Net Promoter System

Bain Net Promoter System Framework

Net Promoter System® Quiz – Final part, and full quiz

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Here is the full Net Promoter System true/false quiz. The new questions are the final five below. All other questions are the same as those I have posted over the last five weeks. A link to the answers follows below the questions. The questions are all learning checks at the end of chapters in our book Net Promoter – Implement the System. You will see that the sections below correspond to the various parts of the Bain Net Promoter System framework, as illustrated at the top of this article. Our book concentrates on implementing the system. My experience is that the most difficult part of implementation is ensuring the reliability and trustworthiness of the research. That is why there are more questions on this subject than the others.

Decide whether each statement is true or false, note your answers, then click on the link to the answers.

Introductory questions

  1. The answers to “How likely are you to recommend [Company] to a friend were found to be the best predictors of future revenue trends among all the questions tested by Fred Reichheld in his 2003 Harvard Business Review article The One Number You Need to Grow.
  2. The answers to the “How likely are you to recommend [Company] to a friend were found to be the best growth predictors for all industries tested, in the same HBR article.
  3. The Net Promoter Score scale must start at zero and go to ten. All other scales are invalid.
  4. Reichheld’s research showed that customer behaviors really do change depending on their classification as Promoters, Passives or Detractors.
  5. The definitive reference source for the Net Promoter System is The Ultimate Question 2.0, and no other information on the design and implementation is available from Reichheld and Markey.

Reliable, Trusted currency / metric

  1. If your competitive benchmark NPS number is better than that of your main competitor, you will take market share from them moving forward.
  2. Good NPS scores start at 30, great scores at 40, and you are world-class at 50.
  3. Consistent trends in numbers that are based on small sample sizes are always useful. You do not need sample sizes for all competitors to be the same, for example.
  4. All customers are considered equal by benchmark survey suppliers, so customers who spend a lot have the same weight as those who do not spend much.
  5. Even the font you use in an email asking customers to take a survey can make a big difference.
  6. To make sure you are doing a good job, you should always send a survey request to every customer who phones your service center.
  7. Embedding at least the rating question in a survey request email improves response rates by about 2.5 times.
  8. Culture makes no difference to survey responses, so it is always fair to compare countries’ NPS performance with each other.
  9. Low survey response rates tend to give overly optimistic NPS scores.
  10. The more questions there are in your survey, the more likely people are to complete the survey, as it is clearer that you value their opinions.
  11. The cost of renewing an existing annuity contract is typically one-tenth the cost of acquiring a new customer.
  12. If your overall brand NPS trend is better than that of your competitors, it is safe to assume that all parts of your business will benefit in the same way.
  13. Bain experience suggests that the average time lag between a relative NPS improvement and new product revenue improvement is 6 to 18 months.
  14. Since contra-revenue is not in a standard P&L statement, it should not be considered when calculating the lifetime value of a customer. (Contra-revenue includes things like discounts from standard list prices, and rebates given to resellers.)
  15. To avoid bias, all customers should be considered equal in your research, no matter how much they spend with you or your competition.

Feedback, learning and improvement

  1. The Inner Loop is where you follow up with customers on individual feedback items. The Outer Loop is where you work across departments on feedback that has come from many customers.
  2. All common customer improvement suggestions are equally important. You should staff up to work on as many as you can afford to.

Robust operational and analytic infrastructure

  1. Customer Experience is clearly a part of brand marketing and the customer experience leader should always report to the Marketing leader.
  2. Humans are currently the best single solution for evaluating and prioritizing verbatim responses to surveys.

Employee / team environment focused on loyalty

  1. Happy employees are the single most important customer satisfaction predictor in most businesses.
  2. The Net Promoter System work just as well as an employee experience improvement process as it does for customers.
  3. Satmetrix is the only official provider of Net Promoter professional certification.

Sustained leadership commitment

  1. To be most persuasive, customer experience leaders should usually start their presentations with a story about a single customer, a quote from a customer executive, or a single emotionally-charged statement.
  2. Senior leaders who participate in a company’s Executive Sponsor program should have no experience in the client’s industry. Customers will welcome their outside views.

Once you have decided on your answers, click here.

Feel free to disagree and debate the answers in the comments section below the answers. I recognize that some answers my be difficult to understand without the context of the corresponding book chapter.

 

 

#27 – NPS Podcasts, Customer Advisory Boards and more

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Welcome to the 27th edition of my customer strategy newsletter. The five topics this week are:

  1. Just recorded two more NPS podcasts
  2. An unusual negotiation technique – worth trying? 
  3. Latest blog posts
  4. Notable items from other sites – Customer Advisory Boards, NPS benchmarks
  5. Looking forward

Recorded two more NPS podcasts with Rob Markey

Rob Markey and I recorded two new Net Promoter System podcasts on Monday. We had planned to record three, and blocked out 90 minutes to do so. However, we got enthusiastic about the first two subjects, and over-ran. We used questions from the Net Promoter System Forum on LinkedIn as the basis for our discussions.

The first one was all about benchmarking. I hope we will bring you a bit of clarity about the use of the word itself. It is being used to designate quite a few different types of research, not all of them useful. We covered the state of the art, the relationship between benchmark trends and revenue, benchmarking alternatives for smaller companies and niche industries, and a variety of other questions. I learned quite a bit, and hope you will find it useful when it goes live a couple of weeks from now.

The second recording was about response rates to customer feedback requests. It should go live in September. I was surprised at the high response rates Rob is able to achieve with his B2C clients. We covered how to improve response rates, dealing with SPAM filters, how to talk about response rates when communicating results, and a variety of other questions.

 

The ‘Scarboro’ negotiation technique – worth trying

I recently had another opportunity to use what I call the ‘Scarboro’ negotiation technique. It is quite surprising, and it can work. I named it after a former colleague at Digital Equipment Corporation, Alan Scarboro. I am writing about it here, because one of my contacts asked me for advice on how to submit an effective customer experience budget proposal for his company’s next fiscal year, which starts on October 1st.

Alan and I were working in the Software Product Group at DEC in Geneva, around 1995. Most of the other teams had UNIX or VMS workstations. Alan felt the software team should have PCs, as we wanted to use particular software that was not available for the workstations. PCs were expensive, and central IT had started to allow some teams to have low-end models. Alan submitted his request for our team. Quite a fancy configuration. Refused by IT. Alan then wrote a nice note to IT, copying two levels of management, saying “Thank you for refusing this configuration. You are absolutely correct. We need bigger screens and more powerful graphic cards. Here is our new order.” Quite a nasty refusal the second time. Alan’s response to the second refusal was similar to the first, adding more to the configuration, based on a specification just received from the software vendor as appropriate for power users. The response from central IT: “Approved. We don’t want to fight with you.”

When you are asking for something, it is worth thinking about what you could reasonably ask for that would be even better. If your first request is refused, ask for more. It worked for Alan. It just worked for me last week, in an unrelated area. And it was fun too!

 

Our latest blog posts

We are now up to the fifth in a series of six true / false quizzes about the Net Promoter System. All questions come from our book Net Promoter – Implement the System. Older posts are still available on the blog page.

image A Puppy! And the Net Promoter System® Quiz – Part 5 – Feedback, improvement, teams

Another puppy photo. Enjoy. And of course, it is time for the fifth in a series of six true/false quizzes about the Net Promoter System. How are you doing so far?
image A Puppy! And the Net Promoter System® Quiz – Part 4 – Your CFO is Your Ally

This quiz concentrates on financial aspects of the Net Promoter System. It comes after a book chapter that emphasizes the need to work with your finance team to ensure the numbers make sense.
image A Kitten! And the Net Promoter System® Quiz – Part 3 – Survey Design

Yet another kitten, and the third in a series of true or false questions about the Net Promoter System. This time the questions are about survey design.

Notable customer experience items from other sites

Satrix Solutions on Customer Advisory Boards

I provided a link to an earlier Satrix post on CABs a few weeks ago. I consider Customer Advisory Boards to be essential for B2B companies in particular. You need to ask for and carefully consider the advice of your most important customers when you are developing and implementing your business strategy. This latest post provides guidance on CAB logistics, taking action after the meetings, and how to understand the ROI of your investment in CABs. The article is here.

Infographic – Satmetrix NPS benchmarks for US consumer businesses

Satmetrix is a co-owner of the Net Promoter System trademark. They are the reference provider of NPS training, and also provide benchmarks and other services. If you fill in a few details about yourself and your company, you can download a great infographic that provides benchmark ranges for a variety of industries, as well at the names of the best in each. You can get it here.

 

Looking forward, and a correction

Thanks to the alert readers who pointed out that I misstated the year of the HP and EDS merger in last week’s article about British Airways. The companies merged in 2008, not 1998, so Sir Colin was not in charge when BA outsourced to EDS. The lesson for me is that I should not write anything before my second coffee.

Things are quite quiet for me at the peak of summer in the northern hemisphere. If there is something you would like me to investigate or write about, I have time available to do the necessary research, so please let me know.

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.

 

Black puppy

A Puppy! And the Net Promoter System® Quiz – Part 5 – Feedback, improvement, teams

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And here is another puppy photo! Enjoy. And of course, it is time for the fifth in a series of true or false questions about the Net Promoter System. There will be one final batch of questions next week. A link to the answers follows below the questions. The questions are all learning checks at the end of chapters in our book Net Promoter – Implement the System. The first two questions below come after the chapter titled Feedback, learning and improvement. Questions 3 and 4 are after the chapter on Robust Operational and analytic infrastructure.

Questions about the improvement process, as well as the CX reporting line and infrastructure

Decide whether each of these statements is true or false. Note your answers, then click on the link to check them.

  1. The Inner Loop is where you follow up with customers on individual feedback items. The Outer Loop is where you work across departments on feedback that has come from many customers.
  2. All common customer improvement suggestions are equally important. You should staff up to work on as many as you can afford to.
  3. Customer Experience is clearly a part of brand marketing and the customer experience leader should always report to the Marketing leader.
  4. Humans are currently the best single solution for evaluating and prioritizing verbatim responses to surveys.

Once you have decided on your answers, click here.

Feel free to disagree and debate the answers in the comments section below the answers.

Bain Net Promoter System Framework

 

#26 – Loyalty Cards, Outsourcing, and more

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Welcome to the 26th edition of my customer strategy newsletter. The five topics this week are:

  1. Thoughts about loyalty cards
  2. Article on British Airways: “How cost cutting increases costs.” Really? 
  3. Latest blog posts
  4. Notable items from other sites – Jobs to be Done, Customer Support
  5. Looking forward

Thoughts about loyalty cards

I have difficulty making up my mind about loyalty cards and similar schemes. I still have not been able to decide whether they are worthwhile, but at least I am able to articulate a few thoughts. Two things stimulated my thought process recently. One was a request from a company that offers a multi-brand loyalty scheme. Another was a report on Swiss radio about the loyalty schemes the two largest supermarket chains run here.

Starting with the supermarkets, the tone of the report was that it was almost scandalous that the cards give just a 1% discount, and that the supermarkets get so much data about us in return. Reducing my attitude to this to personal anecdote, the existence of these schemes has had no effect whatsoever on my grocery shopping. I continue to do it all in the supermarket that is closest to where I live. The other major chain would be a further five minute drive away, so I don’t bother. Similarly, I when I travelled a lot for HP, I reached the highest tier on all three major airline alliances’ frequent flyer schemes. However, the existence of the schemes had no effect whatsoever on my purchases. Company policy required me to take the lowest-cost flight to any destination. I suspect many other companies have similar policies. All this makes me think such single-brand cards are nice to have, and bring no particular benefit to the companies offering them. Of course the consequences of stopping such a system would be major.

There are a number of companies that offer multi-brand loyalty cards. I have to say that I don’t see many advantages for the participating companies. Since the cards are not proprietary, participating companies do not get customers’ purchase data that way. Yes, they can say they offer a loyalty card, but the loyalty card also potentially works at their competitors’ stores.  I play golf, and have received offers for three different loyalty cards, each of which gives substantial discounts at a large number of clubs. I can get out a calculator and work out whether they make financial sense for me. In the case of golf, one of the loyalty schemes comes from a company that owns a number of the golf clubs covered. For more general purchases covering lots of different retail stores, I just don’t see what it is in it for the stores. What am I missing? Your views are welcome.

 

Cost reduction and its effect on customers – maybe – British Airways

Rowan Jackson posted an article on LinkedIn on July 19th. Eight days later, it has had over 10,000 likes and 1200 comments. I have not seen this volume on LinkedIn before. The title is British Airways: a brilliant example of how cost-cutting increases costs. It attributes the recent major computer system failure at BA entirely to a supposedly-misguided decision to outsource its IT operations. Rowan suggests that one of BA’s historic CEOs, Sir Colin Marshall, would never have outsourced IT, quoting him as saying “Our IT is so important we would never outsource it.” He goes on to say that Sir Colin’s successors did not have the same IQ as Marshall and outsourced anyway.

Let’s remember what the nature of IT outsourcing was at the time. A company simply transferred its people and equipment to the outsourcing company. That company in turn drove efficiencies that typically resulted in a 20% cost reduction. EDS and HP merged in 2008 and EDS arrived with the BA outsourcing contract. I don’t know when it was signed. Sir Colin left in 2000. EDS/HP do not have the BA outsourcing contract anymore, by the way. But the unfortunate single employee whose mistake caused the downtime could have been working for anyone, including BA..

Moving from the specific to the generic. A good business strategy is one that allows you to concentrate your scarce resources on the few things that will help you to destroy your competitors. Everything else should be cut to the bone to provide you the cash you need to invest in the few things that will let you win. Unless you have decided that superior IT operations are one of the few things that will let you win, you should therefore give it all to someone else to operate. I have no idea what was on the list of BA’s top three strategic investments in the late 90s. If IT operations were on the list, they should have kept it in house. If not, goodbye, and use the resulting savings for the things on the top three list. 

Our latest blog posts

By popular request, I have replaced the kittens with a puppy for the latest true / false quiz. All questions come from our book Net Promoter – Implement the System. Older posts are still available on the blog page.

image A Puppy! And the Net Promoter System® Quiz – Part 4 – Your CFO is Your Ally

 

This quiz concentrates on financial aspects of the Net Promoter System. It comes after a book chapter that emphasizes the need to work with your finance team to ensure the numbers make sense.
image A Kitten! And the Net Promoter System® Quiz – Part 3 – Survey Design

Yet another kitten, and the third in a series of true or false questions about the Net Promoter System. This time the questions are about survey design.
image A Kitten! And the Net Promoter System® Quiz – Part 2

Now that you have seen another kitten, it is time for the second in a series of true or false questions about the Net Promoter System. This time the questions relate to ensuring that NPS is a reliable, trusted currency / metric.

Notable customer experience items from other sites

Entrepreneur Magazine: Want to Drive Growth? Improve Customer Support

Robert C. Johnson guest wrote this for Entrepreneur magazine today. It is an interesting read. I suggest reading the statistics he quotes with care. For example “The report says that 60 percent of consumers have taken their business elsewhere due to poor customer service, and nearly 70 percent of younger consumers have moved on due to inadequate support…” This does not mean that 60% of the people who receive poor service from your company will change. What it means is that 60% of consumers who may have received poor service from many companies, have stopped buying from at least one of them. Some companies are easier to drop than others. Restaurants are particularly easy to drop, while cable TV companies and Internet Service Providers are harder. The article is here.

Jim Kalbach and Jobs to be Done

Here is another way of thinking about customer journey mapping. You may remember I provided a link to Fred Reichheld’s views on ‘episodes’ last week. Jim Kalbach brings the ‘Jobs to be Done’ concept to journey mapping. The suggestion is that customer experience can be broken down this way, each major interaction representing a job the customer wants to do. His formula is “When [Situation], I want to [Motivation] so I can [expected outcome]. I really like this way of thinking. Of course I continue to believe that customer journey mapping should be used selectively, concentrating on things (jobs to be done) that need the most urgent improvement. Jim’s article is here.

 

Looking forward

I will be preparing the contents for the next three Net Promoter System podcasts over the coming few days. Your input is still welcome. We record on Monday.

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.

 

Puppy

A Puppy! And the Net Promoter System® Quiz – Part 4 – Your CFO is Your Ally

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By popular demand and threats of lawsuits from local puppies, I have decided to give them equal time. Enjoy. And of course, it is time for the fourth in a series of true or false questions about the Net Promoter System. You can look forward to several new questions each week, for about the next four weeks. A link to the answers follows below the questions. The questions are all learning checks at the end of chapters in our book Net Promoter – Implement the System. The book has three chapters on how to ensure that NPS is a ‘reliable, trusted currency / metric’, which is why you will see three parts to the quiz questions on the topic. I recognize that some questions may be tricky to answer correctly without reading the corresponding chapter. This third set is about the financial aspects of the system and the role of your Chief Financial Officer in ensuring the leadership team trusts NPS as a metric.

Questions about NPS as a ‘Reliable, trusted currency / metric’ – Third section – Financial impact

Decide whether each of these statements is true or false. Note your answers, then click on the link to check them.

  1. The cost of renewing an existing annuity contract is typically one-tenth the cost of acquiring a new customer.
  2. If your overall brand NPS trend is better than that of your competitors, it is safe to assume that all parts of your business will benefit in the same way.
  3. Bain experience suggests that the average time lag between a relative NPS improvement and new product revenue improvement is 18 months.
  4. Since contra-revenue is not in a standard P&L statement, it should not be considered when calculating the lifetime value of a customer. (Contra-revenue includes things like discounts from standard list prices, and rebates given to resellers.)
  5. To avoid bias, all customers should be considered equal in your research, no matter how much they spend with you or your competition.

Once you have decided on your answers, click here.

Feel free to disagree and debate the answers in the comments section below the answers.

Bain Net Promoter System Framework

 

Tabby kitten

A Kitten! And the Net Promoter System® Quiz – Part 3 – Survey Design

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Now that you have seen another kitten, it is time for the third in a series of true or false questions about the Net Promoter System. You can look forward to several new questions each week, for about the next five weeks. A link to the answers follows below the questions. The questions are all learning checks at the end of chapters in our book Net Promoter – Implement the System. The book has three chapters on how to ensure that NPS is a ‘reliable, trusted currency / metric’, which is why you will see three parts to the quiz questions on the topic. This second set is about survey design.

Questions about NPS as a ‘Reliable, trusted currency / metric’ – Part 2 – Survey Design

Decide whether each of these statements is true or false. Note your answers, then click on the link to check them.

  1. Even the font you use in an email asking customers to take a survey can make a big difference.
  2. To make sure you are doing a good job, you should always send a survey request to every customer who phones your service center.
  3. Embedding at least the rating question in a survey request email improves response rates by about 2.5 times.
  4. Culture makes no difference to survey responses, so it is always fair to compare countries’ NPS performance with each other.
  5. Low survey response rates tend to give overly optimistic NPS scores.
  6. The more questions there are in your survey, the more likely people are to complete the survey, as it is clearer that you value their opinions.

Once you have decided on your answers, click here.

Feel free to disagree and debate the answers in the comments section below the answers. The next set of questions on the ‘reliable trusted’ topic will relate to making your CFO into a key ally.

Bain Net Promoter System Framework

 

Kitten

A Kitten! And the Net Promoter System® Quiz – Part 2

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Now that you have seen another kitten, it is time for the second in a series of true or false questions about the Net Promoter System. You can look forward to several new questions each week, for about the next six weeks. A link to the answers follows below the questions.

Questions about NPS as a ‘Reliable, trusted currency / metric – Part 1

This is the first of three sets of questions about this critical subject. Decide whether each of these statements is true or false. Note your answers, then click on the link to check them.

  1. If your competitive benchmark NPS number is better than that of your main competitor, you will take market share from them moving forward.
  2. Good NPS scores start at 30, great scores at 40, and you are world-class at 50.
  3. Consistent trends in numbers that are based on small sample sizes are always useful. You do not need sample sizes for all competitors to be the same, for example.
  4. All customers are considered equal by benchmark survey suppliers, so customers who spend a lot have the same weight as those who do not spend much.

Once you have decided on your answers, click here.

Feel free to disagree and debate the answers in the comments section below the answers. The next quiz questions will be the second of three sets on how to make NPS into a ‘reliable, trusted metric’, a key element in the Bain Net Promoter System Framework shown below.

Bain Net Promoter System Framework

Kitten photo courtesy of Shutterstock and Menna.

Kittens

Kittens! And the Net Promoter System® Quiz – Part 1

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Now that you have seen some kittens, it is time for the first in a series of true or false questions about the Net Promoter System. You can look forward to several new questions each week, for about the next seven weeks. The first set is below. A link to the answers follows.

Introductory questions

Decide whether each of these statements is true or false. Note your answers, then click on the link to check them.

  1. The answers to “How likely are you to recommend [Company] to a friend were found to be the best predictors of future revenue trends among all the questions tested by Fred Reichheld in his 2003 Harvard Business Review article The One Number You Need to Grow.
  2. The answers to the “How likely are you to recommend [Company] to a friend were found to be the best growth predictors for all industries tested, in the same HBR article.
  3. The Net Promoter Score scale must start at zero and go to ten. All other scales are invalid.
  4. Reichheld’s research showed that customer behaviors really do change depending on their classification as Promoters, Passives or Detractors.
  5. The definitive reference source for the Net Promoter System is The Ultimate Question 2.0, and no other information on the design and implementation is available from Reichheld and Markey.

Once you have decided on your answers, click here.

Feel free to disagree and debate the answers in the comments section below the answers. The next quiz questions will be the first of three sets on how to make NPS into a ‘reliable, trusted metric’, a key element in the Bain Net Promoter System Framework shown below.

Bain Net Promoter System Framework

 

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