Chief Customer Officer

NPS definition

The Net Promoter System® is defined and documented in one single way – Everything else is fake news

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I have been trying to work out why most Net Promoter System implementation I see are missing even some basic things. I believe I have found a new way of thinking about the problem.

The relationship between countries’ constitutions and the Net Promoter System

Many countries have a constitution. The constitution is the fundamental law of a country, and sets out the principles by which a country should operate. The United States has a constitution, and it has been enhanced by a number of amendments over the years. Here in Switzerland, the constitution dates from 1848, and our direct democracy model means we have the opportunity to propose and vote on amendments every three months. I think of these constitutional models as ‘open systems’. They are public, are clearly documented, and can be improved over time.

The Net Promoter System follows the same model. The current version of the NPS ‘constitution’ is The Ultimate Question 2.0 by Fred Reichheld and Rob Markey. The constitutional amendments are documented in a single location: the netpromotersystem.com website. The website includes a blog and podcasts that define the amendments to the NPS constitution.

Any representation of a country’s laws that does not take amendments to the constitution into account is wrong. And any representation of the Net Promoter System that does not take the updates on the website into account is wrong.

90% plus of all companies do not even use the correct NPS survey questions

Before trying to draw some conclusions, I would like to make a distinction between the score and the system. Since Net Promoter is an open system, anyone can take whatever element they like and combine it with whatever they want. This is what almost all software vendors and consulting companies have done with the Net Promoter Score. While defining the score correctly, they combine it with open questions and improvement processes that are not the same as those documented in the Net Promoter System. Indeed, I feel confident when I say (without any proof other than my experience of answering about a hundred NPS-type feedback requests that I have received over the last two years) that 90% or more of all companies that use the score do not even use the correct survey questions, let alone the rest of the system. The same applies to vendors that supply NPS software.

Unfortunately, the same applies to training. NICE Satmetrix is the only certified NPS training provider and I believe they currently only offer training in what they call NPS2. NPS2 is something different from the Net Promoter System as defined by its reference point. This is unfortunate, given they are joint holders of the NPS service marks, together with Bain and Fred Reichheld. Bain provides training that is individually customized to the needs of their implementation customers, but does not offer a standard course of any kind.

Standardization matters

Standardization beyond the recommendation question matters. At the very least, please use the correct open questions in your implementation. For overall brand and relationship research, the questions that should follow the scoring question are ‘Why?’ and ‘What could we do better?’. Close approximations to the second question are acceptable, such as ‘What should we improve?’. Being consistent on these will at least allow software vendors to provide better survey and text analytics software.

Conclusion

If we can all be more consistent in how we implement the Net Promoter System, we will all find it much easier to communicate. It is already the system that is easiest to communicate. However, our apparent collective difficulty in keeping up to date with its ‘amendments’ make us less consistent than we should be. I do not know of any company that provides a training course that corresponds to the current version of the Net Promoter System. If you know of one, I will be happy to mention it here. In the meantime, please use The Ultimate Question 2.0 and the netpromotersystem.com websites as your reference points. And of course, recent books on implementing NPS according to this design should be useful too. Hmm… ah yes, I can think of one: our own Net Promoter – Implement the System.

As always, feel free to agree or disagree below, or by sending me email at mfg@customerstrategy.net.

 

#43 – Industries that have no way to ‘delight’ us, NPS standards, and more

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Welcome to the 43nd edition of my customer strategy newsletter. The five topics this week are:

  1. Are there entire industries where making customers happy is impossible?
  2. Does NPS need a single standard?
  3. Latest blog posts
  4. Notable items from other sites
  5. Looking forward
Are there entire industries where making customers happy is impossible?

While listening to a friend complain about his cable TV provider over the holidays, I asked myself whether cable TV companies can ever make customers happy. Perhaps their only opportunity is to make us unhappy. After all, if their service works perfectly, we don’t event think about it.

I think this ties into Frederick Herzberg’s two-factor theory of motivation. He studied workplace / job satisfaction and found that there is a set of factors that motivate us, and a non-overlapping set of factors that demotivate us. The demotivators are also called hygiene factors, which I have discussed in various blog posts and in our books. I now believe that the motivators and demotivators available to different companies are simply different. Specifically, some have lots of available motivators and others do not. Please take a look at the industries represented in the Temkin 2017 NPS benchmark results, shown below.

At the top of the graph, I feel car dealers, streaming media companies like Netflix, and computer / tablet manufacturers have far more opportunities to remember you and give you an excellent experience than, for example your electricity supplier, down at the bottom of the table. You only notice that you have an electricity supplier when you receive the bill or when it stops working.

Before my latest reflections, I used to believe that the bad performance of the companies at the bottom of the graph came exclusively from their monopoly or duopoly status in most markets. That still matters, but it is not the only factor.

What is the NPS ‘standard’?

I sent my team to Satmetrix NPS training a few years ago. I noticed that what they were taught was not the same as what Reichheld and Markey have documented in ‘The Ultimate Question 2.0’ and on the netpromotersystem.com website and podcasts. I speculate that the CXPA certification exam may have yet a third standard for NPS. Would anyone from CXPA or who has done the certification care to enlighten me?

An example may help clarify what I mean. Reichheld and Markey’s standard NPS survey has three questions (recommendation score, ‘Why?’, and ‘What could we do better?’). Satmetrix certification has or at least had two questions, and the second one is not simply ‘Why?’. What version is in the CXPA exam, assuming NPS is covered at all?

I could give many other examples, and will pick one. The overall Net Promoter System Framework taught by NICE/Satmetrix is not the same as the one on netpromotersystem.com.

Personally I feel a single standard is needed for a variety of reasons. Among others, it would allow software developers to be more consistent in what they propose, both for surveys and for anaytics. Your views are welcome. Please write to me at the address given at the bottom of this newsletter or open it and post a comment on our newsletter page at customerstrategy.net.

 

Our latest blog posts

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

image Journey mapping – The Main Customer Experience Measurement and Improvement Systems – Part 7

This is the final article in a series of seven about CX measurement and improvement systems. I hope you have enjoyed them, and that you learned at least a little.…
image The main customer experience measurement and improvement systems – Part 6 – Proprietary systems

Various consulting companies propose proprietary measurement systems. Your company may have its own composite metric too. The Temkin Group, for example, has both the Temkin Loyalty Index and the Temkin Experience Rating. They are useful examples…
image Most-read articles in 2017

A list of the five most popular articles on customerstrategy.net and the most popular article I wrote on LinkedIn in 2017. The LinkedIn article is not about customer experience, and is still worth a read, I think.

Notable customer experience items from other sites

Speaking of cable TV – Comcast price gouging

Continuing the theme of companies that can only make us unhappy, this headline grabbed my attention: Comcast celebrates repeal of net neutrality by hiking prices in 2018. As you might expect, it is not totally accurate, though Comcast constantly raising prices for people who have few or no alternatives does seem to be real. (The inaccuracy here and in most media is that the Federal Communications Commission did not ‘repeal net neutrality’. They simply said they felt ISPs should be regulated by the Federal Trade Commission instead, as they should no longer be considered ‘common carriers’.) As I have written some time ago when discussing the EpiPen, price gouging often produces acts of revenge. I would condier this article to be an act of revenge. Revenge feels good in the short term, but generally has no real effect. (Epi Pen prices continue to rise.)

Forbes / Micah Solomon: How long will it take to develop a customer culture at my company?

Some good customer culture tips from Micah Solomon. Two of the four tips are about getting the right messages to new employees on their first day, or even earler. It is about a three-minute read here.

 

Looking forward

It is still January and there is still time to think about your professional goals for 2018. What about doing something for your customers? But what? Our books can help! Here are links to each on Amazon.com. If you use a different country site, you can just open the link, then edit .com to .co.uk, .de or whatever:

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.

 

#42 – Customer Experience and Growth, and much more

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Welcome to the 42nd edition of my customer strategy newsletter. The five topics this week are:

  1. Customer Experience as a growth initiative
  2. Relationship between NPS trends and market share / growth
  3. Latest blog posts
  4. Notable items from other sites – Fred Reichheld, Jared M. Spool
  5. Looking forward
Positioning Customer Experience as a growth initiative

Over my 40-year career I learned something critical about how company leaders view different types of work. I believe I can summarize it simply:

People who drive growth are perceived as geniuses. Everyone else is simply doing their job.

I spent the first four years of my career as an industrial engineer with the parent company of Wrangler jeans. We were measured on producing cost reductions that were at least a particular multiple of our salaries. Then I moved to the sales subsidiarey for France, Italy and the Benelux, based in Paris. What a change! In black-and-white terms, I discovered that nobody cared about cost. All that mattered was growth. If you worked on growth, you got the salary increases and bonuses. I quickly managed to position myself in the middle of the development of stonewashing, our most important growth area. $$$ followed, well, French Francs anyway.

With Digital Equipment Corporation, I was the business leader in charge of handling an anti-trust case brought against us by the European Commission. We were threatened with a $1.3 billion fine for alleged anti-competitive practices in our hardware services business. When I was put in charge, the advice I was given by the lead lawyer on the case was “Just try to settle it all for $100 million.” I had a different point of view. It took almost two years, but we managed to settle the case with the Commission for $0. When the time came for my annual review a few months later, I expected big bucks. My boss, the head of our business in Europe just gave me an average increase. When I expressed suprise, he told me “You just did your job.” That’s when I truly understood what I have written in italics above.

If you lead customer experience work, you have a choice to make. You can position your work as driving growth or as avoiding loss. Your work on customer loyalty can be positioned as ‘less customers leaving’ or as ‘more customers staying’. The latter is what you want. If your work is successful, renewal and upsell rates will be higher than their historical averages. If you work in software, activation rates will be higher. Position this work as a corporate growth initiative! Write the corresponding announcement for your CEO. Work with whoever is communicating the top five growth iniatives for your company to ensure customer experience improvement is one of them.

Let me give you one last analogy. We customer experience professionals feel proud of, and make a lot of noise about our ability to ‘put out fires’. But think about it; city fire departments who put out fires don’t get big rewards. They are just doing their jobs. Architects who design new buildings and lead the construction projects are the ones who get the big bucks. And they don’t even risk their lives. It may not be fair, but that is the reality.

So, that is my suggestion for your customer experience New Year’s resolution. Your work has to be communicated as being about growth, not cost. Happy New Year!

Relationship between NPS trends and growth

I continue to read articles that use anecdotal evidence to dispute the science behind the Net Promoter Score. I would like to clarify what Fred Reichheld and Rob Markey have to say about the subject. Their research showed that NPS trends predicted between 20 and 60% of market share / growth trends, depending on the industry. The relationship is strongest in mature industries, where there are many players, and where it is reasonably easy to switch providers.

This seems logical to me. One notable study that claims that NPS is relatively useless includes Norwegian retail gasoline sales as an example of the non-relationship between NPS and growth. However, during the three years studied, Statoil was the only retail gasoline chain in Norway, and the price of a barrel of oil dropped 30% in the second year. This is a great example of where you would not expect any customer experience metric to have predictive value.

You can the relevant information from Reichheld and Markey here.

 

Our latest blog posts

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

image The main customer experience measurement and improvement systems – Part 6 – Proprietary systems

Various consulting companies propose proprietary measurement systems. Your company may have its own composite metric too. The Temkin Group, for example, has both the Temkin Loyalty Index and the Temkin Experience Rating. They are useful examples…
image Most-read articles in 2017

A list of the five most popular articles on customerstrategy.net and the most popular article I wrote on LinkedIn in 2017. The LinkedIn article is not about customer experience, and is still worth a read, I think.
image The main customer experience measurement and improvement systems – Part 5 – The Wallet Allocation Rule

Authors Keiningham, Aksoy, Williams and Buoye describe the system in the book of the same name. Its focus is a composite metric should provide good predictions of revenue trends for companies, at least for large companies that have a good choice of suppliers.

Notable customer experience items from other sites

LinkedIn article by Fred Reichheld – What’s in a name?

In this article, Fred talks about the different names he has seen in use for the Net Promoter Score® and why they may make sense for you and for your company. However, the phrase that caught my attention was “…but with Net Promoter, perhaps the most important thing we are tracking is whether a life has been enriched.”

He also provides useful clarifications about the Net Promoter categories. Well worth a read here.

 Silliness – Jared M. Spool on the Net Promoter Score

I get the dubious privilege of reading quite a lot of silliness about customer experience in general, and about the Net Promoter System in particular. Such posts usually have two characteristics. First, they are often written by people who have not read either Reichheld’s original HBR article on the subject or The Ultimate Question 2.0, and have not learned about updates to the system by listening to the Net Promoter System podcast or reading books such as our own. The second characteristic is that they tend to have an academic background and will not accept pushback that unless it is in the form of an article in a peer-reviewed academic journal.

Jared M. Spool has both of these characteristics. Nonetheless, what he has written is worth reading. Perhaps not for the reasons he intends, but as a perfect illustration of pseudoscience. His main argument in his latest article is that since his personal experience of recommending companies differs from the (non-peer reviewed) research done by Reichheld and Satmetrix for the HBR paper, that research is worthless. This is what I call the fallacy of “My anecdote trumps your science.” You can read what I am talking about here.

 

Looking forward

It is time for all those New Year’s resolutions. What about your customers and a resolution to make their lives better? Our books can help! Here are links to each on Amazon.com. If you use a different country site, you can just open the link, then edit .com to .co.uk, .de or whatever:

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 Experience Ratings

The main customer experience measurement and improvement systems – Part 6 – Proprietary systems

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Various consulting companies propose proprietary measurement systems. The Temkin Group, for example, has both the Temkin Loyalty Index and the Temkin Experience Rating. They are useful examples as they both have one thing in common with the systems proposed by other consulting companies: they are composite metrics, aggregating customer responses to multiple questions. Since they are good examples, here are the details of what Temkin proposes.

Temkin Loyalty Index

From the Temkin website, “The Index is based on evaluating consumers’ likelihood to do five things: repurchase from the company, recommend the company to others, forgive the company if it makes a mistake, trust the company, and try the company’s new offerings.”

Temkin Experience Rating

Again, from the Temkin website, “The Temkin Experience Ratings are based on evaluating three elements of experience:

  • Success: How well do experiences meet customers’ needs?
  • Effort: How easy is it for customers to do what they want to do?
  • Emotion: How do customers feel about the experiences?”

The Temkin Experience Rating report is available free each year on the Temkin site. An Excel file with all the data costs $395. Within the report, they state “To improve customer experience, companies need to master four competencies: Purposeful Leadership, Compelling Brand Values, Employee Engagement, and Customer Connectedness.” It should be obvious and it is indeed stated that customers would never come up with such a list. The improvement suggestions come from a completely different study. The Temkin Experience ratings are calculated using an average of the answers to three rating questions. Customers are not asked what should be improved. There is no claim that you can predict revenue from the experience ratings, though there is such a claim for their Loyalty Index. The diagram at the top of this article shows the questions asked, copied from the Temkin site with permission:

It is not at all evident that these are the perfect questions to ask in a study of customer experience. I don’t dispute that they are valid questions. I would just find it difficult to explain and defend them in front of an audience.

Compaq and HP: The Account Loyalty Index

The Account Loyalty Index was a metric from HP and Compaq’s deep-relationship survey and is now part of the HPE Relationship Assessment Process. It is a composite of three individual metrics and is an excellent predictor of customer spending. All three are on a 1 to 5 scale and they are averaged to come up with the ALI number. The component metrics are ‘Overall satisfaction’ (CSAT), ‘Likelihood to repurchase’ and ‘Likelihood to recommend’. ALI scores of 3.5 or more always lead to increased spending. We loved the metric, though things gradually got more complicated. When HP merged with EDS, EDS brought its own composite metric from their Voice of the Client process. We never merged the two measurement processes, as they served different purposes. The EDS business was mainly long-term outsourcing contracts. VOC measured customers’ views on the performance of individual agreements, while the Compaq / HP process was at the overall relationship level. The ALI and VOC metrics both took quite some time to explain to new audiences. The HP PC and Printer business had a different set of high-spending customers and its own different process and metrics. Once Meg Whitman came in as CEO, she found this all too confusing and imposed the Net Promoter System throughout the entire company.

Advantages and disadvantages

The use of composite ratings has advantages and disadvantages. The principal advantage of well-designed composite metrics like the Temkin Loyalty Index is that they should be better predictors of future market share than metrics based on answers to a single question. The major disadvantage of composite metrics is that they are difficult to explain and understand. It is hard to overstate how important that difficulty is. If you are not able to explain your metric in 10 to 20 seconds, I don’t believe it will ever be completely trusted. Composite metrics all take too much time to explain. Unless the people to whom you are presenting work in customer experience full-time, you will have to start every presentation by explaining it again, as they are really difficult to remember. Too many audiences will start to doze off while you are explaining how the metric works. Those who have heard it before or who think they already understand it will just start to look at their phones or do their email while you are speaking.

Conclusion and personal opinion

The following is a personal opinion. You may have a different experience, and I would enjoy hearing about it if so. It is also possible that my views arise from the communication difficulties that are typical in large organizations. Anyway, here goes:

The relative accuracy of composite metrics is irrelevant. They are close to impossible to communicate concisely and consistently. Do not use them.

Feel free to agree or disagree below.

This article is a slightly modified version of a chapter in Customer Experience Strategy – Design & Implementation, one of four books written in collaboration with my artist / cognitive psychologist brother Peter. The others are Net Promoter – Implement the System, Customer-Centric Cost Reduction, and a book of Peter’s illustrations, with learning points: “So Happy Here” – The Absurdist but Essential Guide to Better Business.

Next time: Journey Mapping

Top 5 blogs

Most-read articles in 2017

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Greetings everyone, and my best wishes for a happy 2018!

I started my website and blog on January 1st 2017. As this is my last message to you for this year, I thought I would let you know which of my blog posts and LinkedIn articles have been read and shared the most. If you have missed any of them, what can I say? Perhaps they could be good sources of professional resolutions for the new year. Anyway, here are my top five blog posts, and the article I wrote on LinkedIn that has been read the most:

(Drum roll…)

And in first place, with thousands of reads, and almost double the total of the second place item…

(Drum roll…)

The most read post of 2017 is…

Journey mapping – Use with care, if at all

I have to say that I was surprised to see this one as the most popular. The post that required the most work finished third. Anyway, here are the posts that finished in second to fifth places:

Here is how to think about the work of the customer experience leader or Chief Customer Officer

Does employee satisfaction drive customer satisfaction? In general… no!

The main customer experience measurement and improvement systems – Part 3 – Customer Effort Score

Customer relationship research / surveys for B2B – First of three articles

As you can see, this is a diverse list. My most popular article on LinkedIn was not about customer experience, so I did not blog about it on my own site. I took the dangerous step of providing career advice that nobody had requested:

Career Advice – Don’t work for a cost reduction company

If you read the LinkedIn article, I would urge you to read the comments too.

Thank you

Thank you again for reading our books, newsletters and blogs. I wish you a happy new year, in advance, and want to remind most of you that you are supposed to be on holiday / vacation. Here is a drawing from our book of business cartoons to help motivate you to get back to your families and friends.

Please share this with your friends and colleagues and encourage them to sign up for our newsletter 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.

#39 – Net Promoter for People, irritating surveys, customer culture, customer lifetime value

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Welcome to the 39th edition of my customer strategy newsletter. The five topics this week are:

  1. New podcast on ‘Net Promoter for People’
  2. Another irritating survey
  3. Latest blog posts
  4. Notable items from other sites
  5. Looking forward

New podcast on ‘Net Promoter for People’

Many companies, and I suppose all large companies, run annual employee surveys. The process usually runs something like this:

  • The CEO announces the annual survey and how important it is, committing to drive improvements based on the research.
  • The survey is open for two or three weeks, to ensure that people who are on vacation get a chance to respond.
  • Particularly for large companies using external survey vendors, the analysis and benchmarking of the results takes time, often several months.
  • Since most research uses large numbers of questions with rating scales, but no input on why the ratings were given, companies find out that particular things have bad ratings, but don’t know why. They then form focus groups of just a few people who decide why the particular rating was so low an what should be done about it. This takes time, and may not reflect the reasoning of the larger population. And of course, the fact that one of the 80 question son the list had a low rating does not make that question important.
  • Reporting out on the results is sometimes delayed to avoid communication conflicts with quarterly financial resporting.

The result of all this is often improvement initiatves that employees do not recognize as relevant, announced so long after the survey itself that employees feel the company does not care. And that’s the ‘best case scenario’. Senior leaders are also known to say “Ah yes, there was that thing going at at the time of the survey that makes your proposal irrelevant. Let’s wait to see whether employees say the same thing next year.”

The new Net Promoter for People is designed to address many of these concerns. It has been covered by Bain’s Darci Darnell in the latest Net Promoter System podcast. It adds an additional rating question the standard three-question NPS format. The new question is ‘To what extent do you agree with the following statement: I am inspired by my job.” The standard questions are the NPS ‘How likely are you to recommend [your company] as a place to workl?’, ‘Why?’ and ‘What could we do better?’ The Bain research shows that verbatim comments relating to recommendation are mainly about basic needs and things about which they are dissatisfied. The inspiration question produces verbatim responses that are about their higher-level need and suggestions for a positive future. I consider the podcast to be essential listening. You can find it here.

Yet another irritating survey

I have been in Los Angeles this week, attending the Bain Net Promoter Forum. I had to transit via Zurich, and got a pop-up survey request as soon as I logged into the Wifi in the Swiss lounge there. As I usually do, I tried to decide what I wanted to say before starting the survey. There were 34 questions in the survey, plus demographic questions. I could not really say what I wanted. It was clear that the survey is designed primarily to give scores to each of their own departments, rather than to find out what the customers want.

I suppose I should write this one up in more detail. Why can’t companies just stick to a three-question NPS format or something similar? The Swiss people used the recommendation rating question, but did not follow it with ‘Why?’ and ‘What should we improve’ questions. I just can’t understand this sort of thing. Why would you need anything more? If people don’t make any comments or suggestions about the reception area, it just does not matter.

Our latest blog posts

Here are the latest posts. The most recent is the secondin a set of seven articles I am planning on the main customer experience measurement and improvement systems. Older posts are still available on the blog page.

image The main customer experience measurement and improvement systems – Part 2 – CSAT / Customer Satisfaction

When you are asked to rate your ‘overall satisfaction’ with something, you have entered the Customer Satisfaction rating system. It is a metric, rather than a system, and different companies do it in different ways. As a metric, it is by far the most common one we see. Read on to learn about its advantages and disadvantages.
image The main customer experience measurement and improvement systems – Part 1 – Smiley Buttons

There are quite a number of customer experience measurement and improvement systems in use around the world. They are not all equal. This post is the first in a series of seven articles about the main systems.
image What B2B customers and resellers want – A perspective that goes beyond research

While I have been pushing a scientific approach to building and implementing a customer experience strategy for a long time, let’s put that aside for a moment. After working on customer experience since 1981, here are some things I believe B2B customers want, and that you won’t discover directly from your customer research.

Notable customer experience items from other sites

Wownow: CX Framework Series #6 – Customer-centric culture

Far be it from me to say that my way of thinking is the only one that matters. Rosaria Cirillo Louwman has designed an overall customer experience framework that includes six disciplines. This final blog in a series of six in the framework covers a set of interesting suggestions about how to establish a more customer-centric culture in your organization. Personally, I think culture is the hardest thing to change, because it requires so many soft skills and so much consistency. I think you will find it a useful read here. She has also recorded a TEDx talk that you can find on the Wownow site.

CMO Australia: Why so many organisations keep getting NPS wrong

Excellent article in which Brian Andrews of Medallia talks about his extensive experience leading NPS implementation over a long period. He led the first major NPS implementation, which was at Intuit in 2003, and is now ‘Senior CX Principal’ at Medallia. The points I like best in the article are about tying the NPS results to revenue.

Customer Lifetime Value is the terminology I use for this. As Brian points out, it is useless to develop a model for this in isolation. Your CFO or her delegate must design the model with you. Once your company has an agreed model for how much one point of client retention is worth over time, it becomes far easier to decide on investments necessary to drive that improvement. You can find the article here.

Looking forward

We have had our first sales of the new book of Peter’s drawings, so thank you for that. As always, Amazon reviews are the way you can help us most, so please do that, no matter what you think of our books.

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.

 

Hygiene factors

What B2B customers and resellers want – A perspective that goes beyond research

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While I have been pushing a scientific approach to building and implementing a customer experience strategy for a long time, let’s put that aside for a moment. After working in this area since 1981, there are a few things I believe are high priorities for most B2B customers. You probably won’t discover some of these points directly in any formal feedback system, though they may be at the heart of many different improvement suggestions.

Remember me

Customers all want to be remembered. This means remembering everyone with whom you have had contact, and what that contact was about. Think about your favorite local restaurant. You appreciate it if the owner greets you at the door and says, “Welcome back Mrs. Smith. It is good to see you here again.” It gets better if the waiter asks, “Would you like the same drink as last time?” You feel that you matter to them.

At its most trivial this means not asking customers for the same information repeatedly if they phone you for support. If your phone routing system asks them for a contract number to route them correctly, you should not ask them for the contract number again. If you have gone through a diagnosis process with a generalist and found that you need to pass it to a more specialized person, the diagnosis information should go with the call. If the person has already phoned with the same problem, or indeed any problem, you should know about it and potentially check that all is still OK. If you have the person’s phone number in your database and the person calls from that number, you should not need to ask their name.

You must participate in the customer’s investment process

Your company probably has a standard format for proposing solutions to customers. If your customer is a large company, they are certain to have their own investment approval process. The person you are selling to has to decide, then propose any substantial investment for further approval at their end. Your proposal needs to fit their process. You should find out what their process is, and make it as easy as possible for them to use it to get your proposal approved.

Continuity of project management

If yours is a service business that relies on project execution, ensure the same project manager is in charge from the start to the end of the engagement. Let’s suppose you have three project stages: proof of concept, pilot, and full roll-out. Different people are needed for each stage of the project. If you have a completely different team for each stage, each new team leader has to get to know the customer organization, and the customer has to get to know them. Customers find full team changes deeply frustrating. The best solution for this is to keep the same project manager in charge the whole way through.

Reduction of your organizational complexity

If you are a large company, you are a complex company. Large customers are complex too, so they will have some empathy for you. A fundamental role of your account team is to reduce the perception and consequences of that complexity for customers. The account manager should be the broker between your different businesses and functions. If you have multiple businesses, each with a separate sales team, you will fail in this complexity reduction and never become a true strategic partner. You will be condemned to have their procurement department as your main contact point. This is not good for your margins.

Your company is always “We”

No matter what your customers complain about, apologize on behalf of your company. The worst type of thing you can say is “Ah yes, another complaint about shipping. Those people have a lot of problems at the moment.” Replace the thinking by “I am sorry you had this experience. We have had a few shipping problems recently and are doing our best to improve.”

What resellers want

If you use resellers to sell complex products, the resellers’ top priority will probably be that you supply accurate, price-competitive quotations quickly. Let’s suppose the reseller is selling to Nestlé, and that you have a global discount agreement directly with Nestlé that gives them a price reduction everywhere in the world. The quotation you give the reseller needs to reflect that. Let’s further suppose that this deal is in Indonesia and that you have had to give a further 15% price reduction to Nestlé in Indonesia the last three times you did business there. You should give the reseller the quotation with the additional reduction without being asked, though with the necessary explanation. Otherwise you, the reseller and Nestlé all waste time.

The second thing resellers want is for you not to compete with them. Unless you have a formal business model that says you work 100% through resellers, their expectation is not realistic. Your most important customers will want to do business directly with you. The best you can do for resellers is to provide them with clarity on your business model, letting them know when they can expect you to show up, and when it is less likely. If you do business in many countries, it is also probable that you have countries where you have no direct presence and will use resellers. Sometimes you will have an exclusive agreement for a country with a single reseller. Be clear about that too.

Remember that cost reduction is not strategic

While your selling proposition to customers may be cost reduction, cost reduction is not strategic for customers. While that might not seem to make sense, try to think about it this way: the strategic decision is what to do with the money that has been saved. How will it be invested? Once you are helping customers with their investments, you access people that are higher up in the organization and develop a true strategic partnership.

Customers get used to positive experience, then expect more

With relatives in Chicago and California, the difference in weather between the two is common subject of discussion. In addition, the Californian relatives have moved there recently. I have observed this phenomenon with others who have moved to much better climates. Personally, I moved from wet and grey Galway, in the west of Ireland a long time ago, and learned to appreciate the existence of summer. However, for me, and for others who have gone through the weather-improvement experience, its impact is strongest at the start, and fades over the years. Nicer weather becomes “the new normal”. So it is with customer experience. No matter how great the improvements you implement, customers will get used to them. Your competitors may also copy them. You need to repeat the whole strategy development exercise and come up with your “next big thing”.

Conclusion

I hope you enjoy these points that are based more on experience than on what comes out of customer research. Feel free to agree or disagree below. As is usually the case for my blog posts, this is a slightly-edited version of a chapter in one of our books, in this case Customer Experience Strategy – Design and Implementation. And the drawing at the top is included in a new book of business cartoons by Peter FitzGerald that should appear within the next week on Amazon.

 

Customer Strategy Newsletter #33 – Response Rates, CX Strategy, and more…

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Welcome to the 33nd edition of my customer strategy newsletter. The five topics this week are:

  1. New Net Promoter System Podcast on response rates.
  2. ‘Modern Day Fairy Tale’ series now complete 
  3. Latest blog posts
  4. Notable items from other sites
  5. Looking forward

New Net Promoter System Podcast on response rates

Questions about feedback response rates were among the most common during the six months when I managed the LinkedIn Net Promoter System group. There were questions about how to improve response rates and about statistical significance. Good questions!

Rob Markey invited me to record a new Bain Net Promoter System podcast on the subject. As usual, I asked most of the questions, and he answered them. He has achieved amazing response rates with his clients.

The podcast was released earlier this week. I hope you will find it entertaining, and I hope it answers some of the questions you may have on this important subject. You can find it on the Bain site here, as well as on iTunes and other locations where you may be getting your podcasts. Please let us know what you think.

‘Modern Fairy Tale’ blog series on CX strategy now complete

Thank you for the excellent feedback I have received on the unusual series of articles I wrote. The fourt and final article revealed all of the secrets and made it clear why I wrote it as a work of fiction. Some of you recognized the types of discussions and incidents I covered. One person wrote to me because he had worked out who the protagonists actually were. He was almost completely correct. He only had access to the first three posts at the time, and had not worked out who the narrator was. If you have not read any of the articles, please start with the first one here, rather than jumping to the finale mentioned in the ‘latest blog post’ section below. Each article has a link tot he following one. Enjoy!

 

Our latest blog posts

Here are the latest posts. As mentioned last week, all of these are in a new writing style and intended for you to use for CX Day on October 3rd. Older posts are still available on the blog page.

image A Modern Fairy Tale (Part 4 of 4) – You don’t need a customer experience strategy – You already know what to do

The big day has arrived. I have to present to our CEO and leadership team. I am really nervous. Death or glory?
image A Modern Fairy Tale (Part 3) – You don’t need a customer experience strategy. You already know what to do

A date with George, and I actually do the necessary customer research. Unfortunately, the customers do not confirm my own ideas about what needs to be done…
image A modern fairy tale (continued) – You don’t need a customer experience strategy – you already know what to do (Part 2)

Continuing the story of what happens when you don’t bother with a customer experience strategy. (Because you already know what to do.) In this episode, the narrator (who could this person actually be?) finds at least one person willing to help.

Notable customer experience items from other sites

Matt LeMay: On Net Promoter and Data Golems

A provocative article from Matt Lemay, writing on Medium. Has NPS grown into an uncontrollable monster? While I would say that his understanding of the sytem is incomplete, he makes some excellent points, notably on the importance of talking to your customers to find out why they gave particular ratings. (I say his understanding is incomplete because asking why is part of the stadard three-question research format.) See what you think. You can find the article here.

Forbes: 7 Steps to Great Customer Experience in Any Industry 

Steve Andriole wrote this article which appeared on Thursday. He provides some lists of best and worst companies and then proposes his seven steps. Nicely written and useful. I suppose one obvious step is missing. You need to ensure you have sponsorship for the work before you start. Otherwise you waste your time. He sort of covers this in his seventh step, but it really needs to be the first one. The article is here.

 

Looking forward

I will try to write a few new things on LinkeIn and elsewhere on Tuesday, in honor of Customer Experience Day. My experiments with Amazon Ads are continuing. I have reached a dangerous stage in that one of my ads has produced better results than the others, but I have not yet run a confirmation experiment. The temptation to stop experimenting is powerful, and I must resist it…

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.

 

Love

For CX Day: How YOU can build a customer-centric culture in your company

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Your CEO keeps saying customers are important. Your own business leader says the same thing. So does your manager. So why do you still think this is just ‘lip service’ and that nobody really cares? I can suggest several reasons, and some practical steps you may want to take to improve things.

In any company, people can only get things done in three possible ways:

  • What you do
  • What you say
  • What you write

To be credible, all three have to match. Consider this scenario:

Bob has been our CEO for the last three years. Our company has almost 10,000 employees. Bob and his leadership team constantly repeat how important customers are to us. Bob just sent an email to all employees announcing the latest quarterly results. Great stuff! We have had another good quarter, with growth of 10%. He also laid out the top three priorities for the rest of the year. They are:

  1. Sell, sell, sell!
  2. Finish the design of our new corporate HQ in Atlanta, and start building it.
  3. Reduce our operating costs by outsourcing our customer service center operations to an Indian service provider.

Hmm…where are the customers on the list, other than the negative impact they will have from the last point? Perhaps the customer initiatives are on the intranet sites of each of Bob’s staff members. [Click, click, clickety-click] Nope. Nothing on any of those pages about what customers have asked us to improve. What now? Let’s see…who is responsible for customer experience on Bob’s staff? [Click, click, clickety-click] Ah…nobody, or should I say ‘everybody’, since that is what Bob says, when he tells us that everyone is responsible for customer satisfaction. However, nobody seems to actually be doing anything practical about it, at least according to what they are telling their own teams. I think that’s a problem. What can I do about it?

Does any of this sound familiar?

The ‘Bystander effect’

Psychologists have studied the bystander effect for years. The phenomenon is quite consistent. Take the example of a person who is drowning. If you believe you are the only person who sees that the person is drowning, it is extremely likely that you will do your utmost to help, even risking your own personal safety. However, if you are one of a hundred people on a bridge who have seen a drowning person float by, it becomes far more likely that nobody will do anything.

The bystander effect is common in companies that have nobody formally in charge of customer experience for the corporation. Everyone assumes that someone else will do the work, so they just get on with their lives. It is difficult to be successful if nobody is in charge.

Additional things you may like to check

It should be easy to check your intranet for evidence of customer-centric investments. While you are checking that, I suggest finding out whether customers are ever invited to your internal meetings. Why not? And how about your major annual sales event? Are customers and other external partners invited? If not, why? Why should your resellers not receive exactly the same training your own sales people receive, for example.

Do you have a formal customer feedback system?

Does your company have a formal list of improvements that customers have requested based on some form of scientific research? If not, any improvement work is likely to be rather random. Most companies have surveys and other feedback systems in place. However few have a process for agreeing and funding what should be done with the results.

Leaders don’t talk about customer experience. What should I do?

Find out who manages their websites, prepares their presentations and otherwise works on their communication material. Give them the results of the customer research. Provide interesting content about improvements that have been made for customers. Write up personal interest stories about people who have gone ‘above and beyond the call of duty’ to help customers. Don’t be a bystander. Take the lead yourself.

Remember to combine the emotional and the rational

I spent years talking about customer experience in a particular way before noticing that I was putting some people in my audiences to sleep. I spoke in terms of percentages of this and that, numbers of escalations, customer complaints that had been resolved, an Account Loyalty Index, and indeed Net Promoter Scores. All very rational. However, when you are in front of an internal audience, talking about customer experience trends, the people in the audience will make up their minds within the first minute. They will jump to an immediate conclusion, based on intuition and emotion. They will have decided what is important long before you present actual data. No matter what the data, it will then be difficult to change their initial emotional reaction. Don’t let this happen! Create the emotion for them, right at the start.

Make it personal

The simplest approach is to start by talking about a single individual customer situation that encapsulates your overall message. Let’s suppose your company provides ambulance services. Your traditional customer experience messaging may talk about response time, number of paramedics available after midnight, cardiac arrest survival rates, and so on. Tables of data. I am not suggesting you should not present that data. I am just suggesting you should start the presentation differently. Let’s suppose response time is the primary challenge that appears in your research. Start with a photo of a family, with one person missing. The caption is “This is Frank Muller’s family. We were five minutes too late to save Frank.” I guarantee you will have full audience attention for the rest of your presentation.

How to ensure ongoing support for your work

If I were to pick a single thing, it would be to demonstrate continuous progress. Agree a set of three to five initiatives. Demonstrate progress on each at least every one or two months. The progress has to be worth the effort.

Can a customer-centric culture always be achieved?

Dunce customers

The simple answer is no. Some CEOs and leadership teams don’t actually care. They believe it is sufficient to have a great product or service. That may work for them in the short term. If you find yourself working for such a CEO, you should probably change jobs. Otherwise, I hope some of the hints I have provided here will help you on your journey.

Customer Experience Leader

More thoughts on the role and team of the Chief Customer Officer or customer experience leader

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Thank you for the feedback on my first post on how to think about the work of the Chief Customer Officer or customer experience leader. I realize the majority of readers will see this by clicking on a LinkedIn link, rather than going directly to my website. One comment included links to useful articles on the role, and I have included them at the bottom of this article. Now, onwards to a discussion about the CCO or customer experience leader’s teams. I use the plural because I feel the leader needs to be a member of other teams too.

Focus produces results

It is easy to say, “Everybody is responsible for the customer”. The problem with this statement is that when everyone spends a little of their time on improving things for customers, but nobody does it full-time, nothing is likely to change. If you are already the loyalty leader in your industry, that may not be a problem in the short term. Success in improving customer experience requires a dedicated person or team. That leader must be well-connected and respected in your organization. Where they report does not matter much. The teams of which they are members matter a lot.

Relationship with sales leadership is critical

If you are successful in measuring and improving customer experience, you will sell more. Your sales team should find that value proposition quite compelling. The customer experience leader needs to have an excellent relationship with sales and should be part of their leadership team. I am not suggesting that he or she should report to the sales leader, simply that they must be in the team. My own approach has been to start by proposing to attend an internal sales meeting to present competitive benchmark data. Sales teams find the insights about their competitive advantages and disadvantages to be really useful, so they have always been attentive. Using that positive feedback, I then propose to be a permanent member of the sales leadership team. That has usually worked for me.

Reporting lines in larger organizations

In a large organization, each major business should have a customer experience leader. The job title does not matter. Customer Advocacy is used quite often. Personally, I have held a full-time customer experience role reporting to the EVP of Software at HP, and have also combined the job with the Chief of Staff role for other businesses earlier in my career. The Chief of Staff tends to be well-connected, neutral, and controls the leadership agenda. Having editorial control means customer experience can always be part of strategic discussions. If the Customer Advocacy leader is a full-time role, a great relationship with the person setting leadership meeting agendas is important. Customer Experience falls into the general category of things that are important, but not urgent, and can easily become an agenda also-ran.

Chief Customer Officer role

There are aspects of customer-centricity that cannot be addressed within a single business or function. We have seen the rise of the Chief Customer Officer (CCO) over recent years. The CCO should report to the CEO. The job description should include most of the following areas, depending on the size of your company:

  • Chair and run a cross-organizational Customer Experience Council that shares successes and agrees strategy across your company.
  • Define, fund and implement the on-boarding and refresher NPS training that should be mandatory for all employees of all levels, including the executive leadership team.
  • Define and implement appropriate NPS measurement and reporting standards across the company.
  • Regularly report progress to the Executive Leadership Team.

The only advantage I see with the CCO title is that it is better recognized externally than, for example, the Customer Advocacy Officer title. The job content is the same. I believe what I have written here is largely in line with what Jeanne Bliss writes in Chief Customer Officer 2.0 and elsewhere.

Customer complaints team

It is a good idea to have a single customer complaints team for your entire organization. You should consider having that team report to the CCO / CX leader. The phone and email contact details for complaints should be visible at the top level of your company website. “Log a complaint” is a reasonably clear heading. The person or people should accept complaints from both internal and external sources. It is difficult for complaints team members to be effective if they are new to the company. The ideal profile is a relatively experienced company veteran who understands the organization and can get things done quickly. A single person could do this on a part-time basis in a small company. A team is needed for a large organization. When I managed this for HP, covering consumer and enterprise business, there were over 100 people in the complaints team in Europe alone. We had 350,000 employees in the whole company at the time. The range of work was quite extreme, even including representing the company in small claims courts when people went there to get satisfaction on a printer or PC problem.

The complaints team, and perhaps your full organization, should have the authority to spend a certain amount of money to resolve complaints immediately, without further approval. That amount should be something between $1,000 and $10,000. In HP, the Swiss complaints team could leave the office, go to a local electronics store, buy a product and drive it to the customer’s home near Zurich, if that was appropriate. Flowers and other small gifts are a good way of apologizing when you make mistakes or a product is defective. Think about this when you are trying to turn around detractors. Note in passing that most countries have rules prohibiting gifts to government employees, so your processes need to take this into account.

Conclusion

If I had to pick the single item from the above that has most helped me, it would be the one about influencing the agenda for formal leadership team meetings, ensuring customer experience is always there. Integration with the sales team would be second on my list.

What I have written here is a slightly edited version of a chapter in our book Net Promoter – Implement the System which combines the science of NPS with behavioural economics, cognitive psychology and personal experience. All comments and suggestions welcome. Yes, spam attacks mean I have to ask you to click either on a kitten or a puppy before posting, but they don’t bite!

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