets our award for the highest NPS of 70% in their industry!" Corporate PR departments are not in a rush to disclaim such announcements, and these scorecard publishers are wisely more careful about publishing the bottom rung of their study.

So there you are, running your NPS program and sweating to create a 20% NPS. Your boss now wants to know why everyone else is at 50. You must be doing something seriously wrong! Or maybe not.

We like to think we know a thing or two about NPS scores. With apologies for the risk of hubris, we don't see the evidence, at a market level that these very high numbers are typical, nor do we see the anecdotal evidence amongst the large numbers of companies we discuss NPS with each year. So what gives?

Pants on Fire!

It's generally thought that Charles Wentworth Dike, who died in 1911, coined the term "lies, damned lies, and statistics" as a practice of using statistics to bolster a weak argument. However, I would argue this is an unlikely explanation and we should start with giving the benefit of the doubt to these publishers. Deliberate misrepresentation of data seems pretty rare.

Adverse Samples

It's quite possible that the companies publishing their NPS do not represent a good sample of the overall population. This topic is rich with irony; one of the classic tenants of NPS is that it should avoid heroic extrapolation from small data (especially in B2B) and act in favor of census. It's very plausible that only companies with very high NPS would seek to publish them. Of course, this risks looking silly, or at the least disingenuous should those scores decline and you - ahem - forget to update your readers. But this theory does hold water as long as you have a good sense of what is good in your own industry. The PR value of a 15% score in the cable television industry might actually be lost on the public at large but be relatively better than a 60% NPS in the luxury hospitality game. All these factors create upwards bias.

Equally, it's possible that the publishing of data is more likely by small, private companies rather than large public firms. Publically traded companies always worry more about lawsuits and the defensibility of their claims, so perhaps that's it. Or maybe, just maybe, a lot of small nimble companies tend to have higher NPS after all!

Getting the math wrong

We see enough sophisticated, large companies get the math wrong to suggest that any published score has no better than a 50/50 chance of being correct (meaning an accurate representation of the business) in any case. Sure, there are the eye-popping errors (0-11 scale, multi $bn publically traded firm) but the more likely error is around sampling or segmentation introducing bias into their numbers. It's hard to get a trustworthy data set, as you probably already know. Small error? Not necessarily, our benchmark data can differ by 20% or more from publically reported numbers of the same firm. Of course, our benchmark has built in errors also for absolute score reports.

Of course, you could ignore all the noise. My advice: focus on improving your own score. If you really want a comparison point, organize a comprehensive benchmarking study and draw your own conclusions.

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