ACSI

ACSI-NPS 800

Useful if you have no NPS® benchmarks for your company – ACSI to NPS converter

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As many of you know, public competitive NPS benchmarks are exceedingly rare. The only large-scale public customer satisfaction data I know of is the American Customer Satisfaction Index. So… the question I asked two years ago is whether it would be better than nothing to design a method of converting an ACSI score into an NPS number. The graph above shows the mathematical relationship between the two numbers. There is some research that supports this approach. And of course, any results are only as good as the sources of the data.

Temkin and ACSI data

Bruce Temkin publishes NPS benchmarks. You have to pay to have the full database. However, the summary by industry is free. The American Customer Satisfaction Index people publish satisfaction benchmarks for hundreds of large US companies that sell to consumers. Access is free, and they also summarize the data by industry sector. So, I took both sets of industry results from 2015 to 2018 and mapped them against each other. It gives the graph at the top of this article. You can see the equation of the trend line too.

Research results that support this approach

The ACSI number is a composite metric based on the answers to three questions in the ACSI survey. A Net Promoter Score is based on the answer a single question, “How likely are you to recommend X to a colleague or friend?” Keiningham, Cooil, Andreassen and Aksoy wrote a paper critical of NPS back in 2007. You can find it here. Among other arguments they show that both ACSI and NPS have similar ability to predict a company’s revenue trends. (Reichheld has never said otherwise. His claim has always been that the recommendation question is the best single-question revenue predictor for most industries.) Since their revenue prediction ability seems to be similar it therefore seems reasonable to expect a conversion equation to be at least somewhat accurate.

Examples

Chick-fil-A has a 2017 ACSI score of 87. Applying the y = 1.4781x – 84.59 equation means they have an approximate NPS of 44. Facebook has an ACSI score of 67. That translates to an approximate NPS of 14.

Conclusion

Is this useful? If you think at least the principle is useful, I would welcome any knowledge you may have about public sources of competitive benchmark NPS data. One important point here is that we need competitive benchmarks, meaning a set of NPS results for multiple companies that has been developed using a single method for all companies covered. This excludes self-announced results for a single company. At the moment, the only defect I see in my current method is that Temkin and ACSI cover an overlapping but different set of companies in each industry.

Please let me know what you think.

Maurice

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

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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:

  1. Unexpected (to me) difference between B2B and B2C customer feedback
  2. My recent speaking experience in Amsterdam
  3. Latest blog posts – Answers to CX leadership questions, employee/customer happiness
  4. Notable items from other sites – Annette Franz and Rosaria Cirillo Louwman
  5. 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.

image 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…
image 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…
image 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)

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.

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

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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.

 

So Happy Here

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

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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.

 

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.

 

 

Acme Happy

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

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“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.

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.

 

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.

 

 

#89 – Employee and customer sat, Consumer subscription service feedback

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Welcome to the 89th edition of my customer strategy newsletter. The five topics this week are:

  1. Relationship between employee and customer satisfaction
  2. The right time to ask for feedback on a consumer subscription service
  3. Latest blog posts
  4. Notable items from other sites – Willie Pietersen, Eric Smuda ex-Compaq, HP, Avis, Hertz
  5. Looking forward

Relationship between employee and customer satisfaction

The American Customer Satisfaction Index people released the final part of their 2018 customer satisfaction data earlier this week. I have been able to match the scores against Glassdoor employee satisfaction data for 398 large businesses that sell to US consumers. This is up from 345 last year and hopefully makes the data more reliable.

There are a few surprises, though the overall message has not changed: there is not much of a relationship between employee and customer satisfaction. Variations in employee satisfaction across the 398 businesses explain just 6.2% of the variations in customer satisfaction. This is up from last year’s number of 4.4%. There are industries and indeed a whole sector where there seems to be no relationship at all between the two. The big surprise is that the relationship for the retail trade has dropped significantly. This turns out to be an artefact of the ACSI including eCommerce sites in retail this year while they were separate last year.

At the moment I am doing extensive data validation. This is the third time I have carried out the study. I made minor mistakes each of the first two times and am in the process of ensuring I have at least not made the same mistakes again. I will then write a series of blog posts. The ones you should expect are:

  • Overall results, including an analysis of ‘high-touch’ and ‘low-touch’ businesses.
  • Lists of companies that employees hate but customers love, and vice-versa.
  • Lists of companies that both the employees and customers love, and of course the opposite view.

Based on the feedback I receive each year I suspect most of you believe my study is wrong. Indeed, I submitted it to one academic publication and one business publication the first year and it was rejected by both as not being credible. Nobody, and I mean absolutely nobody, has been able to present a scientific analysis that proves anything different. I look forward to the feedback this year.

The right time to ask for feedback on a consumer subscription service

I just answered a question about when you should ask customers for feedback about a ‘box subscription’ service. This is the type of service where you receive something different every month. Kiwico is an example, with their scientific toy kit subscription service, and I have seen subscriptions that give you a new book every month. Here is how I answered the question:

  1. If you have no people or budget to work on improvements that customers may suggest… well… you are better off not asking them for feedback at all. So, if you have no resources, the right time is never.
  2. You want to be able to work on improvements and tell the customers about them before their subscription deadline comes up. If all customers do not have the same renewal date, this really means working on a single improvement every quarter, then telling the customers when you have completed it. Once again, if you don’t have the resources needed, then please don’t ask for feedback.

Your input welcome.

 

Our latest blog posts

Nothing new this week as I have had my head down working on the employee-customer satisfaction research. Older posts are still available on the blog page.

image Valentine’s Day classic blog – How to stay married – to your customers of course!

It was Valentine’s Day a few years ago, and I was puzzled by the results of some HP customer experience research. The data source and volume were impeccable. However, the results were surprising. Then I remembered what day it was, and everything became clear…
What skills do you and your customer experience team need to be successful? (5-minute read)

While pure luck was a major factor, my use of Microsoft Project version 1.0 on my personal Mac certainly had a major positive influence on my promotion to the European HQ of Digital Equipment Corporation…
image The nature of customer-centric strategy and why your team needs one (Intense 3-minute read)

I have been broadening my writing horizons somewhat over the last few weeks. Among others, I have contributed thoughts on customer strategy to discussion on LinkedIn, Quora and the members-only Customer Experience Professionals Association forum. Some clarity seems to be needed…

Notable customer experience items from other sites

Willie Pietersen – Five time-tested ideas for success

Many of you know that I consider Willie Pietersen to be the greatest strategy teacher on the planet. As a former CEO of some major companies, his advice is intensely practical. His latest blog post is no exception. The five concepts covered are easy to understand. They are:

  1. Our only sustainable competitive advantage is our ability to learn faster than our competitors
  2. Success means putting the customer at the center of business decisions
  3. Strategy is about achieving differentiation by making choices
  4. Leaders must be able to simplify a complex world
  5. To move people at the deepest level, you need compelling stories

Willie’s first strategy book is the only book I have ever read a second time immediately after finishing my first read. I did the same with this blog post. Read it here.

Bain NPS podcast – Interview with Eric Smuda, former CX leader at Compaq, HP, Avis, Hertz

A fascinating and insightful interview with Eric Smuda. My time in CX at HP started after Eric left and I never heard of him at Compaq. I wish I had. He is clear and insightful about what it takes to develop and implement a customer experience strategy. I learned a lot about the car rental business and found some of the stories fascinating. Like the one about the need to reposition cars around New York. Hertz uses a single car fleet. The weekday demand is at the airports. The largest single weekend demand is from people who live in Manhattan and want to get away for the weekend, starting on Friday evening. So Hertz drives huge numbers of cars from the airports into town. It is a constant stream as there is not much space for them in Manhattan. That’s just one story and there are many others. Listen to them here.

 

Looking forward

I will be speaking at the CustomerGauge Monetize! event in Amsterdam on March 13th and will stay over to enjoy the other speakers on the 14th. I look forward to meeting any readers who will be there. And of course I want to complete my blog posts on the relationship between customer and employee experience. I am sure you will find them interesting.

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)

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.
Temkin NPS vs ACSI 800

Useful if you have no NPS® benchmarks for your company – Please help me to improve this ACSI to NPS converter

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As many of you know, public competitive NPS benchmarks are exceedingly rare. The only large-scale public customer satisfaction data I know of is the American Customer Satisfaction Index. So… the question I asked myself is whether it would be better than nothing to design a method of converting an ACSI score into an NPS number. I have found a solution. The challenge is that I don’t know whether the solution is any good or not. And by ‘any good’, I mean I don’t yet know whether it is better than having no solution at all.

Temkin and ACSI data

Bruce Temkin publishes NPS benchmarks. You have to pay to have the full database. However, the summary by industry is free. The American Customer Satisfaction Index people publish satisfaction benchmarks for hundreds of large US companies that sell to consumers. Access is free, and they also summarize the data by industry sector. So, I took both sets of industry results for 2015, 2016 and 2017, and mapped them against each other. It gives the graph at the top of this article. You can see the equation of the trend line too.

Examples

Chick-fil-A has a 2017 ACSI score of 87. Applying the y = 1.5314x – 87.684 equation means they have an approximate NPS of 46. Facebook has an ACSI score of 68. That translates to an approximate NPS of 16.

Next steps

Is this useful? If you think at least the principle is useful, I would welcome any knowledge you may have about public sources of competitive benchmark NPS data. One important point here is that we need competitive benchmarks, meaning a set of NPS results for multiple companies that has been developed using a single method for all companies covered. This excludes self-announced results for a single company. At the moment, the only thing I can think of to refine the equation is to go back to the 2016 and 2015 Temkin and ACSI results and add them to the data set used for the graph.

Please let me know what you think.

Maurice

#52 – Economics of loyalty, non-relationship between employee and customer satisfaction, AI for airline customer feedback, more

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Welcome to the 52nd edition of my customer strategy newsletter. The five topics this week are:

  1. Short answer to a question about the economics of loyalty 
  2. Reactions to articles on the non-relationship between employee and customer satisfaction
  3. Latest blog posts
  4. Notable items from other sites – AI analysis of airline satisfaction
  5. Looking forward
Short answer to question about the economics of loyalty

A reader asked ‘I wonder if you can assist me in understanding the concept of “The Economics of Loyalty” with examples’. You will see that I do not pretend my answer is 100% complete. I just feel these are the most important points. Please let me know if you disagree. Here is what I replied:

… Good timing for the question as I have been trying to work out how to express the concept concisely. I am sure you have found long descriptions like the one at http://www.bain.com/publications/articles/calculating-the-economics-of-loyalty-forbes.aspx. You may also have read what I have written on the subject in my NPS book Net Promoter – Implement the System.

Reducing it all to something simple is tricky, and I am not sure that what I will write here works for all types of businesses. Anyway, here are the two points I feel may be the most important:

  1. Cost of acquiring a new customer compared to cost of keeping an existing one. In an ideal situation, your sales people bring in new customers, while the sales process for renewing existing contracts is mainly administrative and costs a lot less. Divide the total revenue from new customers by the total sales and marketing budget, and you have the cost proportion for the first part. A similar calculation can be used for renewals. The two are often difficult to separate, and you may need to estimate the proportion of sales people’s time selling to existing customers.
  2. The profit margins from existing customers, versus new customers: This probably matters as much as the first point. Happy existing customers tend to pay close to full price. Unhappy customers tend to get price reductions. New customers tend to pay less than existing customers, at least for B2B.

Reactions to my messages on customer / employee satisfaction

Thank you for the many comments whether received directly, via LinkedIn or on Twitter. I wrote four articles in all. Newsletter subscribers received a long one, with details of the methodology. Note that I had to update it slightly due to an error I found in an Excel formula. The updated article is in the blog list below. The second article gave the lists of companies who were in the top 10% for both cusotmer and employee satisfaction, and those in the bottom 10%. The third article provided the counter-intuitive lists, meaning companies in the top 10% for one factor and the bottom 10% for the other. LinkedIn and Facebook are two of the four companies whose employees love them while their customers hate them. I doubt Facebook’s latest tribulations will change that. You will also see a short summary of the new information on the blog list below.

Most people who gave feedback were positive and appreciated that employee happiness and employee engagement are two different concepts. Employees can be happy about many things that have nothing to do with customers.  Two reactions I received were in the ‘my anecdotes trump your data’ category, meaning they just did not want to believe the data. And one, unfortunately was just “My data says the opposite” without any indication of what that data is or where it comes from. I would love to have been able to see it. I really don’t want to believe that employee satisfaction counts for nothing in most businesses. However, that’s what the data suggests.

As always, feel free to disagree…

 

Our latest blog posts

Here are the latest posts. Older posts are still available on the blog page.

image Yet more reflections on why corporate cost benchmarking is often evil and destructive

Regular readers will know that I am not a fan of cost benchmarking. The reason is simple. I think it is almost always misused, sometimes producing disastrous results. The primary reason is that the cost cutting takes place in the absence of clear statements and actions to spend more on the areas where companies want to invest and grow.
image Employees love these companies, and customers hate them… and vice-versa

My research this month and a year ago (see below) has established that there is little or no relationship between employee and customer satisfaction. This post simply gives the lists that should not exist: the companies employees hate but customers love, and vice-versa. If the conventional wisdom that the two always go together were true, these lists would not exist.
image The large US businesses with the best and worst customer and employee satisfaction

Here are the large US businesses that everyone (customers and employees) love, and the ones they both hate.
image Short update on last year’s research: There is almost no relationship between employee and customer satisfaction

This article is intended for readers who remember last year’s article or have read the corresponding chapter in our book Customer Experience Strategy – Design and Implementation. Others should read the longer version below.
image New data: Does employee satisfaction drive customer satisfaction? Not really!

This article is an updated version of what I wrote on the same subject a year ago. The results continue to be surprising and to go against what most people think. If you remember the details of last year’s article, the short version may be enough for you.

 

Notable customer experience items from other sites

Thematic software: Why US airlines rank best or worst, according to passengers

Great article by Alyona Medelyan on how to use web scraping and text analytics to understand what your customers are thinking. Truly an innovative approach. You can read it here.

CMO: Businesses rate themselves two times higher than consumers on CX

An Australian article about the main findings of the 2018 Starcom Media Futures report. And that gap has almost doubled since last year. Read more here.

 

Looking forward

I am currntly trying to suggest how a large sports association with three million members should go about getting feedback from its 60 national associations. I have never done anything like this before, so any relevant experience you have would be most 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, with the notable exception of Australia, where print versions are not available from amazon.com.au.

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

Employees love these companies, and customers hate them… and vice-versa

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My research this month and a year ago has established that there is little or no relationship between employee and customer satisfaction. The full article with the latest results is here. Like last time, the research has shown that there are some companies that combine the best and the worst. I have identified the companies that are in the top ten percent for customer satisfaction while being in the bottom ten percent for employee satisfaction, and vice-versa. Naturally, I welcome all views as to why these companies occupy their unenviable positions.

Customers love these companies, employees… not so much

Here are the companies that are in the top 10% for customer satisfaction of the 345 US companies analyzed, while being in the bottom 10% for employee satisfaction. As explained in the main article, customer satisfaction is measured by the American Customer Satisfaction Index scores, and employee satisfaction by the Glassdoor ratings given by current and former employees. The companies are listed in descending order of customer satisfaction.

 

Companies in the bottom 10% for customers and the top 10% for employees

If you believe what you read on the internet, such companies don’t exist. But LinkedIn and Facebook were on the same list last year. The only nuance I can offer is that ACSI studies consumer customers. LinkedIn and Facebook have customers, including me, who pay for services by giving LinkedIn and Facebook access to our personal data and browsing habits. These are the customers that ACSI measures. Both companies may (or may not) also have B2B customers who are perfectly happy.

Conclusion

That’s it for my current analysis. The overall conclusion is (once again) that employee satisfaction does not do anything at all for customers in most industries. There are some where it matters, but far less than you might expect. Since employees can be happy with pay, the food in the company cafeteria, their commute to work, and other factors that do nothing for customers, this should not be surprising. Employee engagement is a different concept from employee satisfaction. There is no standard metric for engagement, and people can be engaged while being unhappy. I would like to study other factors, like whether companies with more women in leadership positions have happier customers, but I have not found a good source of public data for this. Your input is welcome, and you are of course free to do your own analysis using the data posted on our resources page here. As always, if you like this sort of thing, please consider buying our customer strategy books on Amazon.

So happy here

The large US businesses with the best and worst customer and employee satisfaction

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As explained in my last article here, I have completed my second annual study of the relationship between employee and customer satisfaction for large US companies that sell to consumers. The results confirmed my conclusion that there is almost no relationship between the two for most businesses. The study also allowed me to understand which companies have both customers and employees that are very happy, and those where both are very unhappy.

My meta analysis covers 345 large US companies. I have used the American Customer Satisfaction Index data to measure customer satisfaction, and Glassdoor numbers to measure employee satisfaction. The two tables below show the companies that are in the top 10% on both lists, and those in the bottom 10%. The companies in the upper table are listed in descending order of ACSI score. For the lower table the sequence is from worst ACSI score to best. ‘Touch’ refers to the relative level of contact customers have with company employees.

Top 10% for both employees and customers

Bottom 10% for both employees and customers

So therefore…

If I were looking for a job, the companies on the upper list would be my priorities. And as for those on the lower list… well… Surely it must be frustrating for their boards and leadership teams to know that so many customers and employees hate them. Mind you, some of these are semi-monopoly businesses, so maybe they just don’t care. Remember that employee satisfaction and engagement are two different things. People can be happy with their pay, the distance they have to drive or walk to work, and the food in the company cafeteria. None of these do anything for customers. There is no standard metric for employee engagement, making it difficult to study.

As always, feel free to disagree below or by contacting me at mfg@customerstrategy.net. The rabbit drawing is of course by Peter FitzGerald and is the cover illustration for our book of his business drawings “So Happy Here” which is available from Amazon.

Next time: the counter-intuitive lists, meaning the companies whose customers love them while their employees hate them, and vice-versa.

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