Employee Satisfaction

October 12, 2019

NPS (35) – Sustained Leadership Commitment – Do you have it? – 35th article in a series on the Net Promoter System®

Maurice FitzGerald / Blog, Employee Satisfaction, Net Promoter System, NPS / Customer Experience, employee training, Net Promoter System, NPS, strategy /

Welcome to the 35th article in my series on the Net Promoter Score and System.

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

The questions addressed here are about the true level of commitment of your leadership to improving customer loyalty and the associated mid-term financial performance. We will cover how to tell whether you have the commitment already, and what you should do if not.

Are your leaders already committed?

Don’t start by making assumptions. Do your research. If you work for a public company, download and read your annual report. Read your latest earnings announcement. If your company does a quarterly earnings conference call with financial and industry analysts, try to join the call. Download the slides used for the call and inspect them. Assuming your company strategy is stated somewhere in all this material, what is it? Are customers mentioned among the top few priorities? While it could have changed by the time you read this, many consider Apple to be customer-centric, but Apple does not mention customer experience in any of these documents at the time of writing. They are in fact a product-centric company. This does not mean they don’t care about customers at all; far from it. In a product-centric company, work on customer experience simply has to be positioned as supporting product growth.

Prompted versus unprompted support

Reading your CEO and senior leaders’ all-employee emails is close to reading what psychologists call an unprompted response. Unprompted reactions to questions tell you what a person really feels. The prompted reactions of a senior executive bring political correctness into play. Think about what would happen were you to ask these questions in the Q&A section, after your CEO has spoken to all employees. Accept for a moment that all three start with “You have told us your top five priorities, but you have not mentioned…”

“…that only 15% of the people managers in the company are women while we represent 40% of the workforce. Do you not think this is important?”
“…that most other companies around here give paid time off for employees to do volunteer work in the community. How much do local communities matter to our company?
“…our customers as a priority. Where are customers on your list?”

Faced with such prompting, the CEO is forced to reply that he/she is launching a major initiative to double the number of female managers, that we can look forward to an announcement about volunteering, and that customers are central to everything we do, so should not be mentioned separately, or something similar. None of these responses change the reality of the top priorities: the list the CEO gives without prompting. If customer experience is not on your company’s formal priority short list, you can change it over time, with patience and persistence.

Leaders’ job history may work against you

If your company hires leaders from outside, it can pose particularly difficult problems. After all, the executive who has been poached is naturally convinced that he or she has been hired for their beliefs, knowledge and results, as well as the business practices and results of the former employer. If her former company had better results than yours, and did not use the Net Promoter System, it is unlikely that she can easily be persuaded to adopt it. She is more likely to propose that NPS be abandoned in favor of whatever she is used to. This is where your CFO should help, assuming you have jointly proven the financial effect of NPS trends for your company. (This won’t work if the new executive is the CFO, of course.) If the executive’s former company is one of your competitors, NPS should be positioned as a way you are going to catch up and overtake them. That position is hard to argue with, as most executives understand that you can never overtake a competitor by copying exactly what they have been doing.

Do your leaders spend much time with customers?

According to Bain research shown below, the larger the company, the more time leaders spend on internal meetings, rather than directly with customers. They know this and they hate it.

Ask your senior managers how much of their time they spend with customers and how much they would like to spend. If they currently devote more than the proportions below to customers, you can consider them to be committed. All of this has a perverse benefit for the customer experience leader in a large company. If you can come up with simple proposals that let leaders spend more time with customers, and with minimal effort on their part, you will win.

Check your Intranet

Now you know what is being said publicly. Are the public statements about customers backed up by the internal priority list? What has the CEO said in his or her latest email message to all employees? Assuming you have an intranet, go to the home page of each member of the corporate leadership team. Look for their lists of priorities for their teams. Are customers mentioned? If you work for a large company, look one layer down. What do you see? I suggest making a table with all the priority lists and discussing it with your leadership team.

Do the actions match the words?

Now you know what your leaders are saying. Time to inspect what they are doing. Start internally. Does your company hold events for sales teams? Do customers or partners attend and speak at these events? If you have effective monopolies in some product areas, what has been your approach to pricing? Do you put prices up each and every year, as some notorious pharmaceutical companies have been seen to do? If you are in software and perform license audits on customers, is it done by a helpful operations person or an aggressive lawyer? What is your supply chain team’s attitude to their operational metrics like level of fill and delivery to customer commit dates? Is there evidence that both the standard and the performance have been steadily improving over time, or does cost reduction seem to compromise that?

Price gouging — a particularly insidious move

When I first wrote on this subject in 2016, the New York Attorney General had launched an investigation into Mylan Pharmaceuticals, the maker of EpiPens. An EpiPen is used to provide life-saving injections to people in anaphylactic shock, due to allergies. The reason for the investigation is that Mylan have had a monopoly on the product and have increased its price in the USA by 471% since acquiring it in 2007. The CEO’s initial public attitude to this seems to be “Hey… I am just running a business here.”

Daniel Kahneman has written about price fairness and the consequences of unfair pricing in Thinking, Fast and Slow. He gives examples of a hardware store that puts up the prices of snow shovels by a third during a storm, and of an employer putting down the salary of an existing employee due to competition. Very few people consider these practices to be fair. So what? So… he goes on to cover the revenge customers are prepared to take when they see an unfair practice. Indeed, not only will customers take revenge, many other people who are not customers will happily join in to punish the unfair practice and they will all feel great about it. This is what is currently happening with Mylan. Go to their website at www.mylan.com. It purports to show how caring they are. The actions do not seem to match the words.

Corporate goals can conflict with each other

In larger companies, each corporate function can have goals that seem perfectly sensible in isolation, but conflict with each other. I remember one of these situations arising when I was in the HP office in the center of Prague. A bank across the road had a guaranteed 30-minute intervention time for their systems. We held spare parts in our building for them. The local team were unpleasantly surprised by the results of the corporate Real Estate team’s cost reduction goals. We had to leave the expensive office downtown and move to a cheaper location, making it impossible to honor the service time guarantee with existing processes.

A similar exercise led to a proposal to close a remote parts stocking location in the east of Russia. The next-closest office was over a thousand miles away. Our response time guarantee to a local oil company was at risk. Unfortunately, we had to find more expensive solutions for servicing the customers while still allowing the Real Estate team to make their goals. If you work at a company that needs to reduce costs, try hard to ensure that each cost goal that could impact a customer is accompanied by an appropriate customer-centric operational metric.

Next time

The next article will be the first in a set of three about securing and sustaining leadership commitment for your work.

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.

October 8, 2019

NPS (34) – Employee development opportunities – 34th article in a series on the Net Promoter System®

Maurice FitzGerald / Blog, Employee Satisfaction, Net Promoter System, NPS / Customer Experience, employee training, Net Promoter System, NPS, strategy /

Welcome to the 34th article in my series on the Net Promoter Score and System.

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

Many companies have employee training and development processes. Here is how the Net Promoter System should be included in three common types of company training program. And I have added the latest information about recognized NPS professional certification.

Graduate development programs

Most large companies have formal programs to hire and develop graduates from targeted business schools. Company representatives have stands at university recruitment days. They also proactively contact students in particular classes, trying to position the company as an attractive place to work. Once of the common graduate benefits is a formal training program for new hires, along with guaranteed minimum salary increases for the first year or two. One the one hand, these new hires may rise quickly in the organization. On the other hand, they are relatively unlikely to stay for more than a couple of years.

The customer experience leader needs to contact the leader of the graduate program and supply the NPS training content without being asked. If there is a welcome pack or website for new people, your customer listening and improvement process needs to be part of it. Be open about what customers want the company to improve. I don’t see a reason to directly involve new hires in the improvement work. They simply need to understand what the overall process looks like.

Top Talent programs, Fast Track programs

HR evaluation processes are used to identify ‘top talent’ in many companies. These are the people who have high formal performance ratings and who have been subjectively identified as having strong growth potential. (If you think you work for a company that has abandoned formal performance reviews, you are kidding yourself. They still exist, and have simply been given a different name. There is always some fact-based process for distributing money from the annual salary increase and bonus pools.)

I have been involved in several such programs, and it has always surprised me how difficult the organizers find it to develop the curriculum, when it is done internally. This is a great opportunity. I have found them receptive to proposals to deliver customer-centric content myself. The most common proposal I have made in recent years is to start by explaining the Net Promoter System and the latest competitive benchmark results. The participants are then invited to brainstorm and develop improvement initiatives that they then manage while they participate in the program. The last time I did this at HP, I was given a full day of the three-day opening session.

Individual development plans

Most medium and large companies require managers to agree job plans and development plans with each of their employees. It may be counterproductive to require all managers to include a customer-centric objective, as most will be meaningless. A better approach is to write to managers who are about to start working on the development plans. Provide them with a list of the improvements customers and partners are requesting and suggest which ones might be appropriate for a specific manager’s people. Offer to support the formal documentation and implementation of relevant projects.

NPS professional certification

There are not many sources of professional certification for the Net Promoter System. Bain provides customized training for individual clients, though no recognized certification. Satmetrix has been acquired by NICE and is the only official source of certification for your NPS professionals. Official means recognized as such by the co-inventors, Fred Reichheld, Bain and NICE-Satmetrix. The current certification format is called the Net Promoter Masterclass. The development and implementation of the platform has been managed by former Satmetrix CEO Richard Owen and others from his Owen CX team. Their main certification offer costs $3,000 and includes the online certification test, 12 months access to a large library of material, and access to a forum moderated by Owen CX consultants.

Medallia and some other companies also provide non-official NPS training. Medallia’s it concentrates on aspects that support the use of Medallia software. Not quite ideal.

Conclusion

Inclusion of the Net Promoter System in company hiring and development programs will not happen spontaneously. The customer experience leader needs to find out what development programs exist and get involved at the appropriate time. Some of the timing is predictable, such as when graduates are likely to join, and when HR requires all development plans to be submitted in Workday, or whatever management tool your company uses. Be proactive.

Next time

The next article will be the first in a set of three about securing and sustaining leadership commitment for your work.

October 1, 2019

NPS (33) – Why not ask your employees what your customers want? (ceNPS) – 33rd article in a series on the Net Promoter System®

Maurice FitzGerald / Blog, Employee Satisfaction, Net Promoter System, NPS / ceNPS, Customer Experience, employee satisfaction, Net Promoter System, NPS, strategy /

Welcome to the 33rd article in my series on the Net Promoter Score and System. I want to introduce a new concept this time. I call it ceNPS and here is what it is about: Your employees have quite a bit of knowledge about your customers. Why not ask them what your customers want you to improve? Employee ideas tend to be easier to implement and the whole process costs less and is faster than going systematically out to customers.

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

We have talked about asking customers what to improve, and improving it. We have mentioned the same approach for employees. I now want to introduce a hybrid concept: ask employees what to improve for customers. Let’s call it Customer-Employee NPS, or ceNPS.

Why should the customer be the only source of customer knowledge?

Customers are the best possible source for information about what they would like to see improved. As to how to improve it, well, they leave that up to you. Your employees have a different perspective. Most are aware of things that could be made better for customers. Many also have precise ideas about exactly how to do so. I therefore suggest testing the following survey with your employees to see what value it provides:

How likely are our customers to recommend our company?
Why?
What should we improve for customers and how?

Use the same techniques as for customer research to prioritize the input. I don’t see why this would not work in all industries, bearing in mind that ‘customer’ means the direct customer of the company, which could be a retailer that sells onwards to end customers.

Compare with customer feedback

In a rational universe, there will be at least some overlap between customer feedback and employee views on what customers need. Compare the top five suggestions on both lists. Items that come up high on both lists are ideal; the customer’s expression of the need will match employee suggestions on how to implement the improvement.

Employees will have different ideas

Employees may have insights in areas that would not naturally occur to customers. One example that springs to mind happened shortly after HP set up a centralized pre-sales group in Bucharest, Romania. When the new operation started up, it would be fair to say that the people were quite passive, just doing what was asked. Sales people and resellers asked them to provide price quotations to customers, and they did that work well. Then the team supporting the Benelux noticed something. As negotiation cycles continued, sales people removed things from orders to meet a customer price point. Notably, offers for servers and storage that started with round-the-clock support services were often reduced to a cheaper business-hours-only proposal.

The Benelux team in Bucharest decided to systematically give the customers two proposals: one exactly as requested, and one with the service levels they believed the customers really needed, at a higher price. The initiative was a great success, with about half the customers taking the more appropriate service proposal at the higher price. For customers who accepted, it completely eliminated the situations where they would call during a weekend to be told that their contract did not cover the repair. A customer would never have thought of this double-proposal idea.

Employees should lead the implementation of their own ideas

Unless you have an excellent reason for not doing so, the person who made the suggestion should always lead implementation. Letting anyone else lead eliminates a career development opportunity and allows one aspect of human nature to creep into the picture: rejection of other people’s ideas. Just as the golden rule of project planning is “Those who implement must do the planning”, the golden rule of ideas is that the idea generator must drive the implementation. Yes, it is true that really creative people are usually awful at implementation, and that will be their career development opportunity.

Include your subcontractors and partners

If you use resellers and subcontractors, they should be included in your improvement culture too. Simply follow the same approach as for employees. I know of no example of any company doing this and am sure the reaction will be positive. It is to be expected that your partners will have privileged relationships with some of your end customers. You need to learn from them.

Next time

The next article will be about employee development in the context of customer experience work.

September 28, 2019

NPS (32) – Employee Net Promoter Score (eNPS) – 32nd article in a series on the Net Promoter System®

Maurice FitzGerald / Blog, Employee Satisfaction, Net Promoter System, NPS / Customer Experience, employee satisfaction, eNPS, Net Promoter System, NPS, strategy /

Welcome to the 32nd article in my series on the Net Promoter Score and System. This time the subject is a variation on the Net Promoter Score: the Employee Net Promoter Score or NPS. Bain revised the initial concept just under two years ago so some of what follows may be new to you.

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

What is eNPS?

Most medium and large companies, NGOs and public sector organizations measure employee happiness in a structured way, on a regular basis. The purpose of such research is usually to help executives to understand what the general employee population would like them to improve. The CEO also gets to find out what improvements the executives would like to see. Almost everyone uses excessively complex survey methods that take too long and provide limited information about improvement suggestions. Applying the Net Promoter System solves these problems.

Darci Darnell of Bain announced Net Promoter for People in a Bain Net Promoter System podcast on November 30th, 2017. It enhances the original eNPS by adding an additional question. Employee Net Promoter Scores used to simply be the answers to the question: “How likely are you to recommend our company as a place to work?” The additional question is “To what extent do you agree with the following statement: I am inspired by my job.” It is measured on a five-point scale.

Bain research showed that verbatim comments relating to recommendation were mainly about basic needs and things about which employees are dissatisfied. The inspiration question produces verbatim responses that are about their higher-level need and suggestions for a positive future. The two rating questions are followed by the standard “Why?” and “What could we do better?” questions. Note that I continue to use ‘eNPS’ to refer to the new format. And it is also the case that the Bain website still (as of September 2019) contains references to the old eNPS format.

How not to measure employee satisfaction

Most companies that measure employee satisfaction do so once a year. Data collection is a significant exercise and a typical survey has about 80 questions. Analysis is often done by a third party. Results are usually available four to eight weeks after the survey period ends. Companies may further delay publication for various real or imagined reasons, such as not wanting them to compete for attention with quarterly earnings messages. Sub-scores are calculated for areas like employee engagement, or compensation & benefits. There may or may not be open questions with free text input.

To use an old saying, the result of such surveys is far too much data and far too little information. Let’s suppose your employee engagement questions score lower than last year, and lower than the average for your industry. Since you only have numbers, you don’t know why it happened. The usual first phase is one of denial, “Well, we had a major management change right in the middle of the survey period, so the change is understandable. Let’s wait until next year to see if we need to act.” If you can get through that sort of reaction, the next phase is one of focus groups. You may have collected data from 10,000 people, but the decisions about what to do are given to a group of ten people, for example. You could just have started there, skipping the survey, if you think that is a good approach.

Benchmarks

There are no recognized benchmark suppliers for eNPS. The Mayflower group in the USA and the RACER group in Germany have set up agreements among member companies to share employee survey data. The IT Survey Group (ITSG) is a recognized source of non-eNPS employee survey benchmark data for the IT industry. Member companies agree to ask 60 survey questions in exactly the same format, and using the same rating scale. They then use the average ratings as a norm for their own scores. There are no verbatim questions in the ITSG data set, so there is no information on what the average IT industry employee would like his or her company to improve.

The 24 companies shown below are the ITSG members as of September 2019. They all use the long-format surveys ITSG membership requires. At HP, we took the comparison with ITSG numbers seriously. We just did not directly know what to do.

Let’s make it a lot simpler

The new four-question eNPS format used for Net Promoter for People presents an obvious way of doing simpler surveys. You already have all the demographic information you need about them, so analysis should be easy. Yes, the demographics matter a lot. Men and women tend to give radically different answers, for example. Happiness also tends to decrease with increasing length of service.

No matter what the demographic group, the trend is more important than the absolute number. This brings us to another advantage of the eNPS method. I recommend sampling one-sixth of your population every month, sending new survey requests each and every day. The great advantage this brings is that you will be able to see the effect of different things happening in your company, such as earnings announcements, new product announcements, executive arrivals or departures, and even external factors such as a stock market crash or an election.

Follow the NPS framework

The NPS framework works for eNPS as well. Employee feedback is usually anonymous. Typically, a manager will only receive a report if at least eight of her employees have provided feedback. The Inner Loop then takes place at the level of each team. The Outer Loop addresses company-wide improvements. Regular Huddles are the correct way to drive progress and ensure interlock between inner and outer loops.

Indirect advantage

On top of simplicity and the ability to do continuous monitoring, there is an indirect benefit. All employees will become familiar with NPS. They will easily understand that you are asking customers and employees similar questions and follow the same improvement process. Of course, if you take no visible action on the employee feedback, it will be harder to persuade employees that you are indeed acting on customer feedback. You need to do both.

Cultural differences matter a lot in traditional employee surveys and less in eNPS

While cultural differences matter somewhat in customer surveys, they seem to matter a lot more in employee surveys. CEB (www.cebglobal.com) has published the graph below that emphasizes the point. In short, unrealistic self-perceptions of performance are common. These differences are greater than those found between countries for customer surveys.

Personally, I find the table surprising. North Americans use ‘curve grading’ in their schools. Curve grading means that a fixed proportion of a class gets an ‘A’ grade, a ‘B’ and so on, no matter what the objective level of the class is. Most Americans therefore grow up having a realistic view of how they compare to others in the classroom. Apparently, this knowledge is discarded when they enter the world of work. Curve grading is rare in the other countries on the list. Could these facts be related? I could speculate, but don’t really see how they could be.

In short, unrealistic self-perceptions of performance are common. These differences are greater than those found between countries for customer surveys.

An additional communication challenge

We have seen that you should not compare countries to each other in your reporting. A fair way of reporting on countries would be to show only the trends, not the absolute numbers. Just leave the numbers off the y-axis in your graphs. There is an additional communication challenge with eNPS. I have generally seen eNPS scores that are about 20 points lower than the customer scores for a given business. What that means is that eNPS scores are far more likely to be negative numbers than are customer scores.

As previously advised, if your first report on a topic only contains bright red negative numbers, your audience will intuitively deny the reality of your report and ignore it. Rather than perverting the system by (say) adding 20 points to all the numbers to ‘normalize’ them, I suggest devoting the first report entirely to the improvement suggestions and the answers to the Why question. You can supply the positive or negative eNPS trend numbers from the second report on, without necessarily providing the absolute scores at all. You may like to believe your audience will have a rational response to a set of negative numbers, but they will not. Intuition rules. Deal with it.

Conclusion

Use eNPS as your primary ongoing survey methodology and execute it continuously. If you (mistakenly, I believe) think you get value from participating in a benchmark consortium, continue to do that huge survey for a year or two, comparing the actions you take from each survey type. I am confident you will discard the consortium survey, particularly as it does not give you direct insight on the performance of any individual competitor. If you genuinely want to improve things for your employees, just ask them what to do, then do it. The Employee Net Promoter System and Score are the most efficient and effective way of doing so.

Next time

The next article will be about a new concept: asking your employees to tell you what improvements customers would like to see.

September 23, 2019

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

Maurice FitzGerald / Blog, Customer Satisfaction, Employee Satisfaction, Net Promoter System, NPS / Customer Experience, employee satisfaction, Net Promoter System, NPS, strategy /

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.

March 28, 2019

#91 – Critical difference in B2B vs. B2C feedback, Speaking experience in Amsterdam

Maurice FitzGerald / Behavioral economics, Customer Satisfaction, Employee Satisfaction, Newsletter, NPS, Strategy / ACSI, Customer Experience, Customer Satisfaction, employee satisfaction, Net Promoter System, research, Speaking, strategy /

Differences in the way B2B and B2C customers answer open questions. Speaking experience at CustomerGauge event in Amsterdam. Welcome to the 91st edition of my customer strategy newsletter. The five topics this week are:

Unexpected (to me) difference between B2B and B2C customer feedback
My recent speaking experience in Amsterdam
Latest blog posts – Answers to CX leadership questions, employee/customer happiness
Notable items from other sites – Annette Franz and Rosaria Cirillo Louwman
Looking forward

Unexpected (to me) difference between B2B and B2C feedback

While working at HP my experience was that NPS Promoters write the longest answers to open questions. My operating assumption is that such customers like you and want you to continue to improve, so they do their best to help. Rob Markey confirms that this is what they see with Bain clients too. However, all of this is for business-to-business customers.

Since retiring from HP, I have been exposed to the situation at a number of B2C companies. I have seen data that shows the opposite pattern. Detractors write the most. In one large data set, Promoters used about 8 words to answer the ‘Why?’ question after the NPS rating, while Detractors used twice that, with Passives half way between. It may interest you to know that it made less than half a word difference for Promoters when people answered on their phones. Single-word responses from Promoters were quite common in all cases. “Great!”, for example. It would have been nice to know what exactly was great.

Since the data sets I have looked at are for companies without annual contracts I suspect this may just be true for companies that have a purely transactional relationship with their customers. Unfortunately, none of these data sets came from research that included the standard ‘What could we do better?’ question, so I don’t know whether the same would be true there.

Your views would be most welcome.

My recent speaking experience in Amsterdam

I spoke at the CustomerGauge Monetize! event in Amsterdam two weeks ago. What a great experience! The event was held in a theatre that has been created inside an old church. The lighting was great, and the general atmosphere was wonderful. Customer Experience work has advanced quite a lot in the last few years. It was great to see leaders from DHL, Electrolux, Salesforce and other companies present their achievements and concerns.

As is often the case, half of what I learned came from discussions during breaks and during the evening between the two days. Fascinating stuff. One of the blog posts in the list below covers my answers to the two most common questions I was asked during these informal interactions.

My main stage presentation was based on two different blogs that you may remember. The first is my ‘Valentine’s Day’ blog about the similarities in the relationships couples and companies have. The second is my recent work on using stories and emotions to communicate effectively. And I just received the preliminary results of the feedback request sent to all participants. My session was the top rated one on the first day. I have not seen the results for the second day, and don’t expect an overall ranking to be published. Anyway… Yay me! (And thank you to all the attendees.)

Congratulations to Camilla Scholten, Adam Dorrell, Sarah Frazier, Katerina Sinitskaia, Cvetilena Gocheva and the rest of the CustomerGauge team on a great event.

Our latest blog posts

Older posts are still available on the blog page.

Answers to two questions from new Customer Experience leaders: Where do I start, and to whom should I report?

I attended and spoke at the CustomerGauge Monetize! event in central Amsterdam last week. It was fabulous event, held in a theatre that has been created in an old church. Here are the answers to the two most common questions I was asked during breaks…

The best and worst of customer and employee satisfaction (Part two in a two-part series)

And here is today’s Fake News (though the quotes are real): “Our core values: … Put the customer first…” – Frontier Communications website… In reality there are many companies that customers hate though employees love them, and vice-versa. Here are the results of my research on the topic…

Do happy employees bring you happy customers? (Answer: In general – No!)

“Everybody knows that happy employees make happy customers.” “Satisfied employees are the single most important driver of customer satisfaction.” In reality, I don’t believe employee satisfaction even makes the top three for most companies. There are exceptions. I recently completed my third annual study on the (non-) relationship between employee and customer satisfaction…

Notable customer experience items from other sites

Annette Franz – Putting the customer at the center of every conversation

While this memorable article just came up in my LinkedIn feed yesterday Annette actually wrote it on her ‘CX Journey’ site back in 2002. It includes a mention of my ‘favorite hate’ in customer experience work. As she puts it, “I think hearing requires a subsequent action or reaction. And in the customer conversation, that part is often missing.” Annette goes on to suggest that only 5% of companies tell customers what they have learned from their research and what they are going to improve.

I think Annette is an optimist. In my own experiments in which I provided a total of 150 B2C companies with feedback, just a single one wrote back to tell me what they had learned and what they were going to improve. (Just FYI, that company was British Airways, which may surprise you. It surprised me as I have probably sent them about 20 survey responses over the years. At least they closed the loop that one time.)

Read this classic blog post here.

Rosaria Cirillo Louwman / Wow Now

I was able to meet Rosaria for the second time on the afternoon before the CustomerGauge event in Amsterdam. I first met her a few years ago when I spoke at a Satmetrix event in London. It was great to catch up, especially to discuss Yellow Goldfish, the recently-published book she has written together with Stan Phelps.

Rosaria founded Wow Now back in 2013. Her focus is not customer satisfaction or customer experience. I think it would be safe to describe it as happiness, meaning happiness of everyone involved in customer interactions, especially the customers, of course. Her framework builds a new layer on top of the well-known Maslow motivation pyramid: Happiness. She describes her focus as ‘happiness driven growth’ and has invented the Happiness Contribution™ Factor.

Read more about Rosaria’s book, training courses and Wow Now here. And you should be able to find the link to download her Happiness-Driven Growth booklet quite easily.

Looking forward

April will bring the second birthday of our first three books. My co-author/brother’s son is preparing a special birthday animation that you will see a few weeks from now. Thank you for your support during these two years. We are happy with the way the book has been selling, and especially the way they continue to sell well, even two years later. The CX strategy and NPS books occasionally make it up into the top 2% of all Amazon book sales. The cost-reduction book does not do quite as well. I suspect we need another economic downturn to make it more relevant.

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. 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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March 8, 2019

#90 – The relationship (or not) between employee and customer satisfaction

Maurice FitzGerald / Customer Satisfaction, Employee Satisfaction, Newsletter / ACSI, Customer Satisfaction, employee satisfaction, Glassdoor /

A different sort of newsletter this week. I have combined two blog posts on my annual study on the relationship between employee and customer satisfaction to make this special edition. Just like the last two years, I found that the relationship between the two factors is far weaker than most of us would like to believe. This year’s study is a bit larger and now covers 398 businesses that sell to US consumers. I hope you enjoy it. Please forward it to your colleagues and friends as you see fit.

“Everybody knows that happy employees make happy customers.”

“Satisfied employees are the single most important driver of customer satisfaction.”

In reality, I don’t believe employee satisfaction even makes the top three for most businesses. And I think I can prove it.

This is the third year in a row that I have studied the relationship between customer and employee satisfaction for large companies that sell to US consumers. The results have been consistent: There is almost no relationship between employee and customer satisfaction across the 398 business covered this year. Employee satisfaction explains just 6% of the variation in customer satisfaction across these companies. Mind you, “Almost no relationship” is better than my findings in 2017, which were simply that there was, on average, no relationship.

Within the overall results there are exceptions and surprises. There are industries and entire sectors where employee satisfaction matters a lot more. There are also striking examples of companies whose employees hate them while their customers love them. The opposite is also true. And these are big names.

Let’s begin

Back in 2017 I asked myself whether there was any actual evidence for the many statements that I could find that were similar to those at the top of this article. What I found was highly disappointing, to say the least. I found low-volume studies. I found attractive anecdotal studies based on single companies. I found low-volume and single-company studies about employee engagement, which is a different subject. More on employee engagement later. In short, the whole subject had not been studied scientifically. Repeating my searches before writing this article gave the same result. Nothing useful.

It is not surprising that the subject is tricky to study. Companies do not disclose the results of their own internal employee surveys. High-volume public benchmark data about customer satisfaction is also rare. However, it does exist, as does a single high-volume source of employee satisfaction data. I use Glassdoor data for employee satisfaction and the American Customer Satisfaction Index data for customer satisfaction. This year I was able to match the two for 398 businesses. Here are the highlights:

Overall results

ACSI Glassdoor

At the top level and across all businesses, variations in employee satisfaction explain 6.2% of the variations in customer satisfaction. However, I somewhat arbitrarily decided that 129 of these businesses, such as hotels, retail stores and airlines, are ‘high-touch’. By this I mean that employees have regular face-to-face contact with customers, where their smiles and empathy may make a difference. The remaining 269 are ‘low-touch’. I have used quadratic regression for the graphs below and think they are interesting.

High-touch businesses

ACSI Glassdoor High-touch

For the high-touch businesses, variations in employee satisfaction explain 16.8% of the variations in customer satisfaction. Among well-represented industries, the nine hotel chains top the list at 61.8%, followed by 17 supermarket chains at 49.1%.

Low-touch businesses

ACSI Glassdoor Low-touch

At the other end of the scale, low-touch industries have an average of 8% interdependency between employee and customer satisfaction. The energy utilities industry is represented by 23 companies and shows no relationship at all. I don’t find this surprising. When was the last time you spoke face-to-face with an energy company employee? In my own case, they don’t even need to come out to read our meters anymore.

Performance by industry sector

ACSI data is provided by company and by industry, and the industries are grouped into sectors. Some sectors do better than others as you can see in this table:

ACSI-GD by sector

Retail does rather worse than last year. While it might be tempting to say that this is because Internet Retail is now included in Retail, that’s not the problem. Health and Personal Care stores now have no relationship between employee and customer satisfaction.

Performance by Industry

I removed all industries represented by less than five businesses from the table below. This may not be entirely fair. After all, if there are only three large businesses in a particular industry in the USA, the ‘Normal distribution’ rules of statistics don’t apply. If there are only three and you cover them all, you have a good sample. Similarly, there simply aren’t 30 major hotel businesses in the USA, so any preconception you may have that you need a minimum of 30 for a valid sample is simply wrong. In any case, you will be able to make your own judgments when you download the data.

ACSI Glassdoor by Industry

It should not surprise you to see hotels, supermarkets and restaurants at the top of this list. For hotels, employee satisfaction variation explains 61.8% of the variation in customer satisfaction. Employees are an integral part of the experience in these industries. For many of the industries close to the bottom, we never come into face-to-face contact with the employees, so the lack of a relationship between employee and customer satisfaction should not be a surprise either.

And here is today’s Fake News (though the quotes are real):

“Our core values: … Put the customer first…” – Frontier Communications website

“We take pride in knowing how to take care of you.” – Message to potential employees on the State Farm website

“Our team members are the key to our success. Whether they work behind the scenes or are out there delivering great service to our guests.” – Frontier Airlines website

This is the second article about the results of my third annual study of the relationship between employee and customer satisfaction. The first article is here. This time I will cover love and hate, stars and goats. (What a program!)

Love-hate relationships

Here are the companies whose employees love them while their customers hate them. From a data perspective, this means they are in the top 10% of the Glassdoor scores while being in the bottom 10% of the 398 ACSI scores. There are just four companies in this category:

ACSI Glassdoor love hate

Should we be surprised by the positions of the three social media businesses here? Great employment conditions and the fact that the customers seem to hate them is not really a major source of concern. We could debate whether the US consumers answering the ACSI feedback requests are actually the customers. After all, the companies’ main source of income is from advertisers, who were not asked. As for United Airlines, I think the few high-profile nasty incidents they had with passengers last year and in 2017 made a difference to perceptions. They had the biggest drop of any airline. My prediction is that it will all be forgotten in 2019 and they will have the biggest improvement.

And there is just a single company in the opposite category. Kraft Heinz employees give them an appalling Glassdoor score of 2.9, while customers give them an ACSI score of 82. I think it is safe to say that Kraft Heinz employees have a lot to deal with these days and never come into contact with end consumers.

Companies that seem to get everything right – The heroes

Yes, they exist. Here are the companies that are in the top 10% on both the ASCI and Glassdoor lists:

ASCI Glassdoor best performers

Note that the list is in the order of the Glassdoor rankings. Hilton topped the ACSI list for hotels for the fourth year in a row, and their employees love them too. Do you see anything surprising here? I don’t.

Companies that seem to get everything wrong – The goats

Personally, I think goats are cute and I am not sure why various BCG-style business models cast them as the villains. Anyway, here are the companies that managed the difficult task of being in the bottom ten percent for both their customers and their employees:

Should we be surprised to see the lower table almost exclusively populated by ISPs and TV service providers? I think not. Telecommunications companies have a reputation for disdain of both customers and employees.

Are these comparisons fair?

No, the comparisons are not fair, at least as far as customer satisfaction is concerned.

Customer satisfaction varies strongly by industry. There are industries, such as telcos, cable TV companies, and Internet Service Providers, that have little or no opportunities to ‘delight’ us. If they do their jobs perfectly, we simply don’t notice them. We only notice them when things go wrong. So it is to be expected that they would do relatively poorly in customer satisfaction comparisons that cross industry lines. However, that is no reason for them to treat their employees badly.

Conclusion

We should not find the lack of a strong relationship between employee and customer happiness very surprising, for two main reasons. First, a company’s products and services are generally far more important to customers than the employees. The main exception to this rule is where the employees are the product. Second, employee happiness and employee engagement are two quite different concepts. Employees can be happy with their pay, the food in the company restaurant, and their commute to work. None of these do anything for customers.

Employee engagement is a more sophisticated concept that lacks a standard definition. When I worked at HP the Employee Engagement Index was an aggregate of nine questions. Other companies use different standards, as does every study I have read on the subject. (For the experimental scientists among you, this smells of ‘p-hacking’. Ask a lot of questions in your employee survey. Determine after the fact which set of ten have the best correlation with revenue growth. Combine them in some way and call that your ’employee engagement index’. That’s cheating!)

Data

I have put an Excel sheet with the data here. There are four tabs. It is not very pretty. I have inspected it in various ways but may still have made some sort of error. If you find one, please let me know.

Lots more writing like this in our books. All of our books are available in paperback and Kindle formats from Amazon stores worldwide.

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

To change your subscription, click here.

March 7, 2019

The best and worst of customer and employee satisfaction (Part two in a two-part series)

Maurice FitzGerald / Blog, Customer Satisfaction, Employee Satisfaction / ACSI, Customer Satisfaction, employee satisfaction, Glassdoor /

And here is today’s Fake News (though the quotes are real):

“Our core values: … Put the customer first…” – Frontier Communications website

“We take pride in knowing how to take care of you.” – Message to potential employees on the State Farm website

“Our team members are the key to our success. Whether they work behind the scenes or are out there delivering great service to our guests.” – Frontier Airlines website

Love-hate relationships

Companies that seem to get everything right – The heroes

Yes, they exist. Here are the companies that are in the top 10% on both the ASCI and Glassdoor lists:

Companies that seem to get everything wrong – The goats

Are these comparisons fair?

No, the comparisons are not fair, at least as far as customer satisfaction is concerned.

Conclusion

Data

If you enjoy this sort of thing, there is lots more on this topic and many others in our book Customer Experience Strategy – Design and Implementation. All of our books are available in paperback and Kindle formats from Amazon stores worldwide.

March 6, 2019

Do happy employees bring you happy customers? (Answer: In general – No!)

Maurice FitzGerald / Blog, Customer Satisfaction, Employee Satisfaction / ACSI, Customer Satisfaction, employee satisfaction, Glassdoor /

“Everybody knows that happy employees make happy customers.”

“Satisfied employees are the single most important driver of customer satisfaction.”

In reality, I don’t believe employee satisfaction even makes the top three for most businesses. And I think I can prove it.

Let’s begin

Overall results

High-touch businesses

Low-touch businesses

Performance by industry sector

ACSI data is provided by company and by industry, and the industries are grouped into sectors. Some sectors do better than others as you can see in this table:

Performance by Industry

This is part one. What’s next?

This is the first instalment. Here is a link to the data so you can download it and do your own analysis. Note that the Excel sheet has four tabs. In the next article I will cover the companies that employees love while customers hate them, and vice-versa. I believe these lists will be quite enlightening and will make it seem more logical that employee and customer satisfaction do not necessarily go together. I will also provide details of the companies that are at the top of both lists, and of course the opposite. I also go on to suggest why these results should not be a surprise.