#102 – Using AI to predict customer loyalty – A useful NPS benchmark provider quality check

 

Welcome to the 102nd Customer Strategy newsletter. The five topics this week are:

  1. A different approach to the use of AI: Early detection of customer disloyalty
  2. A useful quality check if you use double-blind NPS benchmarks
  3. Latest blog posts – Deep series on NPS continues
  4. Notable items from other sites – Willie Pietersen on strategy – XM Institute research
  5. Looking forward

A different approach to the use of AI: Early detection of customer disloyalty

I recently had the privilege of meeting Ilkka Huotelin, founder of Be Customer Smart. (Yes, the red color is deliberate.) He talked me through their fascinating approach to the use of Artificial Intelligence to do several important things that it would be difficult to do well another way.

  1. Determine the relationship between customer satisfaction indicators and revenue trends and other financial indicators for your company. The use of AI means there are no preconceived notions about what metrics are most relevant. Everything is put into the mix.
  2. Determine the relationship between every single operational metric you may have and customer satisfaction.
  3. Determine the financial impact of a KPI improvement.
  4. Predict revenue based on current and planned customer and operational metrics.

Ilkka’s core personal area of expertise is in telecommunications, though he and his colleagues have covered quite a broad range of industries. One of the most interesting things he showed me was how their software could analyze changes in mobile phone customer behavior and identify which ones predicted that a customer was likely to switch to another vendor at contract renewal time. Understanding this allows telcos to be proactive, intervening before contract renewal time to try to retain the customer. The use of AI means there is no preconceived notion about which customer behaviors matter, and the model is constantly improving to reflect actual customer actions.

As many of you know, the main area of AI that has interested me up to now is Natural Language Processing. Ilkka’s approach adds a new dimension. If you want to learn more, go to his website at http://www.becustomersmart.com/. Note in passing that I have no financial relationship whatsoever with Ilkka or his company. I simply like what they do. 

A useful quality check if you use double-blind NPS benchmarks

I spoke to the customer experience leader of an LA-based company a few days ago. (Let’s call him Ludwig for the sake of this article and for his love of classical music.) They had just received their first full set of double-blind NPS benchmarks, covering their company and their four main competitors. Ludwig was justifiably proud of the achievement. I found the way Ludwig and the vendor had compared the open text responses to the ‘Why?’ and ‘What could company X do better?’ questions particularly compelling. It certainly showed where each company’s strengths and weaknesses lay. I was surprised by how different improvement suggestions were for each company covered.

The journey to this result was far from painless. Some of this was because the vendor is quite new and had not worked in Ludwig’s industry before. However, the core issue is one that you are extremely likely to come across whenever you use double-blind benchmarking: the companies that provide the service contract in turn with companies that provide panels of representative customers for the relevant industry. Unfortunately, and I base this on my personal experience at HP while IPSOS was the overall service provider, the quality of the panels can be poor.

The issue arises when the benchmark vendor does not do a good enough job in checking the quality of the responses given by panel members. Ludwig and the new vendor found these issues after they provided the initial research results. The vendor had not noticed the problems. Note that panel members are paid, either in cash or with some sort of cash equivalent. If a respondent answers for more than one company, they make more money. This gives rise to fraud. The main areas of cheating I saw and that Ludwig also saw were:

  • People who just hit the keyboard randomly to provide text answers. The results were answers like “élakshgéoahsg”. I was stunned that the survey vendors would not see this and insist the panel vendors remove such respondents from their panels.
  • People who copied and pasted the same answers into different places in the survey, including supplying identical answers for all vendors.
  • People who answered for multiple vendors, even for products or services where it is absolutely impossible for a client company to have more than one supplier.

I could easily give you a much longer list but I find these three items the most obvious. If you are considering benchmark NPS providers or indeed already use such services, I would encourage you to do this basic level of inspection yourselves.

 

Our latest blog posts

The posts on this list are part of my extensive and deep series about the Net Promoter System. Older posts are still available on the blog page.

imageNPS (23) The heart of the Net Promoter System (1-minute read) – 23rd article in a series on the Net Promoter System®

 This post is the shortest of all. It provides simple descriptions of the Inner Loop, Outer Loop and Huddle; the three processes at the heart of the Net Promoter System.

imageNPS (22) – How to almost do customer research (AppDynamics) – 22nd article in the series on NPS

AppDynamics makes great software, and customers say so too. Unfortunately, their marketing department apparently decided to exaggerate this reality at one point, providing what seem to me to be ‘fantasy’ NPS benchmark numbers.

imageNPS (21) – How not to do customer research (Audi and a supermarket) – 21st article in the series on NPS

A second article covering bad practices in customer research. I believe I could have picked almost any car brand and found exactly the same practices I criticize here. I was just surprised to see such bad behavior cross the Atlantic and infect a European brand.

imageNPS (20) – How not to do customer research – 20th article in the series on NPS

While I am sure it is not their intent, the way British Airways surveys both its general and special customers is the worst I have ever seen from any company…

imageNPS (19) – How to calculate the lifetime value of a customer – 19th article in the series on NPS

While you can find many methods of doing the calculation on the web, there is only one correct answer. The value of a customer to your company is the total…

imageNPS (18) – Relationship between NPS trends and revenue / market share – 18th in the series on NPS

This is the 18th article in a series on the Net Promoter Score and Net Promoter System. The subject this time is a critical one: the relationship between NPS trends and revenue or market share trends.

Notable customer experience items from other sites

Willie Pietersen – Why Strategy is in Trouble

Readers who have read Customer Experience Strategy – Design and Implementation know that I consider Willie Pietersen to be the greatest business strategist alive. I learned almost all of what I know about developing a clear and implementable business strategy when attending the Creating Breakthrough Strategy course at Columbia business school. Willie has been the CEO of several large companies. I believe this is what made him develop a particularly simple approach that is easy to communicate.

Willie has a blog, but only seems to post a few articles each year. His latest article provides a simple summary of his thinking, as expressed in his courses and books. I strongly believe that even this short read can help anyone working on strategy to avoid what he calls the “fog of complexity and confusion” that surrounds most companies’ strategy development process.

Read all about it here.

XM Institute free research downloads

The Temkin Group was acquired by Qualtrics and rebranded as the XM Institute. (XM stands for Experience Management.) They decided to make most research free of charge. Some readers know that I was able to get a free copy of their 2018 NPS benchmarks; a really useful document. However, their site has no search functionality and it is hard to find what you want. The link below is to the main research page. Even I can no longer find the file I downloaded. If you know how to search this site properly, please let me know. This is not to detract from the excellent content that is easy to find.

Have a look here.

Looking forward

Book sales are doing surprisingly well, so thank you. June was the best of the three Junes since the books first appeared. July was the best July. And if August keeps on going the way it has in the first half of the month, it will be our record sales month overall, a surprise during the main European vacation month. I have to say that I don’t know why this is happening. While the rather attractive NPS series could be an explanation, our strategy book is slightly outselling our NPS book. Insights welcome.

Here are links to all of our books on Amazon.com. Kindle versions are available in all stores. Print versions are available from the major stores only. And as of two weeks ago, you can find the books, or at least order them in many bookstores. If you have already read any of our books, please write reviews on Amazon.

Customer Experience Strategy – Design & Implementation

Net Promoter – Implement the System

Customer-centric Cost Reduction

“So Happy Here”: The Absurdist but Essential Guide to Better Business (Color edition)

“So Happy Here”: The Absurdist but Essential Guide to Better Business (Black & White edition)

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