Success Stories

THE PROBLEM: A Focus on Profits at the Expense of Customer Relationships

Scott Cook, Founder & Chairman of the Executive Committee of Intuit, was hearing more complaints. Some market-share numbers were slipping. For lack of a good system of measurement - and for lack of the accountability that accurate measurement creates - the company seemed to be losing sight of exactly what had made it great: its relationships with its customers.

Like many rapidly growing businesses, Intuit had hired a lot of professional managers, who had been trained to run things by the numbers. There were two requirements for growth, Cook liked to say: profitable customers and happy customers. Everyone knew how to measure profits, but the only measurements of customers' happiness were vague statistics of "satisfaction" derived from surveys that nobody trusted and nobody was accountable for.

So managers naturally focused on profits, with predictable consequences. The executive who cut staffing levels in the phone-support queue to reduce costs wasn't held accountable for the increased hold times or the resulting customer frustration. The phone representative who so angered a long-time customer that he switched to another tax software product could still receive a quarterly bonus because she handled so many calls per hour. The marketing manager who kept approving new features to attract more customers was rewarded for boosting revenues and profits, when in fact the added complexity turned off new users.

THE SOLUTION: Measured Net Promoter Score, Took Steps to Increase Promoters and Decrease Detractors

Intuit jumped at the idea of measuring its Net Promoter Score (NPS), and began an implementation program in the spring of 2003. Intuit's first step was to determine the existing mix of promoters, passives, and detractors in each major business line. Cook suggested that this initial phone-survey process focus on only two questions. They settled on these: first, What is the likelihood you would recommend [TurboTax, for example] to a friend or colleague? and second, What is the most important reason for the score you gave?

Customer responses revealed Net Promoter Scores for Intuit's business lines ranging from 27% to 52%. That wasn't bad, given that the average U.S. company has a Net Promoter Score of less than 10%, but Intuit has never been interested in being average. They convinced the management team that there was plenty of room for improvement.

Creation of "Inner Circle" for Customer Feedback

The Consumer Tax Group, home of the industry-leading TurboTax product line, faced a particularly tough challenge. TurboTax's market share in the increasingly important Web-based segment had plummeted from 83% in 2001 to 42% in 2003. Managers in the division knew that they had to get a better handle on customer issues. One successful initiative was the creation of a 6,000-member "Inner Circle" of customers whose feedback would directly influence management decisions. Customers who registered to join this e-mail community were asked the "would recommend" question to determine whether they were promoters, passives, or detractors. Then they were asked to suggest their highest-priority improvements for TurboTax, and to vote on suggestions made by other Inner Circle members. Software sifted the suggestions and tracked the rankings, so that over time the most valuable ideas rose to the top of the list.

The results were eye-opening. For detractors, the top priority was improved quality of technical support. To address that issue, the management team reversed a decision made two years earlier and returned all phone tech-support functions from India to the United States and Canada. The team also boosted tech-support staffing levels. The second-biggest priority for detractors was to improve the slow installation process. That became a top priority for TurboTax's software engineers, who in the 2004 edition of the program achieved a 56% reduction in installation-related tech-support contacts.

Promoters had a different set of priorities. Topping the list was the rebate process: some complained that it took longer to fill out all the rebate forms than to install TurboTax and prepare their taxes! After getting this feedback, the division general manager assigned one person to own the rebate process, and held him accountable for results. Soon the proof-of- purchase was simplified, the forms were redesigned, the whole process was streamlined - and turnaround time was reduced by several weeks.

Various Customer Segments Examined

The Consumer Tax Group continued to study Net Promoter Scores, examining various customer segments. New customers, they found, had the lowest scores of any cluster. Executives called a sample of these customers to find out why, and what they discovered was startling and unsettling. All the features that had been added year after year to appeal to diverse customer groups with complex tax needs had yielded a product that no longer simplified the lives of standard filers. In fact, more than 30% of new customers never used the product a second time.

In response, the management team issued new priorities for the design engineers: make the program simpler. The interview screens were revised according to new design principles. Confusing tax jargon was eliminated - a new editor hired from People magazine got the job of making the language clear and easy to understand. In tax year 2004, for the first time, the NPS of first-time users was even higher than that of long-time users. In addition, the company introduced a streamlined forms-based option for people with simple, straightforward tax returns. This new product, SnapTax, was released in tax year 2004 and generated an NPS of 64% - the division's highest score ever among new users.

THE BENEFITS: Net Promoter Score Jumped, Market Share Surged

Over the two-year period from spring 2003 to spring 2005, Net Promoter Scores for TurboTax jumped. The desktop version, for instance, rose from 46% to 51%. New users' NPS rocketed from 48% to 71%. Retail market share, which had been flat for years, surged from 73% to 79% - no easy feat in a maturing market. Scores improved at most of Intuit's major lines of business. Thanks to this success, NPS became part of the company's everyday operations.

At the firm's 2004 Investors Day, when executives update securities analysts and major investors on the company's progress, challenges, and outlook for the future, Cook and Bennett unveiled their renewed commitment to building customer loyalty. They described how Net Promoter Scores had enabled the team to convert the historically soft goal of building better customer relationships into a hard, quantifiable process. Just as Six Sigma had helped Intuit improve its business processes to lower costs and enhance quality, NPS was helping it set priorities and measure progress toward the fundamental goal of stronger customer loyalty.

Source: Abridged copy from The Ultimate Question by Fred Reichheld. For the full story, please refer to the book.