Fred Reichheld Archives - Customer Strategy

October 29, 2021

Here is what COP26 sponsor Unilever is telling its stakeholders about its climate actions (Surprise!)

Maurice FitzGerald / Blog, News, Strategy, World / Chief Customer Officer, customer surveys, Fred Reichheld, The Ultimate Question /

COP26 starts a few days from now. The conference has 11 corporate sponsors and I have just examined the first one on the list: Unilever. I have to say that I have been really surprised by what I found. I just don’t understand it. Please help me to work it out.

Here is what I have done: I consider that companies have three main stakeholder groups: customers, employees, and investors. I have looked at how and what Unilever is communicating to each publicly.

Customers and employees: The content for these audiences is absolutely exceptional:

The company home page leads off with climate imagery and messages about COP26. I realize these are temporary messages and don’t know what the page will look like after the summit.
The Our Strategy page is clear and lists the corporation’s five strategic initiatives. While none are directly about the climate, there is a link to more detail.
That detail is what the company calls its Compass Strategy. It is covered with lots of words jammed into two slides. A third of the second slide is about how Unilever will “Improve the health of the planet.”

Excellent stuff indeed!

The website also includes a fabulous Climate Transition Action Plan on 53 pages. The commitment and governance structures both seem strong. The two main components of the governance structure are described as follows:

“The Carbon Neutral Board: Drives delivery of our carbon ambition at the corporate and country-level and leads strategic partnerships and policy on renewables. It is chaired by our Chief Supply Chain Officer, Marc Engel.
The Sustainable Sourcing Steering Group: Supports our strategy focusing on long-term, sustainable access to our key crops. It is chaired by our Chief Procurement Officer, David Ingram.”

Investors: Timing can be a wonderful thing. Unilever reported its latest quarterly results just last week. They made the usual sort of earnings announcement and also provided a comprehensive update on the progress they are making with their business strategy:

Here is what they said about their climate efforts in the Q3 Trading Statement: “[…imagine the sound of crickets…]”
Here is what they said about their climate efforts in the 26 page presentation to investors that accompanied the Trading Statement: “[…imagine the sound of tumbleweed in the wind…]”

The semi-soundless crickets and tumbleweed are not mistakes. Unilever said nothing at all to investors on the topic. Why? Why does Unilever consider it to be the most important communication focus for customers and employees, while apparently being something that must be avoided at all costs when speaking to investors?

I don’t know.

What do you think?

December 12, 2020

(CX Strategy 13) Customer research confusion reduction – There are six types of customer survey

Maurice FitzGerald / Blog, NPS, Strategy / Chief Customer Officer, customer surveys, Fred Reichheld, The Ultimate Question /

There is quite a lot of confusion about which types of customer research are useful for predicting revenue, and which serve more general purposes. No matter what type of research you want to start, there is an important principle to observe: You must provide more value than you extract! Customers must get more benefit from your process than you do. You have to tell them why you are asking questions, what you have learned, and what you then plan to do.

The communication part is simple, though most companies do not do it. Implementation is harder. If you do not have the people and money necessary to act on what you learn from customer research, you should not do it at all. Those resources need to be guaranteed before you start, not afterwards.

Six survey types

Here are the six types of general customer experience research. Each survey type has specific uses.

Benchmark surveys are used to compare your performance with that of your competitors. If the survey and measurement system are chosen correctly, the trend in your performance compared to that of your main competitor will predict your relative market share. Benchmarks can be done at the level of your overall brand, as well as for individual divisions, products and services. The best are ‘double-blind’. This means you don’t know who answers, and the people answering do not know who is funding the research. Most double-blind surveys are panel-based, and panel members receive points or cash-equivalents for responding. The clear disadvantage is that there is no way of following up with an unhappy customer, since you don’t know who has responded.
Brand surveys are those where you ask your customers, partners or employees for their views on your company overall, as distinct from any individual product or service. If you can avoid influencing the responders, brand survey results trends can give you an indication of future revenue trend. However, since your brand survey does not cover your competitors, you don’t really know whether you are improving relative to them, so can’t predict revenue accurately If you improve, but they improve more quickly, you lose share over time.
Relationship surveys are in-depth research with your most important customers. While they are a subset of brand surveys, they require a specific methodology. They are particularly useful if your company has a small number of large customers that provide the majority of your revenue. The best relationship surveys are done face-to-face by a customer experience professional from your own company. They are more directly useful than benchmark surveys in that the input can be worked on directly with your customers. When relationship surveys are done by a function that is independent of the people being measured, they can be good revenue predictors for that customer segment.
Product / service / project surveys get feedback from customers about one of your individual product or service offerings. Using the example of Apple, a benchmark survey would cover the overall brand, while a product survey would be about an individual Mac or iPhone model, for example. They are not good revenue predictors.
Transactional surveys measure customer experience with various customer contact points. Examples would be satisfaction with a price quotation, an ordering process or with telephone support. They do not predict revenue.
Supplier surveys are often neglected. Many large companies survey their own people about the experience they have with a list of suppliers. The company’s procurement people are then measured on improving supplier performance in whatever dimensions are felt to be defective. If your company is covered by such a survey run by one of your customers, you are in luck. As distinct from all other survey types, the customer has ‘skin in the game’ and will want to work with you on improvements. Syndicated supplier surveys also exist.

Feedback welcome below. I would be happy to hear contradictory views.

November 23, 2018

#81 – Goodhart’s Law, eCommerce again, loyalty equals cost reduction, VOC program design

Maurice FitzGerald / Cost reduction, Newsletter, NPS, Strategy / bad service, Customer Experience, eCommerce, Fred Reichheld, Net Promoter System, VOC /

Goodhart’s Law and being careful about metrics, eCommerce that competes with own retail stores. Welcome to the 81st edition of my customer strategy newsletter. The five topics this week are:

Goodhart’s Law is 43 years old – We still need to be careful with metrics
Web stores that compete with physical locations – My latest experience
Latest blog posts
Notable items from other sites – Fred Reichheld, Agi Marx
Looking forward

Goodhart’s law is 43 years old – We still need to be careful with metrics

Charles Goodhart is a British economist. He remains disappointed that he is best known for something he wrote way back in 1975. His original words were not terribly inspiring:

Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.

He was writing about UK monetary policy and the point he was making was that if a particular metric, such as the M2 Money Supply, became the sole focus of monetary supply it would be made to look better, no matter what the underlying reality.

Let me try to rephrase the ‘law’. Once a single metric becomes a major focus the people being measured will make sure it improves. A good example is what happened when a new emphasis was put on crime statistics in Chicago:

In the UK someone in the National Health Service decided to measure hospitals on emergency room arrivals being served in under four hours. A bizarre result was that patients were kept inside ambulances until staff were certain that they would be treated within four hours of being taken from the ambulance to inside the hospital, when the clock started to tick. Guess what? The metric improved.

The same thing will happen if you measure individuals on NPS or CSAT scores. The numbers will improve, even though the reality may be unaffected. I recently came in contact with a situation where call center agents who had to phone customers who gave low scores were measured on those same scores. A surprisingly high (though not surprising to me) number of customers supposedly claimed they had not understood the survey and asked to have their scores changed from the worst to the best number. Success???

The message here is that you should not measure individuals on NPS, CSAT or indeed any score that they can personally manipulate. Customer satisfaction metrics are best used as collectives scores for a team or an entire organization.

Web stores that compete with physical locations – My latest experience

It is Black Friday as I write this. I have just had the opposite experience to the one I wrote about last week. The latest experience is not a good one. I have a loyalty card with the Fnac chain. For those unfamiliar with the brand, they sell books, CDs, DVD/Blu-Ray, photo equipment and electronics. For US readers, I would describe them as a combination of Barnes & Noble and Best Buy. Their weekly email update included a Black Friday deal with 18% off the 2018 9.7″ iPad. Since I have been looking for just that, I decided to pop into the Geneva retail store this morning. Surprise, they were marked ‘10% off’.

So I went to a sales person. His answer, “Oh we never know what those web people are going to do. It’s 10% off here.” Then I pointed out that the web site says I can order at 18% off and pick it up an hour later in this very store. Answer, “If they say so, I suppose you can do it, but I can’t give you 18% off directly.”

This is the exact counter-example to the one I gave last week. Your eCommerce operation cannot compete with your retail outlets. It makes customers like me think you are stupid and trying to trick us in some way. It is a well-known direct marketing phenomenon that you should not give people choices. Having different prices in-store and on the web is idiotic. It means neither price can be trusted to be the lower without checking.

Our latest blog posts

The top two on this are part of a new series on a specific aspect of strategy creation: the process of asking new questions so you can get new answers. Older posts are still available on the blog page.

Strategy: Ask new questions to get new answers – Part 2: Partners

The majority of companies have partners for at least some of their business. The three main categories of partners available to most businesses are resellers, implementation partners, and subcontractors. This blog proposes how to understand your current status with partners and what you can do to improve.

Strategy: Ask new questions to get new answers – Part 1: Customers

First in a series about the first and most important step in determining a new customer experience or business strategy: getting an accurate picture of where you are today and what could possibly be done to improve your business. The key point is that you need to ask new questions to get new answers and insights.

Invisible gorillas prove you need automated text analytics. Seriously! (7-minute read and videos about inattentional blindness)

We are awful at observation. Our brains just don’t work all that well. Various psychological experiments lead to the inevitable conclusion that our brains work hard to fit whatever we perceive to the list of things we already know about…

Notable customer experience items from other sites

Fred Reichheld: The best way to cut costs is to make customers happier

You may know Fred Reichheld as the co-inventor of the Net Promoter System and the Net Promoter Score. While he is not hugely active these days, he has just written a new article that introduces an interesting twist to his favorite theme of customer loyalty. Rather than talking about revenue growth he talks about loyal customers as a cost reduction opportunity. I particularly like his point on the potential for changing sales incentives to favor rewards for customers to stay with companies for at least 18 months. Lots of good ideas in this three-minute read here.

Agi Marx: Voice of the customer: Why you need it and how to start your VOC program

Agi wrote this detailed blog for Thematic, where she is director of marketing. I find her insights about AI, text analytics and the importance of actionable insights quite compelling. A combination of art and science is needed to avoid simply identifying problems but not what you can do to resolve them. I think this blog provides good reading for any company that is setting up a Voice of the Customer program or trying to improve what they already have. It is about a ten-minute read and you can find it here.

Looking forward

Thank you for the great feedback on the ‘ask new questions’ blog posts on customers and partners. The next one will be on competitors.

Here are links to all of our books on Amazon.com. Kindle versions are available in all stores. Print versions are available from the major stores only. If you have already read any of our books, please write reviews on Amazon.

Customer Experience Strategy – Design & Implementation

Net Promoter – Implement the System

Customer-centric Cost Reduction

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

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

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