Metrics

July 24, 2019

#101 – Choosing projects, benchmarks, tech support cartoons

Maurice FitzGerald / Customer Satisfaction, Newsletter, NPS, Strategic initiatives, Strategy / Customer Experience, Customer Satisfaction, infographics, Metrics, Net Promoter System, research, strategy /

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

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

Unusual tips on prioritizing / choosing improvement initiatives

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

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

Why not share your benchmark NPS data with customers?

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

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

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

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

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

Have a look at the Micro Focus information here.

Our latest blog posts

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

	NPS (17) – Does culture affect NPS / customer survey outcomes? – 17th in the series on NPS This is the 17th article in a series on the Net Promoter Score and Net Promoter System. This time I cover cultural differences in the way people respond to surveys.…
	NPS (16) – Five more survey response rate improvement suggestions – 16th in the series on NPS This is the 16th article in a series on the Net Promoter Score and Net Promoter System. In addition to the direct marketing techniques mentioned in my last article, here…
	NPS (15) – Use direct marketing techniques to improve survey response rates – 15th in the series on NPS This is the 15th article in a series on the Net Promoter Score and Net Promoter System. The subject this time is the use of classical direct marketing techniques to improve response rates to survey requests sent by email.
	NPS (14) – 14th in the series – Customer survey response rates and statistical significance Welcome to the 14th article in my series about NPS and the Net Promoter System. This time I cover response rates, sample sizes and statistical significance. Perhaps the most important subject covered here is how best to communicate information about significance. (Hint: Don’t!)
	NPS (13) – 13th in the series – Whether and when to survey This is the 13th episode in my series on the Net Promoter Score and the Net Promoter System. This one is a bit longer than the average and covers some thoughts about whether you should surevy customers at all, and if so, when.
	NPS (12) – 12th in the series – Should I weight my survey results? So you have your survey results and the sample population is not representative of your customer population. So should you play around with the numbers until they match? A difficult question. There is a learning check / quiz at the end of this article.

Notable customer experience items from other sites

Reader’s Digest – 25 funny cartoons technophobes can appreciate

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

Have a good laugh here.

Joy King – Vertica scores big in customer satisfaction

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

Read Joy’s article here.

Looking forward

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

Maurice FitzGerald on stage in Amsterdam

Here are links to all of our books on Amazon.com. Kindle versions are available in all stores. Print versions are available from the major stores only. And as of two weeks ago, you can find the books, or at least order them in many bookstores. If you have already read any of our books, please write reviews on Amazon.

Customer Experience Strategy – Design & Implementation

Net Promoter – Implement the System

Customer-centric Cost Reduction

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

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

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.

July 2, 2019

#100 – 100th issue – When is it OK not to invest in CX? – NPS blogs – Infographics – 100 ideas

Welcome to the 100th Customer Strategy newsletter! The five topics this week are:

100 newsletters already?
When is it OK not to bother with improving customer experience?
Latest blog posts – New series on NPS continues
Notable items from other sites – CXO Infographics, 100 customer-centric companies
Looking forward

100 newsletters already?

Yes, this is indeed the 100th Customer Strategy newsletter. I started the newsletter, blog, and books with a simple idea in mind: to do a sort of ‘mind dump’, meaning to transfer a lot of knowledge and experience from my brain to electronic and physical media. I imagined that I would then be able to forget about it all and concentrate on being retired.

It has not worked out that way.

I thought the principle was sound. I started my career in the clothing industry. When I left it, I felt I was an expert in two areas: logistics and stonewashing. Digital Equipment Corporation (DEC) hired me for my logistics skills, so no mind dump was necessary there. However, I felt I had innovated considerably with the various chemical and physical processes involved in washing jeans. When I stopped working for the Wrangler jeans parent company I felt a need to preserve that knowledge. So I wrote it all up, photocopied it, and sent it to my colleagues and to various internal and external laundries and chemical companies with which I had worked. That was in 1985. I can say that I never thought about it all again from that point onwards.

My latest mind dump worked as far as my work on cost reduction is concerned. It has not worked out that way for customer experience and I think the reason is clear: we are all constantly surrounded by customer experiences every day. As a professional, it is hard not to observe what is happening and to think about what companies and government institutions could do better. So I keep on writing and posting content, though I feel I have already offered all the original thought that was in my head. For the last six months I believe I mainly reinforce points I have already made, sometimes by commenting on the work of others.

Our books continue to do well. June 2019 was the best of the three months of June we have had since launch. I have also been fortunate enough to be asked to speak to live audiences from time to time, and that is quite rewarding. The only work I do from which I don’t get any particular satisfaction is managing the 104,000-member LinkedIn Customer Experience and Artificial Intelligence group. Ever since LinkedIn removed certain management features about 18 months ago it has been impossible to stimulate interesting discussions or indeed any discussions at all. I think I will probably stop working on it.

I feel comfortable continuing with the books, newsletters, blogs, and speaking for now, and hope you feel the same way, faithful readers.

When is it OK not to bother with improving customer experience?

Those of you who expect me to answer “Never!” are going to be disappointed. Business strategy is about winning. Winning is about deciding how to deploy your scarce resources so that you can win. Yes, you need to decide whether your plan is to win in the short term or over time. Whichever time horizon you choose, the nature of your decisions is the same: what investments will give you the ROI you need in the timeframe you need it?

Try to think about the question this way: Customer experience investments are based on the principle that if you make your customers happier than those of your competitors your business will grow at a faster rate than your competitors’ growth rates. So, if you are profitable and growing faster than your competitors in your industry you are by definition making your customers happier than the competition is. This is true whether or not you have any formal customer experience initiatives or a CX team or indeed any processes that are explicitly designed to improve customer experience. So… if everything is going just fine, other investments may make more sense in your current business situation.

While my point is a general one, I think the situation is most likely to arise with smaller companies. Larger companies tend to become more ‘average’, and almost all will probably need to invest in customer experience improvement projects.

Yes, I enjoy being provocative from time to time. The above is my attempt for this 100th newsletter.

Our latest blog posts

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

	NPS (12) – 12th in the series – Should I weight my survey results? This is the 12th episode in my series on the Net Promoter Score and the Net Promoter System. There is a learning check / quiz at the end of the post. Suppose your research population does not match the actual profile of your customers. What should you do, if anything?
	NPS (11) – 11th in the series – The law of small numbers Continuing the discussion on Daniel Kahneman’s System 1 (intuitive fast thinking) and System 2 (rational slow thinking), some curious things happen when people study surprising data…
	How and why you should make it as easy as possible for customers to complain Complaints are bad, right? Well… sort of. The complaints you know about are valuable feedback and give you an opportunity to recover and retain your customers. It seems logical that you should do everything to minimize the number of complaints you receive. I disagree…
	NPS (10) – 10th in the series – How to avoid confirmation bias when analyzing research results In his book Thinking, Fast and Slow [1], Daniel Kahneman describes two ways our brains function. He refers to them as ‘System 1’ and ‘System 2’. In this post I cover the way our minds mess us up when we analyze research results.
	NPS (9) – 9th in the series – How to use the answers to the open questions While our rational minds like to see scores and trends, the primary value of Net Promoter System surveys lies in the answers to the “Why?” and “What should we improve?” questions…
	NPS (8) – 8th in the series – I have my NPS number. Is it good or bad? “OK, I have my NPS number. Is it good or bad?” There are two parts to the answer. First, the score does not tell you much on its own…

Notable customer experience items from other sites

CXO infographics by Annette Franz

Infographics can be a powerful communication tool. When I see them in office settings they often make me stop, look, read, and sometimes understand something new. Annette Franz is one of the world’s leading customer experience experts and she has collected 263 infographics on Pinterest. There are a few duplicates, and I expect that the number of unique entries is about 10% fewer. One thing she did not explain is what the ‘O’ in CXO means. Optimization? Organization? Any guesses?

Have a look here.

Habits of 100 customer-centric companies – Blake Morgan for Forbes

Blake Morgan contributed this interesting article to Forbes. She picked 100 companies that have done well in the American Customer Satisfaction Index reports, in the Temkin Experience ratings and elsewhere. Blake then tries to pick out something interesting and relevant to say about each. I have to admit that about a quarter of the statements are too generic to be useful, though there are some good ones on the list as well. If a reader would like to put the article through their text analytics software I would be interested to learn about any consistent messages. Please let me know.

Read Blake’s article here.

Looking forward

100 and counting. Will we make it to 200? Who knows?

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)

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

To change your subscription, click here.

June 10, 2019

#99 – Relationship between employee and customer sat (new study) – Journey mapping for scorecard reporting

Maurice FitzGerald / Customer Satisfaction, Newsletter, NPS, Strategic initiatives, Strategy / Customer Experience, Customer Satisfaction, Metrics, Net Promoter System, research, strategy, Temkin /

New study on relationship between employee and customer satisfaction. Journey mapping. Welcome to the 99th Customer Strategy newsletter. The five topics this week are:

Relationship between employee satisfaction and NPS (not much)
Customer Journey Mapping and scorecard reporting
Latest blog posts – New series on NPS continues
Notable items from other sites – Do Detractors really say bad things? Off-boarding
Looking forward

Relationship between employee satisfaction and NPS (not much)

Rainy days help my concentration. Regular readers know that I have done three annual studies on the relationship between employee satisfaction and customer satisfaction. For customer satisfaction I have been using the American Customer Satisfaction Index because there used to be no other publicly-available source of such data. For employee satisfaction I have been using Glassdoor ratings for the same reason. As I mentioned a couple of weeks ago, there is a new public source of NPS benchmark data as most Temkin research has now become available free of charge (here).

It rained hard on Monday morning, so I decided to add the Temkin 2018 US consumer benchmark NPS data to my ACSI-Glassdoor spreadsheet and compare the results. While both Temkin and ACSI cover over 300 companies, the lists do not match completely. I have been able to match 223 companies in my first attempt. I then calculated various correlation coefficients and R-squared numbers.

The results are easy enough to understand, I think. For these 223 companies, employee-satisfaction (Glassdoor) variations explain just 5.8% of the variations in customer-satisfaction (ACSI) numbers and 6.6% of NPS variations. As you would expect, the correlation between customer-satisfaction (ACSI) numbers and NPS is high, at 0.74.

What this means is that there is not much of a relationship between employee and customer satisfaction. I have not yet done the NPS analysis by industry and expect to see what we have seen with the ACSI numbers: there is a relatively strong relationship for high-touch industries like hotels, supermarkets, and retail, and a non-existent or even negative relationship for companies where employees don’t have much contact with customers.

I think I will need more rainy days to get the time and motivation needed to abandon the ACSI-based approach and replace it with the full Temkin-Qualtrics NPS data. I think I need to do it, since the general level of understanding and acceptance of NPS is much higher than that for ACSI data. Your views welcome.

Customer Journey Mapping and scorecard reporting

I quite like the principle of reporting customer feedback by touchpoint on customer journey maps. Since I don’t much care for the way most companies approach customer journey mapping, I think this bears some clarification.

For brand or relationship-level feedback, I continue to believe the standard three-question NPS format is the best solution. (Rating question, ‘Why?’, ‘What could we do better?’) Many companies add ‘driver’ questions that I consider useless. The driver questions are usually driven by a perceived need to provide a scorecard for each and every department in a company.

My suggestion is to prepare a top-level customer journey map and to use it for reporting. Use software or humans to assign each customer response to an open question to one of the steps along the customer journey. This should quickly give you a picture of the interactions the customers like and those that need improvement.

You will also see customer touchpoints that receive no feedback at all. In general, this means they are good enough and don’t need to be improved. An exception would be something that is central to your customer strategy. For example, if you have spent a lot of money to provide faster delivery than all of your competitors but fast delivery is never mentioned by your customers… well… you may have made an incorrect strategy choice. This type of feedback would indicate that extra-speedy delivery is not important, so you can save some money and just make it as fast as your competitors’ delivery.

Finally, don’t get too granular. If you get three thousand survey responses every month and have customer journey points that get just one or two comments, you may have broken the customer journey down to too fine a level of detail. Conversely, if you have one step that gets 600 comments you should probably break it down into several elements.

Our latest blog posts

I continue getting feedback on my Elon Musk / Tesla article via LinkedIn and directly. I think his recent launch of 60 clearly visible satellites that are disturbing astronomic observations is another indication that his ‘golden touch’ may be fading. The posts on this list are part of my extensive and deep series about the Net Promoter System. Older posts are still available on the blog page.

NPS (7) – 7th in the series – Transactional / Episode surveys – Best avoided? Use very selectively!

Transactional surveys are by far the most common type of customer research. It is helpful to think of them as feedback about ‘episodes’ or ‘jobs to be done’. They are hugely overused…

NPS (6) – Getting useful feedback about one of your products, services, or customer projects

Unless your company only sells a single product or service, you need a separate process to gather feedback about each product or service you sell. While benchmark and relationship surveys give you overall feedback, they probably don’t let you know (for example) what new features customers would like you to add.

NPS (5) – Relationship research with large B2B customers

A good relationship feedback process could be described as a non-anonymous mono-vendor benchmark survey. You usually only get detailed information about your own company. If you just have a small number of customers, you should go and talk to them all face-to-face. With larger numbers, you need to segment…

Notable customer experience items from other sites

MeasuringU – Do Detractors really say bad things about a company

One question that comes up quite frequently is whether there is any actual evidence that Promoters, Passives, and Detractors actually exhibit the behavior they are theoretically supposed to exhibit. This article is the result of a deep research on the subject. Among other things, it shows that 90% of all negative comments about a company do indeed come from Detractors. The author (Jeff Sauro, PhD) has put a lot of effort into the paper.

Read it here.

MYcustomer – Why do we ignore the end of the customer lifecycle when building personas?

Joe Macleod has written a really thoughtful article about something we never think about: What about customer off-boarding? We concentrate our CX efforts on our current customers and I suppose on new customers too. We never give a thought to those who are leaving us, whatever their reasons. Some of these reasons can be tragic, of course. I remember the difficulties I had helping my best friend’s family cancel his car insurance after he was killed in the crash of Swissair flight 111 from New York to Geneva. OK that’s an extreme case and what Joe has written is somewhat more run-of-the-mill.

Read his article here.

Looking forward

I will continue to try to publish two blogs per week over the coming month or two and do my best to take the research on the relationship between customer and employee satisfaction a little further.

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)

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

To change your subscription, click here.

June 6, 2019

#98 – Choosing CX project names. Does your clock show the same time as your customer’s?

Maurice FitzGerald / Customer Satisfaction, Newsletter, NPS, Strategic initiatives, Strategy / Customer Experience, Customer Satisfaction, Metrics, Net Promoter System, Podcast, project management, research, strategy, TAT /

Project names matter quite a lot. Does your clock show the same time as your customer’s clock? The five topics this week are:

Pick powerful names for your improvement projects
Turnaround time disconnects – When does the clock start to tick?
Latest blog posts – New series on NPS continues
Notable items from other sites – Text analytics in insurance, NPS benchmarks
Looking forward

Pick powerful names for your improvement projects

I have written about how to ensure ongoing sponsorship for your work. Recent experience makes me want to reinforce one point in particular: the importance of the name of the project or projects. In a totally rational world project names should not matter, but we humans are not 100% rational.

Think of the following situation. You have done your customer research for your eCommerce company. One of the points that has come up frequently is that you say you will reimburse customers five days after they return goods they don’t want, but quite a few customers say it takes longer than that. You have spoken to the accounting people and they say the customers are wrong. You believe there is a disconnect somewhere, as quite a few departments are involved in some way. So you want to launch a project to investigate it and ensure customers stop complaining about the problem (if indeed there is one).

So you put together a project proposal. You decide you need someone from logistics, from the website team, from accounting and from quality control. Since the accounting people have already told you there is no problem to solve, well… you could have a problem. The project name can help a lot. Think about it. You could call the project ‘Investigation and resolution of perception disconnect about reimbursement timing.’ Boring! How about calling it ‘Keeping our promises – reimbursement of customer returns’. Would anyone dare say, “I don’t agree with the ‘Keeping our promises’ project. Let’s not do it.” Anyone who says that sounds like an idiot. Once you have a name like this the project is hard to refuse and will not get cut if some need to save corporate costs arises.

Turnaround time disconnects – When does the clock start to tick?

What I wrote above is about the importance of project names. The example I used is one I have experienced personally at two companies. I first came across it when I worked for the Wrangler jeans parent company (Blue Bell Apparel, at the time). Customers occasionally told us we did not respect the delivery lead times we gave them, and we had the precise issue about reimbursements mentioned above. If, for example, we made a mistake with a delivery, the store would send the goods back and we would send them the correct products. If they had already paid, we had to reimburse them.

The first time I saw this a customer said they had returned goods that they had paid for and that we had taken several days longer than promised to reimburse them. Our accounting people said everything was done correctly. I told the customer that. The customer gave me the exact dates and times involved, which I have to say was quite kind of them. It was my first experience of a timer disconnect.

These disconnects arise when your customers’ timers start and stop at different times from yours. In the specific case of a customer returning product, their view of when the five days started was when the truck picked up the cartons of clothing. Their view of when the timer stopped was when the money was back in their bank account. It turned out that our view was different.

Our timer started when we had received the merchandise, opened the cartons and a quality control person had checked that the goods were undamaged. The accounting people then started their clock. They believed that we had committed a five-day TAT for the reimbursement and that they therefore had five days to process it. Our accounting people’s five days did not include weekends. The accounting timer stopped when they gave the transfer order to the bank. The bank took an average of three days to process the payment, not including weekends.

As far as the customer was concerned, we promised reimbursement in five days, but took an average of 12 days to actually do so. There was lots of what I call ‘white space’ in our processes where the timer was simply not running.

I hope you get the point. Your operational metrics for things that involve customers have to be measured from their perspective, not yours. In our specific case, we were not able to get the process down from 12 to five calendar days, so we had to change our promise to at least 12 days. We chose two weeks as our promise. Clarity is far more important than giving customers everything they might like to have, such as a real five-day TAT in this case. I hope you agree.

Our latest blog posts

I have been getting fantastic feedback on my Elon Musk / Tesla article both via LinkedIn and directly. Thank you! Two posts on this list are part of my extensive and deep series about the Net Promoter System. Older posts are still available on the blog page.

NPS (5) – Relationship research with large B2B customers

NPS (4) – Competitive benchmarks and supplier surveys

Quite a few companies sell NPS benchmark data. Some will do custom surveys to your design. Done properly, benchmark survey trends are the best predictor of revenue and market share…

Tesla, Elon Musk, and the new financial apartheid

A story about the extreme differences between those at the top and those whose lives must be sacrificed so that their leaders can receive excessive compensation packages. The blog starts like this:

José Luis Martínez* started work at as usual at Tesla’s Fremont plant on a January morning earlier this year. He was in his third year as a ‘maintenance technician’, ensuring…

Notable customer experience items from other sites

Edward Hu / Thematic – Four Ways Insurers Can Leverage AI Powered Text Analytics

Edward has written an insightful article for the Thematic blog. The first of the four points includes a way that AI-powered analytics can identify themes that are mainly mentioned by clients when making fraudulent claims, for example. He also covers how the technology can help detect call center themes that should be added to self-help sites and two more points. It is about a three-minute read.

Read Edward’s blog here.

Retently – What is a good Net Promoter Score?

At the other end of the length scale, Grigore Raileanu has written an excellent piece for Retently. It provides some surprising numbers and it is well-referenced. Personally, I found the Tesla NPS of 97 extremely surprising, though I could find no defect in the way it was obtained. (Research on a large panel of electric vehicle owners.) I did some digging and could not find details of exactly how Retently obtained its own NPS benchmark numbers, though these are broadly in line with what you will see elsewhere.

Grigore makes great points about the differences by industry and by culture or geography. The only minor thing he wrote that I disagree with is that any benchmark number better than your last one is a good number. I suppose my disagreement is a bit technical: If your entire industry has gained five points and you gain two points, your number is bad, and you will lose market share.

Worth the ten-minute read here.

Looking forward

I will continue to try to publish two blogs per week over the coming month or two.

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)

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

To change your subscription, click here.

May 28, 2019

#97 – New Net Promoter System podcast, two CX books I read recently, bad experience with ‘Fruit’ company, Reicheld and Owen on WSJ article

Bain Net Promoter System podcast with… me. Two good CX books I have just read. company sometimes goes rotten, and Fred Reichheld reflects on the WSJ article on NPS. The five topics this week are:

My 10th Bain Net Promoter System podcast
‘The Human Brand’ and ‘Yellow Goldfish’ – Two CX books I enjoyed
Latest blog posts – New series on NPS continues
Notable items from other sites – ‘Fruit’ support, Reichheld and Owen on the WSJ article
Looking forward

My 10th Bain Net Promoter System podcast

Readers who received my newsletter last week know that I was interviewed for a Wall Street Journal article on NPS. Rob Markey and I recorded a Net Promoter System podcast to discuss and reply to the article. I have to say that Rob was somewhat more emotional than he usually is during his podcasts. It was my tenth recording with him, and I think I had the most fun with this one.

We had an extensive discussion about the main new point that one of the journalists raised, which was the increasing use of unexplained NPS numbers in annual reports and earnings calls by S&P 500 companies. We feel it is a good thing that CEOs are able to talk about customer experience trends at the same time as they talk about financial performance. It is just an unfortunate fact of life that there is no recognized or required standard for such disclosures. Ideally, their customer experience numbers should come from recognized double-blind benchmark research providers. An alternative would be syndicated research using a standard methodology, such as the Prism methodology recently launched by Bain and Qualtrics.

Overall, we felt the WSJ article was a positive one, despite a negative headline. We used the podcast to reinforce various points about how you can ensure your metrics are considered to be trusted and reliable within your company.

If you have not subscribed to the podcast you can find it here.

Two customer experience books I have read recently

Yes, I try to constantly read books about business strategy, behavioral economics, and customer experience. I feel I still have a lot to learn, despite my age and experience. Here are a few words about two books I have read and enjoyed recently.

The Human Brand was written some time ago by Chris Malone and Susan T. Fiske. In an illustration of how much I still have to learn, the authors introduced me to a customer experience model that I had never heard of and that appears to be well-known. It is the ‘warmth and competency’ model. The central message of the book is that our attitudes towards people, products, and companies are determined by these two factors. I read warmth as being about our perceptions of empathy and positive intentions towards us. Competency is about the ability to execute as expected or promised.

The book is full of stories about companies and individuals that have done better or worse jobs of exhibiting these two attributes. The stories come from the mega-companies we know and scale right down to one about a dentist who insists on doing teeth-cleaning work himself because it is easier to have a conversation with a patient while that is going on than when he is extracting a tooth. I learned a lot and hope you will too. There is a website for the book here.

Yellow Goldfish was written by Stan Phelps and Rosaria Cirillo Louwman. I love the central theme: happiness! The overall message is that companies can ensure success by making customers happier than they were before their latest interaction or experience with a product or service. Stan and Rosaria represent happiness at the top of a Maslow-like motivation hierarchy, and suggest we measure the Happiness Contribution Factor, as represented in this illustration:

This is the ninth book in Stan’s Goldfish series, the only one that is in collaboration with Rosaria. Each book title mentions a different color. For Stan, a goldfish is a great symbol of something that is small and can make a big difference, despite its size. A goldfish metaphor also helps to communicate things like competition (the number of other goldfish in the pond) and the market (the quality of water in the pond). Yellow was chosen for communication about customer experience because it is a warm primary color and because (surprisingly) of the yellow color of the original ‘smiley face’ by American artist Harvey Ross Ball.

True to its metaphors, the book is filled with wonderful examples of small things people have done and behaviors they have adopted that have made major differences for customers, employees, and indeed for entire companies. A fun read! Rosaria has created a site for the book here.

Our latest blog posts

Two posts on this list are part of my extensive and deep series about the Net Promoter System. Articles I read about Elon Musk’s compensation package made me interrupt the series with a post on a different subject entirely. Older posts are still available on the blog page.

Tesla, Elon Musk, and the new financial apartheid

A story about the extreme differences between those at the top and those whose lives must be sacrificed so that their leaders can receive excessive compensation packages. The blog starts like this:

José Luis Martínez* started work at as usual at Tesla’s Fremont plant on a January morning earlier this year. He was in his third year as a ‘maintenance technician’, ensuring…

NPS (3) – Net Promoter System Framework, ensuring metric is trusted

The NPS metric is just one part of a much larger system. The Bain & Company Net Promoter System Framework has five elements, as shown in the diagram.

NPS (2) – Basics and history of the Net Promoter Score and System

This series supposes the reader is already familiar with the basics of the Net Promoter System, and ideally has read The Ultimate Question 2.0 by Fred Reichheld and Rob Markey.…

Notable customer experience items from other sites

‘Fruit’ support screws up

My former colleague Dr. James Borderick recently had a rather negative support interaction with a company whose name he has disguised here, just calling it ‘fruit’. I know him as a passionate promoter of said company’s products and can understand his discretion. As he puts it, “My first support engagement in a while with a certain fruit company has led me to believe that a once NPS leader is not what it once was. Multiple failures along the support journey coupled with a very bad customer success manager interaction at the close have pushed me to write this article.”

Read his disappointing story here.

Richard Own and Fred Reichheld comment on the WSJ NPS article

Here are what will probably be my last mentions of the Wall Street Journal story on NPS. The original inventor, Fred Reichheld, responded on LinkedIn and included this noteworthy phrase, ‘Instead of NPS, perhaps I should have called the system “NLE,” for Net Lives Enriched. After all, that is what NPS really measures.’ Read his full response here.

Richard Owen was CEO of Satmetrix at the time NPS was invented and led the research that proved that Promoters generally do indeed talk to others about your product or service, and the related behaviors of Passives and Detractors. Richard’s thoughtful response includes useful content on the validity of NPS as a metric, among a variety of other topics. Worth a read here.

Looking forward

Not much on my calendar at the moment, so I will try to publish two blogs per week over the coming month or so.

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)

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

To change your subscription, click here.

May 20, 2019

#96 – WSJ article on NPS, Temkin research now free, Journey Mapping, Improved version of original NPS research

Maurice FitzGerald / Customer Satisfaction, Newsletter, NPS, Strategic initiatives, Strategy / Customer Experience, Customer Satisfaction, Metrics, Net Promoter System, research, strategy, Temkin, Wall Street Journal, WSJ /

The Wall Street Journal writes about NPS. Free Temkin Group research. Welcome to the 96th edition of my customer strategy newsletter. The five topics this week are:

WSJ article about NPS
Almost all Temkin Group research is now free of charge!
Latest blog posts – New series on NPS
Notable items from other sites – Journey mapping
Looking forward

Wall Street Journal article about the Net Promoter Score

Khadeeja Safdar and Inti Pacheco wrote an article about NPS that appeared last week. It has the rather odd title of The Dubious Management Fad Sweeping Corporate America. (Note that you will not be able to see the full article unless you are a subscriber. Since I had this problem, I chose to subscribe for three months for the equivalent of $1, which I can apparently cancel at any time.)

I was among the people interviewed by one of the two journalists behind the article. I spent about 45 minutes with Khadeeja Safdar on the phone. I also sent her some material about the subjects she raised during the call.

Despite the odd headline (which neither of the two journalists supplied, so I suppose it was written by an editor who did not actually read the article), I found the article quite positive about NPS. There are some relatively trivial inaccuracies.

In her call with me Khadeeja introduced me to the main new subject she brought to the discussion which is the increasing use of unattributed NPS numbers by CEOs in earning calls and annual reports. Mind you, unattributed does not mean they are not correct, just that the methodology has not been described when the numbers are provided. You would hope that they all come from double-blind benchmarking studies, but that is almost certainly not the case.

Personally, I think it is great that more and more top CEOs at least mention customer experience in their calls and messages.

I believe that at least one other point is worth noting. While various people have published papers suggesting that their favorite metric (always one that is a compound metric, therefore more complicated than NPS) has equal ability to predict market share trends, nobody has presented a metric with significantly better predictive ability. Khadeeja mentioned peer-reviewed papers critical of NPS. I have studied every such paper I can find in detail and have found none with any merit. One, for example, included a study of NPS versus revenue in Norwegian retail gas stations from 2000 to 2003, a period when the price of a barrel of oil went down by 30%. And some may know that gas stations in Norway are a state-owned monopoly, so it is not possible to study NPS versus market share.

I hope at least some of you will be able to read the full article. The data on the mentions of NPS in annual reports and earnings calls is quite surprising, at least to me. I learned quite a lot from the article.

Almost all Temkin Group research is now free of charge!

Great news! I have often said that the lack of public domain double-blind NPS benchmarks is a problem. That problem has now been solved. Bruce Temkin just announced that his historic research findings are now available free of charge. I immediately registered and was able to download the full 2018 NPS benchmarks report. It used to cost a minimum of $495.

Temkin Group was acquired by Qualtrics in October 2018. Qualtrics was in turn acquired by SAP in January 2019. Bruce stayed along for the ride and his team is now called the Qualtrics XM Institute.

So, please go over to their website and have a look. You will find the research reports in the lower half of the home page. You can filter on ‘Metrics’ to find NPS benchmarks and loads of other interesting stuff. You must register to be able to download the reports. Enjoy them here.

Our latest blog posts

The posts at the top of this list are the first in a lengthy and deep series about the Net Promoter System. Older posts are still available on the blog page.

NPS (2) – Basics and history of the Net Promoter Score and System

This series supposes the reader is already familiar with the basics of the Net Promoter System, and ideally has read The Ultimate Question 2.0 by Fred Reichheld and Rob Markey.…

NPS (1) – Do you really need a customer experience measurement and improvement system?

This is the first in a series of blog posts about implementing the Net Promoter System. The Net Promoter System®[1] is the most widely adopted system for managing customer feedback…

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

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… here is how to convert ACSI scores to approximately accurate NPS numbers.

Notable customer experience items from other sites

Instrktiv / Ferry Vermeulen – Customer Journey Mapping

A nice article giving a list of ten things to bear in mind if you are going work on a customer journey map. I have to say he had me when he mentioned Daniel Kahneman’s ‘Peak End rule’. Regular readers will know that I don’t believe journey mapping should be applied indiscriminately. It is at its best when your customers have told you that you have one or more processes that need to be improved. Spend your time and effort there, rather than trying to map everything that exists in your company.

I hope you will find the article useful. You can find it here.

Jeff Sauro: Assessing the predictive ability of the Net Promoter Score in 14 industries

There is a slight risk of excessive NPS focus this week. Jeff has written a fabulous article that takes the basic research Fred Reichheld and friends did when coming up with the NPS concept and takes it further. No historic data was available when Fred did his landmark work. Jeff added further years of data. Among other things, he tries to answer the ‘chicken and egg’ question. And the result is that NPS is indeed a predictor.

If you are a customer experience professional, I believe this a page you need to read, bookmark, and share with your colleagues and friends. Get it here.

Looking forward

I have recorded a new Net Promoter System podcast with Rob Markey. I will give you more details when I know the release date.

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)

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

To change your subscription, click here.

May 9, 2019

#95 – Change equation – Are your metrics any good? – Great NPS podcast – Jeb’s Jobs technical support (funny)

Maurice FitzGerald / Customer Satisfaction, Newsletter, NPS, Strategic initiatives, Strategy / creative commons, customer complaints, Customer Experience, Customer Satisfaction, Metrics, Net Promoter System, research, strategy /

The Change Equation. Is your CX metric useful? A great new NPS podcast. A source for free-to-use images. Welcome to the 95th edition of my customer strategy newsletter. The five topics this week are:

Change equation update
How to understand whether your main customer satisfaction metric has any value
Latest blog posts
Notable items from other sites – NPS podcast with Razia Richter, Jeb’s Jobs
Looking forward

Change equation update

I wrote about what I called the change equation in this newsletter about six months ago. I came across what I wrote again yesterday and realize my information was incomplete. Here is the full information. For change to happen, three elements are necessary:

Dissatisfaction with the current state.
A clear future vision.
Practical first steps that are worth the cost and effort.

While the subject of this newsletter is customer-centric business strategy you should be able to see lots of useful examples all around you. In France, for example, the ‘Gilets Jaunes’ protests show a large number of people who are clearly dissatisfied with their current situation. However, the lack of central leadership for the movement means they have no clear future vision and of course no practical first steps towards that vision.

So it should be obvious that general dissatisfaction with the current state is not sufficient. The first thing you have to have is what I suppose should be called ‘specific dissatisfaction’. If you are a customer experience leader, or indeed lead any area of strategy, your list of things that need to be changed needs to be short and consistent. And to be consistent with myself, I would add that you need to be able to create dissatisfaction in your audience by telling stories, thereby creating emotions. (In another domain, think how great Greta Thunberg is at doing this.) Numbers, scores and trends just won’t create sufficient dissatisfaction on their own. If your data shows that you need to improve in a particular area, start the discussion with a story about an individual customer, ideally in their own words.

Remember the old Bobby McFerrin hit Don’t Worry, Be Happy. What you sometimes want to communicate is the opposite: Do Worry, Be Sad!

Finally, as noted the last time I mentioned the subject, the change equation is not my idea. Peter Mercury and Don Gordon promoted it strongly at DEC and Compaq and I believe it was their invention.

How to understand whether your main satisfaction metric has any value

As I come into contact with more and more companies selling to consumers I have been learning more about metrics and their interpretation. Since it is quite easy to game all measurement systems, I would like to suggest how you can tell whether your system has any value, meaning whether it measures what you think it measures. Let’s assume you are using NPS for this example, though you should be able to apply the same principle to any CX metric.

It should be obvious that customers who like you are more likely to become repeat customers than those that hate you. So when you look at your loyal customer list, meaning all those who have ordered more than once, Promoters should be better represented on the list than Passives or Detractors. If not, your current survey process is worthless. If you do not know which of your survey respondents have only bought once from you and which are more loyal customers, well, then you have a different sort of problem and are probably not yet ready to ask for feedback.

I hope this is reasonably clear. I will probably write more about the subject soon, possibly a full blog post with an example.

Our latest blog posts

Older posts are still available on the blog page.

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

Can we, should we reverse-engineer customer experience strategy for speed and effectiveness?

Is the Net Promoter Score (NPS) dead?

The Net Promoter Score is dead! Or are the reports on NPS simply fake news? Well, the image at the top of the article shows what I found with a simple Google search. This article explores the main negative points made about the Net Promoter Score and suggests which ones are correct and which are misleading…

Notable customer experience items from other sites

Net Promoter System podcast with Razia Richter – When an operator becomes CcO

I thought this was one of the best episodes ever! Razia had a variety of senior positions at PetSmart before the CEO asked her to become Chief Customer Officer, a concept that was in its infancy at the time. I found several of her points particularly interesting. I suppose some of that was because she and I seem to agree on a lot of things. She placed a lot of emphasis on the need to communicate issues with personal customer stories rather than using dashboards full of numbers. And she gave a lot of useful advice about how to engage leadership team members in the improvement work.

I hope you will enjoy it here.

Comedy – Jeb’s Jobs – Technical support

This apparently dates from 2005 but I had not seen it before today. Poor Jeb is not having a good day. Will he ever be able to eat his sandwich?

Check it out here.

Looking forward

I was interviewed for customer experience articles for the Times business supplement and for the Wall Street Journal recently. The Times article appeared last week, though I have not been able to find an online version so far, so can’t provide a link. I will let you know when and if the WSJ article appears. It is about NPS.

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)

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

To change your subscription, click here.

April 23, 2019

Can we, should we reverse-engineer customer experience strategy for speed and effectiveness?

Maurice FitzGerald / Blog, Customer Satisfaction, Strategic initiatives, Strategy / Customer Experience, CX, Metrics, NPS, project management, Sponsorship, strategy, Surveys /

As regular readers will know, I have been quite frustrated by the focus customer experience professionals place on metrics. Your primary focus should be on designing and implementing improvement projects, not on measurement. In that context, I would like to suggest a strategy development architecture that emphasizes that point and prioritises speed over precision.

First step

Yes, if there is no conceivable way you can get the people and money you need to drive improvement projects you should abandon your customer experience strategy effort. What you do next is up to you.

Second step

If you don’t know what your customers want you have no rational basis for selecting your improvement projects.

Third step

If the top three to five things customers want you to improve fall cleanly into the responsibilities of individual business units or functions, then please just let them get on with those improvements. The central customer experience leadership role should limit itself to communicating the improvement work internally and externally.

Fourth step

If customer improvement priorities cross business and functional lines (and only then) you need a cross-BU, cross-functional team to agree the design and implementation plans. Remember that to retain sponsorship for your work your projects need to have meaningful names, need to produce meaningful results every two to three months, need to reflect things senior leaders talk about, and need to be easy to communicate effectively.

And now… step five

Yes, you should resign if you have followed the agreed funding process and the answer is negative. Your CEO or senior leader has lied to you and they cannot be trusted. Use the experience to find a more trustworthy leader elsewhere, ideally before you actually resign. (There is an old Dutch saying that I like: “Never throw away your old shoes before you have new ones.”) Assuming approval, then just get on and implement. Then start the cycle again when the first project is complete.

Conclusion

I see this as a simple and effective approach. Only do CX research if you are certain to be able to drive improvements. If you need additional customer research, only do it in areas that customers tell you are important. You don’t have unlimited resources. You need to use them where you, your team, and your company can win!

As always, feel free to disagree or provide other perspectives below.

More of this sort of thinking in our books. They are all available in paperback and Kindle formats from Amazon stores worldwide.

April 4, 2019

Is the Net Promoter Score (NPS) dead?

Maurice FitzGerald / Blog, Customer Satisfaction, NPS, Strategic initiatives / CSAT, Customer Experience, CX, Metrics, NPS, Surveys /

The Net Promoter Score is dead! Or are the reports on NPS simply fake news? Well, the image at the top of the article shows what I found with a simple Google search. So… is the Net Promoter Score dead? Here are the views of two important people:

And of course this well-known quote:

For reasons I won’t go into at the moment I have had to research what those who do not support NPS have been writing over the years. Here are some of the objections I know about and what I think of each. If you have others in mind, let me know and I will provide my perspective.

‘Compound metrics’ are better predictors of revenue and market share trends than NPS’

Yes, this is true in many cases. It is possible to design and implement more sophisticated measurements that are better predictors and a number of them exist. Reichheld and Markey have never claimed otherwise. Reichheld’s original contention was simply that the recommendation question was the best single-question predictor among those studied, for the majority of industries. The issue with compound metrics and the reason none have ever caught on is that they are extraordinarily difficult to explain. And because they are not common, every single communication about the results has to start with an explanation of how the metric works. Too boring. Audiences go to sleep, no matter what the value of the sophisticated metric is.

The recommendation question is not always the best or most predictive single question to ask

Yes, that is true and Reichheld says so in his 2003 HBR paper. Indeed, he refers extensively to Enterprise Rent-A-Car in his paper and the question they ultimately used and that turned out to be a great predictor for them was ‘Please rate your overall satisfaction with your rental’. When eBay implemented NPS their target customers were people making their living selling things on eBay. The found that when they asked the recommendation question they got answers like “No, I am never going to recommend to a friend that they should compete with me on eBay.” So they implemented “How likely are you to continue selling on eBay?’ and continue to use that question to this day.

Lots of other things affect growth more than NPS

That is certainly true in some industries. Overall, Bain and my own research suggest that NPS scores predict between 20% and 60% of revenue / market share trends, depending on the company. There are clearly industries where external factors drive 100% of the revenue and customer satisfaction will drive market share only. Take gold sales. Revenue depends on the price of gold. Market share will partly depend on how customers feel about you compared to your competitors. Where there are monopoly providers of essential resources like electricity, customer sat has no effect on revenue, as should be obvious. You can the relevant information from Reichheld and Markey here.

NPS is easy to game

Yes, that is true, and the same is true of every other metric like CSAT or Customer Effort Score. Here is a blog I wrote about how to cheat a couple of years ago. https://customerstrategy.net/gaming-survey-results/

Companies publish fantasy numbers as their NPS numbers in their annual reports

I wish that were not true, but it is. The only number they should publish is a double-blind competitive NPS benchmark score. Some companies choose to publish numbers that correspond to some positively-perceived subset of their business such as a support desk that only a minor proportion of their customers actually use. Again, the same self-measurement phenomenon could happen with CSAT or other metrics.

NPS is not a good predictor of revenue

While I will go into specific papers about the topic below, I want to make a few general points first. Not all NPS numbers are equal. The only scores that are consistent and reliable predictors of revenue and market share trends are double-blind competitive NPS benchmark trends. Double-blind means that the people answering the feedback requests do not know who is funding it. Ideally the people analyzing the feedback don’t know either, though this second ‘blinding’ may be tricky to achieve. If, for example, the only NPS numbers you have are feedback from a support desk survey, you should not expect it to predict revenue or market share at all unless yours is simply a support desk business. And of course if your numbers improve but your main competitor’s numbers trend is even better, you will lose market share. I emphasize share rather than revenue because some industries are in decline. If your score is better than your competitors’ scores you may simply decline more slowly in that industry.

We did deep research on this while I was at HP and I have posted the top-level results of the relationships we found between relative NPS trends and revenue in various places. Since then, Dr. James Borderick of Micro Focus has done even deeper research on the subject across more than 30 global software vendors and once again proven the strong relationship between NPS and market share trends. I don’t know exactly what level of detail he has been allowed to publish as his work does of course include some confidential company data.

An often-cited quote from Fred Reichheld about his own research

There is an often-cited quote from Fred Reichheld stating “A number of perspicacious readers have noted that the statistical evidence provided in my book The Ultimate Question is imperfect. It does not provide proof of a causal connection between NPS and growth. Nor are some of the timeframes ideal.”: This quote comes from one of his own blog posts (here) and has been used by a number of people to ‘prove’ that Fred felt his own research was defective. The quote is horribly out of context. Here is what he says immediately afterwards and which proves he believes his research was entirely legitimate. “When the manuscript was completed in mid-2005, that data, imperfect as it was, represented the best available information: 8 quarters of NPS and annual organic revenue growth rates for competitors in a dozen or so industries. Today, this database has grown enormously. Bain has conducted additional research in scores of industries around the world, gathering NPS data and apples-to-apples revenue-growth statistics for individual competitors. Bain teams consistently find that NPS explains the majority of variation in organic growth rates across an industry over many time periods. More importantly, we have found that individual customer responses to the ultimate question predict those customers’ subsequent behaviors across the multiple drivers of profitable growth: repurchase rates, margins, cross-sell, retention, referrals, etc. Many companies, including GE, Intuit, eBay, American Express, and others have seen similar results.”

Proof of the relationship between NPS trends and revenue / market share trends has never been published in a peer-reviewed journal

Not true at all. For example, here is one that Andrew Stephenson, Jana Fiserova, Geoff Pugh, and Chris Dimos had accepted for the British Academy of Management annual conference proceedings. It actually won best paper at their 2018 event. The data is from the UK-based multinational furniture retailer that has over $1B in annual revenue. It is quite a ‘deep’ read. To me, the essential point is their choice of using feedback gathered six months after purchase. This seems like a great way of getting a pure brand-level NPS number. I would like to invite you to take the time it takes to read it, if you are at all interested in the subject. You will see that the relationship between NPS and revenue is established in a quite compelling way. The paper is here. (This should open with a completed search for the name Stephenson, and you can download the paper directly from the search result.)

Keiningham et al. paper ‘A Longitudinal Examination of Net Promoter and Firm Revenue Growth’ – Journal of Marketing vol 71, July 2007

Let me try to be polite about this. It is a disgraceful failure of the peer review system that this article could have been published in the form it was published. Here is a link. While there are a number of issues, the main thing that should have disqualified it from publication is on page 43. During the second of the three years studied the price of a barrel of oil dropped 30%. This is a great example of an industry where you would not expect any customer experience metric to have predictive value for revenue. The only factor that matters is the price of oil. This is so blindingly obvious that I can only believe that it was included in a deliberate attempt to deceive readers. The other half of the same page proves the opposite, meaning a strong positive relationship between NPS trends and revenue / market share for banking. Without the gas station example, the overall conclusion of the paper does not stand up.

However, that was not enough for the authors. They added to the what I feel is the deception with an extensive comparison between NPS and ACSI as revenue predictors, proudly showing that ACSI was at least as good a predictor and thereby ‘proving’ that the recommendation question is not the best single-question revenue predictor. However, they knew that ACSI is not the response to a single question. It is a weighted average of the answers to three different questions so is a compound metric (see above). Keiningham knows about my objection and rejects it as it has not been published in a peer-reviewed journal. He does not deny the facts I set out.

Morgan and Rego paper ‘The Value of Different Customer Satisfaction and Loyalty Metrics in Predicting Business Performance’ – Marketing Science Sep-Oct 2006

In the abstract and full paper the authors write things like “metrics based on recommendation intentions (net promoters) and behavior (average number of recommendations) have little or no predictive value.” Unfortunately, this is another, perhaps even more disgraceful, failure of the peer-review process. Morgan and Rego did not study the recommendation question at all! The paper should never have been published as written. They used the answers to two other questions and then state that they are equivalent to the recommendation question. Here is what is on page 429 of the article: “We utilize ACSI data concerning consumer responses to the questions “Have you discussed your experiences with [brand or company x] with anyone?” and “Have you formally or informally complained about your experiences with [brand or company x]?” I suppose they felt compelled to write something about NPS, had no data at all, and so invented something deliberately deceptive that supported the conclusion they wanted to make.

There are a number of other papers published in various magazines and journals that pick on particular aspects of NPS or specific industries. I have one that covers just two industries, one of which is PC manufacturing. Reichheld said they had found no relationship between IT manufacturing and the recommendation question in his HBR paper, so the ‘finding’ is hardly surprising. Note that for the HBR paper end users of IT were asked, rather than the corporate purchasing decision-makers, so it is really not a surprise that there was no relationship with revenue trends.

I suppose you can tell I feel strongly about some of these objections while considering others to be valid. If you have more that you would like me to examine, please feel free.

More of this sort of thinking in our books. They are all available in paperback and Kindle formats from Amazon stores worldwide.

March 20, 2019

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

Maurice FitzGerald / Blog, Customer Satisfaction, Strategic initiatives / CSAT, Customer Experience, CX, Metrics, NPS, strategy, Surveys /

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 building. I was able to socialize extensively with the attendees, the speakers, and various people from the CustomerGauge team. I found my interactions with their software developers particularly stimulating.

Two questions came up most

I have not attended this type of conference in a while and did my best to learn what was on customer experience leaders’ minds. The most common questions I was asked were, “Where should I start?” and “Where should I report?” These are simple questions, though the answers are not simple. Or at least the answers are not simple if you exclude “It depends.” as an acceptable answer.

Where do I start?

The best way to ensure that you have the support of the leadership team from the start is to go and ask each of them what you should do. This is a tactic works best at two points, one of which may surprise you. I believe the best possible way you can start is to try to talk to other members of the management team you are trying to join while you are still in the interview process. I did this once, for my biggest promotion. I had already met two of them and made it my business to meet several others before I interviewed with the head of HP EMEA. When he asked me the inevitable question, “What do you think should be your priorities?” I was able to answer, “Well, here is what various people on your team suggest. I agree with these three suggestions and want to add a fourth of my own. What do you think?” I suppose this also addressed a more general interview technique which is that the person who shows they want the job the most usually gets it.

My second suggestion for where to start is almost the same as the first. It consists of going through the same process with your new teammates, just after your appointment. In both cases you should be trying to get their suggestions for work that crosses organizational boundaries. I don’t think there is any point in asking (for example) the support leader what the support team should do.

Just the first steps

The above are my suggestions for the very first things you should do. They are designed to achieve consensus about the priorities. That consensus should make it easier to take the subsequent steps, which are mainly around ensuring you have the people and funding you need to implement what has been agreed. Once you are in motion you can take the time to work more deeply on your mid-term strategy.

If you have already been appointed some time ago and are still asking where you should start… well… you probably have a different problem. And I am going to try to answer it in a different way, by talking about where you should report, or at least the teams with which you need to have your closest relationships.

To whom should I report?

In a perfect world you would report directly to the head of the organization for which you are the Customer Experience leader. While I had that privilege, it is rarely the case. I have quite strong views on the next-best options, and they may not be what you expect.

The best reporting line is to the Chief of Staff, if your organization has such a position. That person usually sets the agenda for and runs all leadership team meetings. They always know everything that is going on. This ensures that CX will be on the leadership team agenda and will be well-connected to whatever is going on.

The second-best reporting line is to the sales leader, at least in B2B companies. The reason for this is quite simple. If your work is successful, win rates will improve. Reporting this way can also remove one of the major obstacles CX leaders face: resistance by sales people to customer interviews. Sales people commonly say “I already know everything that is going on with my customer so we don’t need to do any more research.” I have never found this to be true. Face-to-face interviews with the top customers always bring new surprises. Once you are seen to be addressing any negative surprises you will find it easy to get the support of the sales team.

Reporting lines best avoided?

There are two common places that CX leaders report and which I believe are best avoided. The first is Marketing. Indeed, this may be the most popular reporting line. The reason I don’t like it is simple: CX work is too far from the Marketing mission. Marketing exists to do demand generation and sales support, primarily for current-quarter business. Marketers refer to the necessary resources as ‘People and Programs’ and need funding for both. If there is insufficient funding for this core work, lower-priority work such as CX gets cut. The second place CX sometimes reports is to a support organization. I see two disadvantages here. First, that normally moves you a management level further from the top as the support leader rarely reports to the CEO. Second, it moves you to a team whose role is primarily a reactive one of ‘putting out fires’. I find this far less motivating than improving sales win rates, for example.

Conclusion

It was great to be in Amsterdam with such a large group of enthusiastic people. I learned a lot and can only hope that I contributed something useful to the audience. As you might expect, the organizers ran an NPS-type survey after the event and I am looking forward to seeing the results. The views expressed above are representative of how I tried to answer questions on these two topics during breaks in the conference. I hope you find them helpful.

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