Customer Satisfaction

#104 – My new role, NPS book refreshed, Customer Gauge eBook, KPMG Nunwood, ACSI

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Welcome to the 104th Customer Strategy newsletter. The six topics this week are:

  1. My new role – Editor in Chief – Owen CX
  2. Our NPS book has been refreshed
  3. CustomerGauge eBook on B2B CX and NPS includes a section with me
  4. Latest blog posts – Deep series on NPS ends
  5. Notable items from other sites – I disagree with KPMG Nunwood, ACSI Non-Durables report
  6. Looking forward

My new role – Editor in Chief – Owen CX

As many of you will know, the Net Promoter Score and System trademarks are held by Fred Reichheld, Bain, and Satmetrix (now part of NICE). Richard Owen joined Satmetrix as CEO the same month Fred Reichheld published his HBR paper The One Number You Need To Grow. Bain and Satmetrix worked together on proving the relationship between NPS research responses and actual customer behavior, among many other things. They are co-holders of the trademark of the system, together with Fred Reichheld.

When NICE acquired Satmetrix in 2017, Richard decided not to stay with the new company. He founded a new company, Owen CX Group, focused on B2B customer experience. NICE Satmetrix decided they needed to completely refresh their Net Promoter training and subcontracted the work to Owen CX. The result is the new subscription-based Net Promoter Masterclass.

I first met Richard when I was a speaker at a major Satmetrix event in London a few years ago. (It was held inside the Chelsea Football Club stadium, which was really interesting, and must have been mentally challenging for Richard as a Liverpool native.) We sat together at dinner that evening and got along well.

One of his team called me about six weeks ago to ask me whether I would be interested in doing some freelance work for them, with a particular focus on a newsletter. We continued our discussion and I met Richard when he happened to be in Geneva for a customer visit. We followed this up with two workshops in London three weeks ago. The result is that I have now contracted with them to provide my services as ‘Editor in Chief’ for their content business on a part-time basis. The details should become quite obvious as our new offerings are launched over the coming months.

What this means is that I may not have the time to write as many of my own blogs and newsletters as in the past. I will give priority to the Owen CX work at least until the end of the year.

Our NPS book has been refreshed

The 37-article series on NPS based on our book chapters gave me the opportunity to refresh the content a little. I made a lot of small grammar improvements and updated some information that dated from 2017. If you have the Kindle version it will have been updated automatically. The updated paperback version has been live on Amazon for about a week now.

We are proud of our books and know that a lot of you like them too. As always, the best way you can help us to promote them is to post reviews on Amazon.

CustomerGauge – Advanced B2B strategies nobody talks about

CustomerGauge interviewed five people, including me, to create this free eBook. As their blurb says, “Looking to take your B2B customer experience program to the next level? Struggling to roll out a comprehensive CX plan your company can get behind? In our latest eBook, we asked some of the top CX experts and influencers to discuss how B2B companies they’ve worked with have revolutionized their customer experience.” I have copied the list of experts interviewed below and you can download the whole thing free of charge here.

 

Our latest blog posts

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

image NPS (37) – Where do I start? – Conclusion and quiz – 37th and final article in a series on the Net Promoter System®

This is the last one in my extensive series based on my interpretation and use of the Net Promoter System in a B2B environment. I provide a good starting point and a little bit of closing advice. Hope you have enjoyed the series.
image NPS (36) – Sustained Leadership Commitment – How to get and keep it – 36th article in a series on the Net Promoter System®

This time the subject is a tricky one: how to get and keep leadership commitment to customer experience improvement work through good times and bad.
image NPS (35) – Sustained Leadership Commitment – Do you have it? – 35th article in a series on the Net Promoter System®

Commitment of senior leaders to customer experience improvement efforts is critical. You may think you already have it, but do you really? Here are some simple checks you can make. I suspect you will be unpleasantly surprised.
image NPS (34) – Employee development opportunities – 34th article in a series on the Net Promoter System®

Providing development opportunities to employees who work on customer experience is important. I cover this and how to make customer experience work an important development opportunity for people in other parts of your company too.
image NPS (33) – Why not ask your employees what your customers want? (ceNPS) – 33rd article in a series on the Net Promoter System®

I want to introduce a new concept this time. I call it ceNPS and explain why your employees may have practical insights about improving customer experience in ways customers might not expect.
image NPS (32) – Employee Net Promoter Score (eNPS) – 32nd article in a series on the Net Promoter System®

eNPS is a simple and practical way of getting employee input about your company and what they would like to see improved. Far simpler than other employee survey systems! Bain updated the methodology about two years ago and the new questions are covered here.
image NPS (31) – Does employee happiness matter? – 31st article in a series on the Net Promoter System®

Welcome to the 31st article in my series on the Net Promoter Score and System. This time I dig into the question of the relationship between employee and customer satisfaction.…
image NPS (30) – Evaluating text analytics software – 30th article in a series on the Net Promoter System®

This is by far the longest and deepest of the set. It includes an example from a business school student survey. Software is in constant evolution so the functionalities may have evolved. However, the comparison method is still valid today.

Notable customer experience items from other sites

KPMG Nunwood – B2B Customer Experience Report (I disagree strongly)

Some really interesting insights in this report from KPMG Nunwood. Yes, they are of course trying to sell us on their ‘six pillars’ methodology.

I have to say that there is a whole section of the report that is simply wrong. (Note that I am not saying “I disagree with this” or “I think there might possibly be an error.” It is just wrong.) It is the part that shows data that “proves” that the US is doing 8% better than the UK across all six pillars. They go on to show numbers for decision-makers, influencers, and end users across six industries. The US supposedly leads in all six. Not so.

The issue is simple. They have not corrected for the differing ways people from different cultures answer surveys. Here is a graph from our NPS book that shows that difference as measured by something like a hundred thousand double-blind benchmark data points over a number of years for all major B2B enterprise hardware suppliers (servers, storage and networking, mainly):

KPMG Nunwood suggest that the US has B2B customer satisfaction that is about 6% better than that in the UK for ‘Business technology’, which also includes software, PC clients, outsourcing and other items. I suggest that the results either show the opposite or show little or no difference.

OK, so one large section of the report is not correct. Bearing that in mind, the whole thing is indeed worth a read here.

ACSI – ACSI Nondurable Products Report 2018-2019 Download

The American Customer Satisfaction Industry people just published a great report on nondurable products covering all major industries that sell to US consumers. Guess what? Breweries ( = beer) come out on top. I suppose they asked customers at just the right time, and not the morning after 🙂 Unsurprisingly, ISPs and subscription television service providers finish joint last.

The download page is here.

Looking forward

I am happy to say that our books sales trend continues. September sales were also the best for the three Septembers the books have existed, and October is looking good too. Thank you.

As mentioned above, I am pretty deeply into my new projects with Owen CX and that will probably mean somewhat fewer blog posts and newsletters. Let’s see how that goes.

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)

Please share this newsletter with your friends and colleagues and encourage them to sign up for it here. I have put links to past newsletters on the subscription page. Finally, please feel free to change or cancel your subscription using the link below.

You can also email me, Maurice FitzGerald, at mfg@customerstrategy.net.

To change your subscription, click here.

 

So Happy Here

NPS (31) – Does employee happiness matter? – 31st article in a series on the Net Promoter System®

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Welcome to the 31st article in my series on the Net Promoter Score and System. This time I dig into the question of the relationship between employee and customer satisfaction. The answer is not what most people believe. While this series is about the Net Promoter Score, I have used American Customer Satisfaction Index data for the analysis as I was able to study 398 companies. I have since been able to do the same type of study using Temkin NPS benchmarks for 223 companies, with very similar results. However, I still consider the ACSI-based study to be superior, just because of the number of companies and industries I was able to include.

You can read all of the prior articles in the NPS series on our blog page here.

Contrary to popular wisdom, happy employees are not terribly important to customers. My research shows that employee happiness contributes about 6% of customer happiness. This does vary by industry.

Source of data

In February 2019, I compared American Customer Satisfaction Index data with Glassdoor.com employee ratings for 398 large companies that sell to US consumers. The research has been described in detail in our companion book Customer Experience Strategy – Design and Implementation. Using linear regression, just 6.2% of the variability in customer satisfaction is due to employee satisfaction. For the stats experts, the number does not change with quadratic regression. This was our third annual study on the subject and prior results were similar.

Reasons for the surprise

There are a number of reasons the link between end customer and employee happiness is not as high as you might expect:

  • First and foremost, a happy employee is not necessarily an engaged employee. A person can be happy with their short commute to work, their pay, and the free food in the company restaurant. None of these involves doing anything positive for customers. Engagement is a more complex concept, with no standard definition. However, every study I have seen shows a positive relationship between employee engagement and a range of things, such as financial results and customer satisfaction.
  • Many brands do not actually interact directly with customers at all. This is the case for franchise businesses. The company grants a right to use a brand in a geographical area to a franchise operator and the franchisee is the one who interacts with the end customer. Even the largest corporations that deliver physical goods do this to an extent. Almost none cover every country in the world themselves, depending on local third-parties to cover their gaps. The happiness of the employees who have no interaction with the end customer is of course invisible to them and has no impact on their NPS scores received from those end customers. The parent companies should be more concerned with the happiness of franchisees. There is no easily-available public data on franchise operator NPS.
  • There are web-only brands where you are unlikely to come into contact with a human. Amazon is a company with a great ASCI score of 82, and a relatively ordinary Glassdoor score of 3.8.
  • Some brands have monopolies and can afford to treat customers poorly. This seems notably to be the case for many cable TV companies and Internet Service Providers. Their customer and employee satisfaction scores seem to be opposites. Who would have thought it possible? Happy employees and unhappy customers. I suppose another explanation is that these companies provide services that we only notice when they are not working. When everything is OK, we don’t think about them. When our internet access is down, we quickly get angry.

There may be sectors where it matters a lot

My research suggests there are high-touch industries where employee engagement makes a difference to customers. There were 17 supermarket chains in my study, and the variations in employee happiness explained 49.1% of the variations in ACSI scores, (as measured by the r-squared number.) For hotels, the number was highest of all, at 68.1%. However, those companies include hotels operated by franchisees, rather than employees of the parent company, and ten is not a great population for calculating correlation coefficients. Perhaps surprisingly, the number was just 7.2% for specialty retail stores. There were 25 companies in this category. I have to speculate that this may be due to the negative environment created by competition with eCommerce. Bearing all of these factors this in mind, I nevertheless selected 129 of the 398 companies covered as ‘High touch’ and found that variations in employee satisfaction explain 8.8% of the variations in customer satisfaction, using linear regression, and 16.8% using quadratic regression. Still quite low really.

Think about it

If you were to assemble a team of people and ask them to brainstorm potential factors that affect customer happiness and loyalty, I believe you would come up with a long list. Employee satisfaction would probably make the list, but I doubt it would be in the top five. Things like the reliability of your products would be higher up on the list. It is only when the question is asked in isolation that people say employee satisfaction is the most critical factor. It is a case of an intuitive reaction, rather than a rational one. It would be tempting to believe that employee satisfaction is a hygiene factor, meaning that unhappy employees do indeed have a negative effect on customers, and that there is a diminishing rate or return on improving happiness, making no difference at all above a certain point. However, the ACSI analysis does not support that theory either. The relationship is close to linear at the cross-industry level.

Full details

If you would like to read about this in far more detail the full blog posts, which are slightly-edited versions of chapters in our book Customer Experience Strategy – Design and Implementation are here and here.

 

Next time

The next article will be about one way of measuring employee satisfaction_ eNPS.

 

As is often the case, the above is a slightly-edited version of a chapter in one of our books; in this case Net Promoter – Implement the System All of our books are available in paperback and Kindle formats from Amazon stores worldwide, and from your better book retailers.

#103 – Warmth and competence – 100 best CX books – Freakonomics – ACSI

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Welcome to the 103rd Customer Strategy newsletter. The five topics this week are:

  1. More on the ‘warmth and competence’ model, after recent personal experiences
  2. Our books on list of ‘100 best customer experience books of all time’
  3. Latest blog posts – Deep series on NPS continues
  4. Notable items from other sites – Freakonomics on Trader Joe’s, ACSI on car satisfaction
  5. Looking forward

More on the ‘warmth and competence’ model

I recently had two experiences that reminded me of the ‘warmth and competence’ model of customer experience, as proposed by Chris Malone and Susan T. Fiske in their excellent book The Human Brand. To simplify, our expectations of experiences delivered by humans is that they should be both warm (by smiling, for example) and competent. Here are two recent personal examples of when one of the two factors was missing:

I scraped my car’s wing mirror in a parking lot. I phoned the garage where I bought the car to arrange an appointment. The call was transferred to the receptionist as nobody in the service department was available. (The people in question sit ten meters / 30 feet from each other.) The receptionist passed a message on to the service people using their internal messaging system. The service people had not phoned back 24 hours later so I drove over to arrange an appointment. Note that my wife and I have been buying cars from this garage for the last 25 years.

When I got there to ask for the appointment I was extraordinarily well received by the service people as has always been the case. However, I asked to speak to their manager to discuss the lack of a call-back. He told me that their workload was such that calling back could take up to 48 hours. He suggested I use their online service reservation form to be sure of an immediate response. I went away feeling they were ‘warm’ but not ‘competent’.

That was about six weeks ago. Last week a message came up on the dashboard saying a regular service should be scheduled. I emailed the main service person I had been interacting with to ask for an appointment. After 24 hours without a response I remembered the online service request form. I filled it out. No response 48 hours later and still no answer to my email, so I went over there again to reserve in person. Once again I was warmly received and made the appointment. However, it is clear that a change of general manager of this family-owned business about three years ago has meant cost-cutting and staff insufficiencies that have destroyed the customer experience associated with servicing the cars. Today my wife and I decided that we will never buy another car from them again.

The second experience was simpler and I am sure you have all experienced this sort of thing. A family member lives in Neuchâtel and we sometimes eat at a simple restaurant that is the closest one to where she lives. For the second time we experienced a waitress who was competent but not warm. On our last visit her very first words to us were “Are you ready to order?” No “Hello” or any such niceties. So… I removed that restaurant from the contact list in my phone. No more reservations for them.

The bottom line: we consumers of products and services expect the people who provide them to be both warm and competent. Without both, we leave, if we have a choice. (I recognize that government services and other monopoly situations exist where we have no choice.)

Our books among ‘100 Best Customer Experience Books of All Time’

I discovered this by complete accident on Monday and had no idea that such a list even existed. What can I say? Book Authority publishes lists of top non-fiction books in various categories. They determine their lists using proprietary algorithms that are based on sentiment, sales volumes, recommendations and other factors. The algorithm is not public.

Our first book, Customer Experience Strategy – Design and Implementation, and our third book Customer-Centric Cost Reduction both make the top 100 list. It is possible to click to create a list by estimated sales numbers for the category and both books are also in the top 100. I noticed that Net Promoter – Implement the System has the same rating as the last few books on the list, so must have just missed the cut.

I suspect our particular thanks are due to book readers who have written Amazon reviews and / or publicly recommended them on Twitter or elsewhere. I will be interested to see how the list evolves over time. You can consult it here.

 

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.

image NPS (29) – The research / survey infrastructure you need – 29th article in a series on the Net Promoter System®

A simple article that describes the infrastructure you need to send surveys to customers and receive the answers. The simplest solution for PC users who don’t have a lot of customers is Outlook mail merge. Things quickly become more sophisticated…
image NPS (28) – The team(s) and tools you need to be successful – 28th article in a series on the Net Promoter System®

This time I introduce the part of the Net Promoter System framework that is called ‘Robust operational and analytic infrastructure’. It is all about your team and tools…
image NPS (27) – How not to deal with a Detractor (Nike and me) – 27th article in a series on the Net Promoter System®

A person story about how Nike lost me as a customer for one of their non-core product sets. And of course this has made me less loyal to Nike overall…
image NPS (26) – Activating Promoters (so they really do recommend you) – 26th article in a series on the Net Promoter System®

This time the subject is money! We are talking about the Net Promoter System. You have identified people who say that they definitely would recommend you. So how do you stimulate them to actually do so?
image NPS (25) – The Outer Loop and the Huddle – 25th article in a series on the Net Promoter System®

The subjects this time are the Outer Loop and the Huddle. The outer loop is the process for dealing with improvement opportunities that are common to many customers. They can take time and require investments across several functions…
image NPS (24) – The Inner Loop – 24th article in a series on the Net Promoter System®

The subject this time is the Inner Loop; the process for quickly addressing the concerns customers express when you send them feedback requests. In simple cases you need to deal with their issues right away. That is what the Inner Loop is all about…

Notable customer experience items from other sites

Freakonomics – Should America be run by Trader Joe’s?

Yes, I am a huge fan of Levitt and Dubner. Their first book was my introduction to the whole world of behavioral economics. This podcast episode is a re-broadcast of a story I found particularly insightful. Readers based in North America and followers of the American Customer Satisfaction Industry benchmarks will know that Trader Joe’s has the highest customer satisfaction rating of any US-based supermarket chain. Yet it provides far less choice than other supermarkets. Why does this make sense? It is all explained in the podcast. I guarantee you will learn a lot!

Worth a listen here.

ACSI – Customer satisfaction crashes across the automobile industry

The American Customer Satisfaction Industry people just published their 2019 results for all major vendors that sell cars in the USA. Most brands had lower satisfaction than in 2018.

Have a look and their press release to see details here.

 

Looking forward

Book sales continue to do surprisingly well, so thank you. June was the best of the three Junes since the books first appeared. July was the best July. And August was our best August. 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)

Please share this newsletter with your friends and colleagues and encourage them to sign up for it here. I have put links to past newsletters on the subscription page. Finally, please feel free to change or cancel your subscription using the link below.

You can also email me, Maurice FitzGerald, at mfg@customerstrategy.net.

To change your subscription, click here.

 

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

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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.

image NPS (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.
image NPS (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.
image NPS (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.
image NPS (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…
image NPS (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…
image NPS (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)

Please share this newsletter with your friends and colleagues and encourage them to sign up for it here. I have put links to past newsletters on the subscription page. Finally, please feel free to change or cancel your subscription using the link below.

You can also email me, Maurice FitzGerald, at mfg@customerstrategy.net.

To change your subscription, click here.

 

Appdynamics blog

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

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Welcome to the 22nd post in my extensive series on NPS and the Net Promoter System. In the last two articles I discussed the major mistakes made by British Airways, Audi and others. This time I cover a company that almost gets it right. Unfortunately their results seem to be a sort of ‘vanity metric’ without a robust source.

A company with industry-leading NPS performance and a customer-centric culture can ruin their message by exaggerating, providing misleading information, and ‘comparing apples with oranges’. When you are performing well, there is no need for such communication. What follows is an example of an over-enthusiastic marketing department using an internal NPS result to (presumably not intentionally) misinform customers. It provides a wonderful example of messaging that gets ahead of the actual facts.

The press release

AppDynamics is a company that provides software for managing computer systems. They have recently been acquired by Cisco. Unfortunately, they have become masters of misleading communication about NPS scores. They have repeatedly published silly press releases that discredit their excellent performance and have the potential to discredit the Net Promoter System. In an early example in September 2015, they led with this headline:

AppDynamics Continues With Category-Leading Net Promoter Score of 85 for the First Half of Fiscal Year 2016

More than 500 customers weigh in to confirm positive experience with Application Intelligence Platform

They go on to say:

AppDynamics, a leading application intelligence company, today announced that it achieved a Net Promoter Score, or NPS® Score, of 85 for the first six months of its fiscal year beginning February 1, 2015. AppDynamics has maintained an NPS score over 80 for each successive six month period over the last three fiscal years, demonstrating its leadership among enterprise software companies, which on average earn NPS scores of mid-twenties according to Satmetrix.

And follow that by:

According to a benchmark study from the Temkin Group, scores for the overall software category in 2014 range from the low teens to the mid-40s. Companies with NPS scores of 60+ are generally considered top performers; USAA (insurance and financial services) and JetBlue are on this elite list, as is Apple. Enterprise software companies have typically had average scores below 20.

So, what is wrong with this?

Here are the main defects:

  • They do not provide any information about the source of the score of 85, though it is implied that it comes from an internal initiative called the Customer 360 program. No other company appears to be covered by that program, so it is not a competitive benchmark.
  • They mention the respected Temkin benchmarks without mentioning that Temkin do not include AppDynamics in their data.
  • Strangely, they were already well above average for the software industry with scores in the low 40s at the time, according to a double-blind benchmark studies by IPSOS and Qualtrics that I used at HP. The same studies also show IBM, CA, HP and BMC between 40 and 50 for Business Service Management software. The average score for IT management software overall is 38, with 8,800 customer responses. 175 people responded for AppDynamics. VMware was leading at 59.
  • While software industry benchmark scores have improved markedly since September 2015, 85 was not a credible benchmark score at that time. No company on the planet had ever had a score of 85 in any double-blind benchmark survey in any industry by the end of 2015. I have personally validated the methodology Qualtrics uses with Bain and it corresponds to their views on how double-blind benchmarking should be done. I shared the benchmark scores with various competitors before I retired from HP in early 2016. We discussed the AppDynamics press releases too. Some competitors had commissioned their own benchmark surveys, and found similar results to what I mention for AppDynamics. Nobody found scores higher than 45 at the time.

The software industry has been improving, and here in 2019 it has become more credible that such high scores are possible. I have no doubt that the Customer 360 program is making a difference. My former colleagues tell me that AppDynamics has produced the highest benchmark scores seen so far. They and their competitors have all improved. It will be interesting to see how this trends.

Temkin benchmarks

For the sake of completeness, the illustration below shows the Temkin NPS technology industry benchmarks for 2016, the time of the press release shown above. 62 vendors are covered, almost all of them software vendors. Even without the intermediate points on the table, you will quickly see that the AppDynamics statement that “Enterprise software companies have typically had average scores below 20” is simply not true. Note that most Temkin reports are free of charge, ever since Qualtrics acquired Temkin Group in 2018. Of course the AppDynamics statement could be based on yet another unattributed source.

Conclusion

When they had great performance, the sort of press release, website content and sales material AppDynamics used in 2015 did it a disservice. Don’t publish scores from your own company surveys and represent them as objective benchmark comparisons. Your competitors know the numbers are wrong and many can easily provide your customers with correct data. The correction may call into question other claims you have made about your products or services. If an NPS number appears to be too good to be true, it is!

If you persuade your senior management that the comparison is fair and real, you also put your future work at risk. After all, your mission seems to have been accomplished. The work should now be put into business-as-usual mode and the investment scaled back. As it is, AppDynamics was on a path to market leadership, though perhaps not at quite the speed their communications people believed in late 2015. Perhaps this is why Cisco acquired them in early 2017. Finally, note that in the spirit of fairness, I wrote to the person whose name was on the press release to make these points, and he did not reply.

 

Next time

The next article will be the first of two on the heart of the Net Promoter System: the feedback, learning, and improvement processes. The process has three elements: the Inner Loop, the Outer Loop, and the Huddle.

 

As is often the case, the above is a slightly-edited version of a chapter in one of our books; in this case Net Promoter – Implement the System All of our books are available in paperback and Kindle formats from Amazon stores worldwide, and from your better book retailers.

 

Audi v3 master 800

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

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Welcome to the 21st post in my extensive series on NPS and the Net Promoter System. Following the numerous reactions to what I posted about the British Airways research process last week, here are my views on the way car dealers survey customers in general and about Audi’s process in particular. I also cover a supermarket.

I suppose I should start by emphasizing that Audi is far from being the only car manufacturer doing what I am about to describe. It seems to be a standard practice for car brands.

Buying a car

Following her purchase of a new Audi, my daughter received a survey request from her salesperson. He provided the link, and added a covering note saying, “Please contact me if you cannot give me a 10.” I was surprised to see evidence of this horrible practice reaching European car dealers. It is the rule, rather than the exception in the USA. The General Motors head of customer experience explained it in a pubic seminar. Sales people typically need to average over 95% satisfaction in the GM dealer surveys to be able to participate in their bonus scheme. One low score can require ten perfect scores to even it out.

David Mingle, Executive Director, North American Customer Experience for GM said that he knows this and is not going to do anything about it. He said he personally pays no attention to the scores, only to the written comments. He says customers tend to be honest in their written comments. The sales people are only measured on the scores and don’t care what the customer writes about the experience. This is clear evidence of a research process that provides no value. If individual dealerships and sales people have no motivation to read and act on the comments, why should a customer answer the survey at all?

Consequences

While this may seem to be an interesting anecdote, though backed by facts, it has major consequences. These consequences are evident in the USA and will come to Europe too. In the USA, car prices are considered to be highly negotiable. There are plenty of websites that give advice about how much a General Motors franchisee has to pay for a particular car, providing the customer with the lowest possible price. I invite you to do your own searches. You will easily find suggestions to use the survey score as a price negotiation point. It is attractive in that the cost to the sales person of lowering the price is zero, while the benefit of a 10 may be high, and costs you nothing. If car companies internalized this, I believe they would change their bonus systems. Indeed, if you receive messages saying “If you can’t give me a 10…” during a negotiation process, you should probably negotiate a little more, no matter what it is you are buying.

Not the only defect in their survey

The Audi survey is somewhat strange. I feel they do not understand the difference between something that matters and something that makes a competitive difference. The illustration below shows the way their US dealer survey from a couple of years ago describes what a 10 means:

It is not appropriate to label intermediate numbers in rating questions, just the extremes. Personally, I find the difference between “Outstanding” and “Truly Exceptional” hard to understand, let alone worthy of a three-point difference. I also consider the appearance of the facility to be a hygiene factor. Once it is good enough, it has no impact on your purchase. I don’t see how it could be a motivator. The same applies to the “comfort of the area or office where you agreed to the price of your vehicle.” What is the added value in getting a score above a five, for example? Indeed, perhaps it should be uncomfortable so you want to negotiate quickly and leave.

Of course, many other companies do the same thing. According to employees at Walmart, Old Navy, Staples and Best Buy, they are measured on receiving 10s and interrogated about receiving anything less. The slip of paper shown below is what one US supermarket allegedly gave customers with their receipts:

Conclusion

There are many ways to cheat or bias your feedback system. This is just one. For a number to be credible, the people who are asking you to fill out the surveys must have no direct motivation to achieve a specific score. They should only be motivated by the desire to improve.

Next time

In the next article I will consider the case of AppDynamics; a company that almost gets its customer research right but seems to fail at the last hurdle.

 

As is often the case, the above is a slightly-edited version of a chapter in one of our books; in this case Net Promoter – Implement the System All of our books are available in paperback and Kindle formats from Amazon stores worldwide, and from your better book retailers.

 

BA NPS for blog header 800

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

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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, from a customer perspective. Perhaps paradoxically, it is one of the richest possible from an internal British Airways perspective. It provides them with a rich set of reports and metrics. While it includes part of the Net Promoter System, it has far too many screens and questions. They have never contacted me about my issues or improvement suggestions. What follows is a critique that includes screen captures from their September 2016 Executive Club survey. Please bear in mind that I am not entirely negative about it all. I just feel it works from an old paradigm, is internally focused, and designed primarily to fit customer experience strategy and reporting software supplied by KPMG Nunwood.

Summary

While the covering email from Nunwood says the survey will take 15 minutes, there are 134 screens to go through, and it is hard to see how it could be done in 15 minutes. The survey invitation is signed by James Hiller, with no job title. A Google search indicates he manages the Executive Club. Nothing is said about what they have improved based on past surveys.

As distinct from a pure survey about the Executive Club itself, competitors are also covered, as are BA and competing airlines. The huge amount of data collected probably fits a comprehensive internal reporting structure, and provides no particular value to customers. It violates the fundamental principle of customer research in that it fails to provide more value than it extracts. Here is how it starts:

Cher Monsieur Fitzgerald,

Given that you are an Executive Club Member, we would welcome your views on your experiences with British Airways and we would like to understand how they have influenced the way you feel about us.

Whether positive, neutral, or negative, your feedback is welcome and highly valued, as it will help us to shape our products and services in the future, and understand what our most valuable customers need from us.

The survey will take about 15 minutes to complete.

Will I be able to provide the input I want to provide?

Before starting to work through the many screens, I decided what I wanted to say. I wanted to make three points:

  1. Transiting through Heathrow Terminal 5 for long-haul travel from Geneva is far more complex than transiting via Zurich, Munich, Frankfurt, Amsterdam and even Paris. This is because passengers have to go through a pointless duplicate security check inbound from the USA / Canada, and a pointless duplicate outbound check when arriving from countries that use the same security standards as the UK. While I did not know this at the time I filled out the survey, the UK Civil Aviation Authority requires this second check and does not accept screening done anywhere else. I suppose this may date from an era when it was too difficult to separate the ‘clean’ and ‘not quite so clean’ transit passengers from each other. Whatever the reasoning, it seems pointless today. The layout of Terminal 5 could easily be modified to create this separation should the law change. BA should apply the necessary pressure, in my opinion.
  2. It is next to impossible to use the Executive Club website to reserve some long-haul destinations using miles. Entire months have no availability. I am not talking about high-demand routes like Christmas in Australia. My latest experience with trying to reserve Australian flights in Business Class was for October, seven weeks in advance, and there were no flights on any date, either to Sydney or Melbourne. December and January show no availability either, which is less surprising. During a Christmas vacation, I looked at availability for South Africa the following Christmas. Nothing.
  3. I wanted the opportunity not just to complain, but also to make improvement suggestions. Among the suggestions, I wanted to be able to mention that BA should tell us what they are doing with the input, and should contact people who make suggestions.

The short answer is that I was indeed able to provide the input. The more complete answer is that I was forced to bury this critical information inside many unimportant and irrelevant (to me) answers. I am sure the 100+ irrelevant answers correspond to the way some staff inside British Airways are measured.

The start

I expected BA to provide a choice of languages for the survey, and they do. I suppose it is a bit surprising that Spanish is not among the languages. It is the second-most common first language in the world with about 400 million speakers, after Chinese, with 1.2 billion.

NPS questions

The recommendation question is next as shown below. Oddly the ‘overall satisfaction’ question is asked as well. After a question about emotions, the NPS “Why?” question is asked.

Logically, the following question should be about what BA should improve. That question is never asked about British Airways, though it is asked about the Executive Club, close to the end of the survey. When you do not ask for improvement suggestions, you tend not to get any from Promoters. Remember that Promoters are the customers who admire you most, and want you to succeed. They tend to provide the most valuable improvement suggestions.

BA executive club survey 1

Lots more questions

Questions about my feelings about the airline follow. I suppose these provide overall statistics and somebody is measured on the trend. It is hard to see how someone would work directly on improvements from the answers, as there is no opportunity to explain the input. The questions all use rating scales and include:

  • How likely would you be to travel with British Airways in the future?
  • To what extent do you consider British Airways a convenient option when choosing an airline to fly with?
  • Taking everything into consideration, overall how satisfied are you with British Airways?
  • How satisfied are you with the value for money British Airways offers?
  • How would you say you feel about British Airways?

Information about competitors

A useful section follows as shown below. After asking what airlines I have used for long- and short-haul travel in the last 12 months, the survey goes on to ask which airlines are my top choices for such travel. It then asks why the first-choice airline is in first place. I consider this section to be the only thing that is potentially useful beyond the basic NPS questions.

BA executive club survey 2

Oddly, they sort of throw this away by asking you to choose from a list of possible responses for not flying with BA. None of the preselected reasons was my main one, so I filled in the Other box. I feel they should have asked this as an open text question.

Then you are asked again about your overall satisfaction with BA. You can’t see the answers to prior questions and my second answer to the same question was one category lower than the first. Maybe because the survey was making my opinion more negative. The wording of the question was not exactly the same as the first one, though I don’t recognize them as different questions.

Lots of rating questions

A seven-point scale is then used to gather answers on flying touchpoints, emotions associated with BA and opinions about their communication. Finally, the section on the Executive Club starts, at last. Remember that the email invitation came from the head of the Executive Club, not the head of British Airways. Overall satisfaction and recommendation questions are followed by another extensive batch of seven-point rating scales Each rating question is presented individually, and you can review your answers to each section, possibly making changes.

Finally finally

A breath of hope is provided by the question “And finally, thinking about your experiences of any frequent flyer programmes, how could British Airways Executive Club be improved?” I mistakenly thought this was the last question. Unfortunately, I was then asked seven questions about demographic information that BA should already have in my Executive Club profile. This is one of the disadvantages of subcontracting surveys. The confidentiality agreement you have with your customers probably forbids you passing their details to a third party. However, the way BA has handled this with Nunwood is not optimal. Since they already had my name, there would be no reason not to provide them with a unique code, that would then allow BA to match my name and demographic details with their own database. The name on its own might be a duplicate.

Speculation and conclusion

I recommend a visit to the KPMG Nunwood website at www.nunwood.com. Their offers include customer experience strategy, journey mapping, NPS support and other comprehensive approaches to improvement. One of the approaches, the ‘Six Pillars’ explains their satisfaction surveys. The excessive number of questions satisfies the needs of the Six Pillars model, and fully exploits their Fizz reporting software.

I speculate that the survey and software are part of a larger consulting engagement with British Airways that requires a ‘slice and dice’ approach to data for distribution to a variety of internal departments. I feel this is an internally-focused way of proceeding. I would love to know what their response rates are, and speculate that they are under 10% overall. I suppose that higher-status members will be more likely to give feedback, and their input is critical, since they generate the most revenue for the company. I believe an interesting opportunity would be lower-status members who have higher status on other airlines. My recommendation for BA is an A/B split test, asking just the basic few NPS questions as a ‘pulse’ survey in between the main ones. I believe they would get better response rates and clearer actions to prioritize. Of course, they would lose the ‘slice-and-dice’ metrics they probably use to measure people. And finally, I have of course lost all my status and privileges with BA since retiring, so don’t know whether they have changed the way they survey Executive Club members since then. Please feel free to reply below if you have new information.

 

As is often the case, the above is a slightly-edited version of a chapter in one of our books; in this case Net Promoter – Implement the System All of our books are available in paperback and Kindle formats from Amazon stores worldwide, and from your better book retailers.

 

Customer Lifetime Value

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

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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 cash flow they generate for you over their entire lifetime. The single calculation method for this is Discounted Cash Flow; the Net Present Value of all cash flows out into the future. No other method is correct, though there are some acceptable approximations. The theory and experience of NPS practitioners is that the operating profit per customer is highest for Promoters and lowest for Detractors. Do not confuse revenue and operating profit. You can have customers that generate lots of revenue, but even more cost. They have negative lifetime cash flow, unless you can turn them around.

The main problem you will face

Unfortunately, most companies are not able to calculate profitability by customer. Financial reporting usually works by product line, not by customer. Asking your finance person to provide you an accurate cash flow from each of your top 100 customers individually will probably be a waste of time. Businesses that depend on large contracts are an exception, and you may well be able to calculate the cash flow from each contract.

Suggested method

In the absence of accurate standard reporting, a good starting point is to work with your finance person to calculate a ‘proxy P&L’ for each of your different customer categories. Unfortunately, there are accepted accounting standards for many things, but not for the precise methods used to calculate the lifetime value of a customer. Segmenting customers in a useful way is a critical step. The first distinction to be made is between customers who have an ongoing contractual relationship with your company, and those who buy things, but have no contractual relationship. The former category is easy to work with. Past contract renewal rates can be used to determine future expectations. Direct Marketing principles need to be applied to the latter category. Direct Marketers think in terms of ‘RFM’: Recency, Frequency, and Monetary value.

Other customer segmentations that are useful will depend on your business model. If you sell both direct and via resellers, lifetime value expectations will be different. They will also differ between very large customers who depend on your company to run their business, and others. If you have the data, NPS categories can be used to refine renewal rate expectations. Here are examples of what needs to be used in the calculation:

  • List prices.
  • Contra-revenue, meaning discounts you give from the list price. While large customers tend to attract higher ‘standard’ discounts, you will generally have easier discount negotiations with Promoters than with Detractors. Since contra-revenue is not part of any standard P&L, it is often forgotten.
  • Net revenue, meaning list price less contra-revenue.
  • Cost of Goods Sold. This includes costs of ‘free’ replacement items and additional merchandise that you may have to supply Detractors to help turn them around. If you have a dedicated escalations team, you can easily calculate the average cost per escalation and use that to assign a total escalation labor cost. While ‘Cost of Goods Sold’ sounds like it should include the cost of selling and marketing, it does not. Selling, General and Administrative costs are ‘below the line’, which means they are not counted in the Gross Margin calculation, but are considered when calculating operating profit.
  • Where Detractors or Passives leave you sooner than Promoters, you can assign a cost of attracting a new customer. Many sales teams are split into ‘Hunters’ who go after new customers and ‘Farmers’ who develop deeper relationships over time and are measured on retention and additional business for existing customers. Farmers generally cost about a quarter of the Hunter cost per revenue dollar. If you don’t split your sales teams this way, agree a reasonable rule of thumb with your finance partner while you try to measure it more accurately. Marketing costs can be split that way too.
  • If you happen to have any indication that you get some of your new customers by referrals from your happiest existing customers, it is worth agreeing a way of taking this into account. However, if you already have a strong enough differentiation between Promoters, Passives and Detractors for your purposes, I suggest this simply be listed as an additional factor that you have not yet quantified. Attaching a reliable number to it can be tricky.
  • Beware of the law of small numbers. If the most positive and negative numbers come from unusually small groups in your analysis, you should find a way of combining them with a larger group until you can validate the reality of what you have seen.

If you are not able to get to this level of detail, calculating expected lifetime revenue per customer is a lot better than doing nothing.

If you can only work on one thing for a contract business

If all this is too sophisticated for the time you have available, here is the single area you should focus on, if your business depends on annual contracts. Just agree the value of a one-percent improvement in contract renewal rates. It is easy to calculate, and you probably have the data on past renewal rates. If you work in a large company, you have de facto experiments in place. By this I mean you can simply observe different measurable business practices or levels of customer-centric performance that have happened by accident, rather than by design. Look at how they have affected renewal rates. If you seem to have nothing relevant, test new practices in part of your company and compare renewal rates. You can test multiple things simultaneously, provided you keep a control group, where nothing has changed. Improved renewal rates were how we justified Customer Success teams at HP Software. These teams worked with customers, free of charge, to make sure they were using software effectively and achieving the benefits they expected.

Summary

Compared to the others, Promoters stay with you longer, buy more products, escalate less, are less price sensitive and are less expensive to sell to and service. There are many businesses that have marginal overall profitability. If you have customers that have been generating negative margins for some time, you will have to decide whether you can turn them around or whether you should drop them as clients. Clarity is more important than always getting the answers you would most like to hear. Once you have agreed the lifetime values of the different NPS customer categories, you and your CFO (or delegate) should present it together to your leadership team for approval. Even if you are not able to do it right away, it should be part of your formal NPS implementation plan. Your credibility depends on it. Your company’s long-term commitment to NPS also depends on it.

Looking forward

The next article in the series will be a counter-example, meaning an example of what you should not do when conducting customer research. The first one will be from British Airways.

Learning check

Here are some true / false questions to check whether I have been successful in communicating my main messages in the last few blog posts. The answers are at the bottom of the page.

  1. The cost of renewing an existing contract is typically one-tenth the cost of acquiring a new customer.
  2. If your overall brand NPS trend is better than that of your competitors, it is safe to assume that all parts of your business will benefit in the same way.
  3. Bain experience suggests that the average time lag between a relative NPS improvement and new product revenue improvement is 6 to 18 months.
  4. Since contra-revenue is not in a standard P&L statement, it should not be considered when calculating the lifetime value of a customer.
  5. To avoid bias, all customers should be considered equal in your research, no matter how much they spend with you or your competition.

 

As is often the case, the above is a slightly-edited version of a chapter in one of our books; in this case Net Promoter – Implement the System All of our books are available in paperback and Kindle formats from Amazon stores worldwide, and from your better book retailers.

Answers to the learning check questions:

  1. True: Renewing a contract is mainly an administrative effort and costs far less than hunting for and acquiring a new customer.
  2. False: You need to do the analysis for each part of your business for which you produce a P&L.
  3. True: This is to do with the average purchase cycle. Even if they love you, people are relatively unlikely to buy the same thing again right away. This varies widely by type of product.
  4. False: Promoters tend to get lower discounts than less happy customers and discounts from list prices are not in your P&L in most accounting systems.
  5. False: You need to distinguish between customers who spend a lot and those who don’t spend much on your type of product or service when calculating lifetime value. Large spenders tend to be more demanding than small spenders, and therefore tend to give lower NPS scores.

#101 – Choosing projects, benchmarks, tech support cartoons

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Welcome to the 101st Customer Strategy newsletter! The five topics this week are:

  1. Unusual tips on prioritizing / choosing improvement initiatives
  2. Why not share your benchmark NPS data with customers?
  3. Latest blog posts – Deep series on NPS continues
  4. Notable items from other sites – Tech support cartoons – Vertica NPS benchmarks
  5. Looking forward

Unusual tips on prioritizing / choosing improvement initiatives

Like many of you, I suppose, I have often been confronted by the need to choose among possible projects. This happens in every business area, not just customer experience. I won’t bother you with the usual and obvious selection criteria such as ROI. What follows is a more personal list. These are three factors I have found to be important over time and I hope you will find something new here.

  1. Choose projects that your manager’s manager is likely to find important. This has all sorts of advantages. It makes your own manager look good. If your manager leaves or changes jobs you can be reasonably sure the project will continue. You will probably get asked to present the project and provide status updates two levels up in the organization. Hello promotion opportunities!
  2. Don’t consider any projects that will deliver nothing worthwhile during the first nine months. Indeed, I think your projects should demonstrably deliver something worthwhile every two to three months. It is one of the keys to retaining sponsorship for your work. If your project plan is to deliver nothing major in the first nine months, well… what can I say? You have failed the project management ‘pregnancy test’. Something will change in the environment during those months and will prevent success.
  3. Choose projects that are likely to be easy to communicate. If the project is really quite sophisticated you should at least choose a clear and simple name that describes what the project is about. Ideally the name should make someone who wants to stop the project sound like an idiot. Try saying “Let’s stop the ‘on-time delivery’ initiative.” There, did that sound like a good idea? Of course you then actually have to communicate progress regularly and generate ongoing enthusiasm for your output. If you don’t have a communications person on your team, go and get one or at least borrow one part-time.

Why not share your benchmark NPS data with customers?

If you are among the many companies that have reliable customer experience benchmark information, why not share that information with your customers? There is no individually identifiable customer information in such data, so you should not have any privacy concerns. Your company does not have to be the best one on the list. Indeed it may make you seem even more honest and open if you are not at the very top.

When I say ‘reliable customer experience benchmark information’, here is what I mean:

  1. It is ‘double-blind’, meaning customers answering the questions do not know who is funding the research. And ideally the people asking the questions don’t know either. The latter point is not so important if your research is carried out online but matters if done by phone.
  2. It covers your company and your main competitors.
  3. The research is performed by a third party that is recognized as an expert in the area.

Of course, you may not want to make broad public announcements that provide a ranked list of all relevant companies. Comparing yourself to the competitive average may be enough. This was all brought to mind by a new blog post by Dr. James Borderick of Micro Focus. He openly says that Micro Focus is ranked 12th among 50 companies covered by the double-blind research. He then goes on to provide a comparison between Micro Focus and the average company for each of four subsets of the overall software business. If you find the rankings strange compared to the overall ranking, just bear in mind that there are fewer competitors in each of the subset areas than in the overall total, as not everyone competes everywhere.

Where you have a particularly strong position, I suggest providing your sales people with the full details. I can’t think of a reason not to let them show customers how you compare to other companies they may be considering.

Have a look at the Micro Focus information here.

 

Our latest blog posts

The posts on this list are part of my extensive and deep series about the Net Promoter System. The one at the top of the list is one of the most popular articles I have ever written. (Thank you.) Older posts are still available on the blog page.

image NPS (17) – Does culture affect NPS / customer survey outcomes? – 17th in the series on NPS

This is the 17th article in a series on the Net Promoter Score and Net Promoter System. This time I cover cultural differences in the way people respond to surveys.…
image NPS (16) – Five more survey response rate improvement suggestions – 16th in the series on NPS

This is the 16th article in a series on the Net Promoter Score and Net Promoter System. In addition to the direct marketing techniques mentioned in my last article, here…
image NPS (15) – Use direct marketing techniques to improve survey response rates – 15th in the series on NPS

This is the 15th article in a series on the Net Promoter Score and Net Promoter System. The subject this time is the use of classical direct marketing techniques to improve response rates to survey requests sent by email.
image NPS (14) – 14th in the series – Customer survey response rates and statistical significance

Welcome to the 14th article in my series about NPS and the Net Promoter System. This time I cover response rates, sample sizes and statistical significance. Perhaps the most important subject covered here is how best to communicate information about significance. (Hint: Don’t!)
image NPS (13) – 13th in the series – Whether and when to survey

This is the 13th episode in my series on the Net Promoter Score and the Net Promoter System. This one is a bit longer than the average and covers some thoughts about whether you should surevy customers at all, and if so, when.
image NPS (12) – 12th in the series – Should I weight my survey results?

So you have your survey results and the sample population is not representative of your customer population. So should you play around with the numbers until they match? A difficult question. There is a learning check / quiz at the end of this article.

Notable customer experience items from other sites

Reader’s Digest – 25 funny cartoons technophobes can appreciate

These seem to be quite old, given what computers look like in many of them. Some real goodies. I particularly like the one about the virus.

Have a good laugh here.

Joy King – Vertica scores big in customer satisfaction

Since we have already been on the subject of Micro Focus above, here is an additional example of the use of double-blind NPS research data in customer communication. Joy King is a former colleague of mine and is VP of Product Management and Product Marketing for the Vertica business. Vertica can best be described as a columnar database. Columnar databases are many times faster than relational databases. Even when I worked at HP part of their customer list was a secret. I never learned why and speculate that the major Silicon Valley companies who were customers wanted $$$ for us to use them as references. I agree with about 95% of what she has written here. My hesitation is for what she says about benchmark NPS numbers above 60. They are rare, but they do exist. She is right that you should treat such numbers that are presented without details of how they are determined as probably bogus.

Read Joy’s article here.

 

Looking forward

Currently negotiating two speaking engagements for after the summer vacation period. You can see a video of on of my keynotes here. Just email me at mfg@customerstrategy.net if I can help motivate or inform your team.

Maurice FitzGerald on stage in Amsterdam

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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Normal curve for NPS blog on statistical significance

NPS (14) – 14th in the series – Customer survey response rates and statistical significance

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Welcome to the 14th article in my series about NPS and the Net Promoter System. This time I cover response rates, sample sizes and statistical significance. Perhaps the most important points are about how to communicate such technical concepts. (Hint: Don’t!)

All survey types are sensitive to response rates. The lower your response rate, the less accurate your survey. Bain analysis shows that surveys with low response rates give over-optimistic results, as the people who like you tend to respond more easily than those who do not. Getting high response rates is primarily a function of the nature of the relationship you have with the people you are surveying. If you are using email to try to survey people you have never met, and with whom you have never done business, you should expect a response rate of 3% or less. At the other extreme, if you have a practice of formally interviewing ten executives from your largest client face-to-face every six months, have been doing so for the last five years, demonstrating that you provide the improvements they request, a 100% response rate is a reasonable expectation.

Perverse effect of high response rates

High response rates drive lower scores on a constant scale. In my experience with HP, this meant that our deep face-to-face relationship surveys with 80%+ response rates usually produced Net Promoter Scores that were considerably lower than the scores we saw in benchmark surveys or indeed in any other type of survey. Avoid the temptation to compare scores from different types of survey, or at least from surveys with very different response rates.

Here is what Reichheld and Markey say

My own experience is not an isolated case and others have found similar trends. Based on their many years of experience, Fred and Rob provide some numbers, and I believe the numbers should surprise most people. They show a far greater impact of low response rates than expected. I don’t believe the phenomenon is specific to NPS. The principles should apply to all rating systems. Let’s suppose you have carried out a survey and the results are as shown below.

What about the non-respondents?

The question is, what do the people on the right think? The diagram below is what is shown in The Ultimate Question 2.0. It represents what would have happened had 100% of the recipients responded to your survey.

The theory is that Promoters are the ones most likely to answer your surveys. They like you and want to help. Passives and Detractors are more likely to think you have already wasted enough of their time. Extreme Detractors will still tend to answer. In a conversation with Rob Markey I asked him how they had determined the numbers on the right. He said it was done by observing the actual behaviors of the non-respondents in a large number of studies in a variety of industries.

Surprise!

This surprises most people. It is a very difficult subject to study as you can’t simultaneously get different response rates for the same survey and same audience. What I have seen is that the results from people who take the survey when they receive a follow-up email tend to be lower than for the initial respondents, though I have also seen exceptions. My brother (and this book’s illustrator) has a doctorate in Cognitive Psychology and has not been able to design an experiment that would prove the theory. Nonetheless, the psychology suggested by Fred and Rob makes sense to me. (Feel free to accuse me of cognitive bias!)

Statistical significance

Analysis and determination of statistical significance of results can be challenging. The following statement may seem counter-intuitive: If you want people to trust your metrics, don’t include any information about statistical significance in your main communication vehicles. There are two main reasons for this:

  • There is no single way to explain significance across all feedback systems. Correctly explaining the significance for each type of survey is long and complex and will make people believe you are manipulating the numbers.
  • There are survey types where intuitive significance rules do not apply. For example, if you have 20 customers that represent 60% of your revenue and you have high-quality relationship survey results from 15 of them, you are in great shape. If you try to explain the statistical significance range correctly, some amateur statistician in your audience is bound to say, “There are less than 30 companies in your sample so it can’t possibly be significant.” If you don’t mention significance, there will be fewer opportunities for such people to embarrass themselves. If the question is asked, well, good luck, and be diplomatic.

Improving response rates

Next, let’s look at the key techniques for improving response rates:

  • Application of classical direct marketing practices.
  • Use of technology when email is used to send survey invitations.
  • Work on the quality of your contact list.

Looking forward

Next time I will cover the use of classical direct marketing techniques to improve response rates.

 

As is often the case, the above is a slightly-edited version of a chapter in one of our books; in this case Net Promoter – Implement the System All of our books are available in paperback and Kindle formats from Amazon stores worldwide, and from your better book retailers.

 

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