Surveys

#66 – CX Communication – Complaints teams – Text Analytics – CX Career Development

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More on CX communication methods, complaints teams, text analytics and developing your CX career. Welcome to the 66th edition of my customer strategy newsletter. The five topics this week are:

  1. Communication – The average person is very bad at math
  2. What does a complaints team do?
  3. Latest blog posts
  4. Notable items from other sites – Thematic Analysis, comprehensive CX career guide 
  5. Looking forward – Webcast on July 19th
Communication – The average person is very bad at math

I was re-listening to an old Freakonomics episode about gun safety in the USA a few days ago. Quite a lot of the discussion was about our emotional reactions to various facts, compared to a truly rational reaction. For example, factually, a US child is apparently a hundred times more likely to die from the parents having a swimming pool compared to the parents having a gun. This made me think about what I have written in our book Customer Experience Strategy – Design and Implementation about how to use emotional reactions to your advantage. In short, you should present numbers in one way to have people think they are important, and in another way if you want your audience to pay no attention to them.

Nobel-winner Daniel Kahneman describes this often-repeated experiment in his book Thinking, Fast and Slow:

Participants are given a choice of drawing marbles from one of two urns, in which red marbles win a prize. They are told how many white and red marbles are in each urn:

● Urn A contains 10 marbles, of which is one is red.

● Urn B contains 100 marbles, of which eight are red.

Easy choice, right? Not so easy, apparently. In the various repetitions of the experiment, 30 to 40% of students chose Urn B, despite the lower probability of winning.

As Kahneman says, “…the remarkably foolish choices that people make in this situation have attracted the attention of many researchers.” He uses Paul Slovic’s term ‘denominator neglect’ to describe it. Some of the phenomenon seems to be explained by how vivid the image of something is in our minds. It is easy for us to imagine the eight winning red marbles against a rather indistinct background of white. Our System 1 has acted and found the answer. System 2 continues to take a nap. Perhaps more remarkably, one study showed that people told about a disease that “kills 1,286 people out of every 10,000” believed it to be more dangerous than “a disease that kills 24.14% of the population.” The imagery of the absolute number overwhelms the relatively abstract notion of a percentage.

This matters for how you communicate the results of any study of what customers want. When you want your audience to internalize and act based on your numbers, use absolute numbers, not percentages. You will of course occasionally want people not to pay much attention to some numbers, and the use of percentages will help. Paul Slovic and his colleagues cite an article that states that “approximately 1,000 homicides a year are committed nationwide by seriously mentally ill individuals who are not taking their medication.” That could also accurately be expressed as “the annual likelihood of being killed by such an individual is approximately 0.00036%.” The former grabs your attention on an emotional topic. The latter makes you want to yawn. The version to use depends on what you want to accomplish.

What does a complaints team do?

As many of you know, I manage the Customer Experience Management group over on LinkedIn. We passed the bar of 99,000 members a couple of weeks ago, and will reach 100,000 within about a month, though that is not what I want to write about. A question about how to measure the effectiveness of complaint handling teams came in yesterday, and I would like to say a few words about the subject here.

The way I think about customer complaints is that they are situations where the ‘normal’ company process has failed to deliver the result the customer expected or situations where the customer can’t identify what the normal process is. In 99% of such situations, the best you can do is to prevent the customer leaving you. If they stay, you have succeeded. After all, they should never have had to complain in the first place. I just don’t see how a complaints team can drive revenue growth or bring you new business directly.

This means that the way to measure the effectiveness of a complaints team is by tracking customer loyalty. If you know your historic rate of losing customers each year by business and don’t have a complaints process, try implementing one for a single business, then comparing loyalty numbers after about six months.

 

Our latest blog posts

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

image Suggested method for choosing your strategy from a list of proposals

Once you have a set of insights about customers, competitors, your industry, the external environment and your ability to implement, the next step is to decide what you are going…
image How demographics affect customer experience research – You should expect surprises

It is tempting to keep feedback requests very short to improve completion rates and avoid wasting customers’ time. However, I have yet to see research where demographics did not make a difference. Most notably, men and women often answer differently…
image Improving response rates to survey requests sent by email

Way back in October last year I blogged about using direct marketing techniques to improve response rates to surveys. This post addresses five additional ideas that are specific to survey requests sent by email…

 

Notable customer experience items from other sites

Alyona Medelyan – Why Thematic Analysis beats Sentiment Analysis

Alyona is one of the world’s leading experts in Natural Language Processing. I consider automatic text analytics to be the single most important technical innovation in customer experience. The reason is that it removes human bias from the interpretation of written customer feedback. It can be applied to unstructured survey data and to online reviews, among others. The whole area is evolving rapidly, as are the ways we can think about and understand it. This short article Alyona has written on LinkedIn explains thematic analysis and compares it to sentiment analysis in a clear and simply way. And she even put a cute photo of a pair of dogs at the top. Enjoy it all here.

Omoto – A comprehensive career guide for aspiring Customer Experience Managers

Moving on from Alyona in New Zealand to Omoto in India, Shruti Sarkar and Vivek Jaiswal interviewed a lot of people in the CX community and wrote this interesting article on CX careers. (Yes, I was one of those interviewed.) The result includes fascinating data about many aspects of our profession, as well as quite a bit of advice. I had no idea the demand for CX leaders was growing so quickly. This is worth the five to ten minutes it will take you to read it here.

 

Looking forward

I will be the guest in a live webcast hosted by Alyona Medelyan on July 19th.  The title is How to combine science and emotion for Customer Experience Success. My preparation is what made me think of the first article in this newsletter. Time zones are tricky to deal with. The webcast is at 11 a.m. Pacific, 2 p.m. Eastern, 8 p.m. Central European Time, for example. A recording will be available to everyone who registers. You can sign up for the webinar here.

Here are links to all of our books on Amazon.com. Kindle versions are available in all stores. Print versions are available from the major stores only, with the notable exception of Australia, where print versions are not available from amazon.com.au.

Customer Experience Strategy – Design & Implementation

Net Promoter – Implement the System

Customer-centric Cost Reduction

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

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

Please share this newsletter with your friends and colleagues and encourage them to sign up for it here. I have put links to past newsletters on the subscription page. Finally, please feel free to change or cancel your subscription using the link below.

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

To change your subscription, click here.

How demographics affect customer experience research – You should expect surprises

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It is tempting to keep feedback requests very short to improve completion rates and avoid wasting customers’ time. However, I have yet to see research where demographics did not make a difference. Sometimes the differences are surprising.

What we mean by ‘demographics’

Demographic information is that which you use to categorize responses. Of course you should never ask people to provide the categories if you already have the information. For web-based surveys, the categories you don’t already know about are normally provided using pull-down menus. Examples are things like these:

  • For product surveys, responses may vary depending on whether the respondent is a purchasing decision-maker, an influencer or an end user. Respondents are asked to self-categorize.
  • For employee surveys, whether the person works from home, the office or is always on the road may matter.
  • For a survey about a software product, it is useful to know what version of the software the customer is using. People using older versions of software may provide improvement suggestions that have already been implemented in the more recent versions. It is then easy to provide instant feedback and make them happy.

Gender matters

Even in B2B environments, women often provide different input to men. You should be able to do the demographic split well enough using people’s names, if you have a few hundred responses. In HP’s research on consumer printers, women mentioned ease of use and overall quality twice as often as men as a reason for recommending the printer. Men mentioned the price of supplies, low ink consumption and value for money twice as often as women. In short, the survey showed that women care about different things than men. It changed the messaging and marketing we used, as well as the training given to people in retail stores.

An example from a student survey

A Swiss business school did a simple NPS survey among its students. Once again, women and men scored quite differently depending on where they lived. Women living at home were far happier than male students living at home (meaning with their parents). This was not expected. It was pure chance that the survey owner decided to look at gender as a factor. The full range of NPS differences by demographic is shown below. Respondents with the attributes towards the top-right gave the highest Net Promoter Scores.

Demographic effect on NPS

The survey owner used the information to propose a series of actions. For example, the unhappiest students were those who came from countries other than Switzerland or France. The proposal was a specific welcoming process for such students, including free French courses. There was no clear proposal for how to make students living with their parents happier with their lot. If you have ideas, I will pass them on. (Strangely, this was mainly an issue for male Bachelor’s degree students. Or maybe you don’t think it is strange…)

I suppose one other entertaining factoid from this survey is worth mentioning. While the beauty of the campus, with amazing views of the Alps and Lake Geneva was in the top three reasons students liked the school, half as many Swiss people mentioned it as French students. Too blasé, I suppose.

Action orientation

One last point: If you don’t already have the demographic information but it is of no conceivable use in an action plan, please don’t ask. Let’s suppose you want to know what should be improved in your commercial air-conditioning products. Asking the respondents what age they are is of almost no conceivable relevance.

 

(As is often the case, this blog post is a mildly-edited version of a chapter in one of our books. In this case the book is Customer Experience Strategy – Design and Implementation. All of our books are available in Kindle and print versions from Amazon.)

Raining surveys

Improving response rates to survey requests sent by email

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Way back in October last year I blogged about using direct marketing techniques to improve response rates to surveys. (You can find that blog here.) I would like to add some points that are specifically about survey requests sent by email. Here are five things you can do, in priority sequence. If you have other ideas, I would love to hear about them.

Let people start to respond to the survey directly in the email

By far the most important thing you can do is allow respondents to respond to the survey directly in the email they receive. Unfortunately, this is technically difficult. The best you can do is to embed the first question in the email, usually the overall rating question. Use HTML widgets to do this. They do not get blocked by the common email clients at least at the time this is written. Embedding the first question improves response rates by a factor of 2.5x, in my personal experience. Promoter.io and other software providers have found that it triples response rates. My suspicion is that embedding the first question makes it far less likely that people believe the survey link could be a phishing attack or other security risk.

Tell everyone what you have learned

Provide feedback to everyone, not just the respondents. When you have completed the survey and determined the actions, write back to the entire mailing list to let them know their voices have been heard and telling them what you are going to do. Those who did not respond are more likely to answer the next time, and could also be given a way of adding their voices immediately if they do not feel represented.

High-quality contact lists

Ensure you have an email contact list that you maintain and use regularly for customer communications. That has two main benefits, one obvious and one less so. First, you will have far fewer emails ‘bounce’ due to unknown addresses. The second benefit is that customers who read your emails will almost certainly have authorized the displaying of ‘pictures’ for anything received from your email domain. Outlook and other clients default to blocking pictures from unknown sources. You should minimize the use of pictures and other graphics in outbound emails in any case, as they present consistency challenges across phone, tablet and PC platforms. One good aspect of the new European Union General Data Protection Regulation is that email lists that respect the new rules will be of high quality, though the lists may be somewhat shorter than ones you would have had before.

Test your outbound emails

Test your outbound email with a set of internal users first, to detect problems. Send some additional test emails to internal users from a non-company email address, to see how they display if an email client blocks anything or automatically puts the email in a spam folder.

Thank people in advance for their help

While I have suggested not using strong incentives, simply thanking people in advance, promising to act and to inform them of the results should be a sufficient incentive for many, and should have a positive effect on response rates.

That’s it for the response rate improvement suggestions. Now let’s discuss ‘over-surveying’.

Risk of over-surveying

How do you know whether you are over-surveying? There are two main principles. First, you need to provide more value than you extract, which should push you towards short surveys. Second, you need to be planning to act on the feedback, including informing customers about your progress. Remember that over-surveying is about individuals, not companies. It does not matter if you send surveys to multiple people in a company. What you want to avoid is sending one individual multiple surveys in a short period of time. When thinking of this, bear in mind that your competitors may be sending surveys to the same person too.

Over-surveying may be over-rated as a problem

Let’s face it, if a customer has not responded to your survey request, they have not wasted any time, but you do not know what they are thinking. Most transactional surveys will give you a response rate between 5 and 15%. Product survey response rates can be a little higher. The people you need to avoid asking to respond again in a short period of time are those who already answered your survey. Most of your customers will not have answered. These should be the focus for the following research round, assuming it happens reasonably soon after the previous one. Write something that starts like this:

“Dear Mrs. Smith,

I realize you did not have time to respond to my request to help us improve our product when I wrote to you six weeks ago. The people who did answer helped us to determine the two items below as our top two improvement priorities. I really want to have a third project and would like to once again ask for your help. There are just three questions and this won’t take you more than about 3 minutes…”

Taking this approach improves the overall response rate, and therefore improves reliability. Make sure you don’t send these emails to people who have already answered.

More generally

If you have listened to customers, made improvements, then reported the progress back to customers, you cannot be accused of over-surveying if you start the process again. Customers will be able to see that you have provided at least as much value as you have extracted, and will cooperate. It is important to communicate your progress to all customers, not just those who responded.

[Like the majority of my blog posts, this one is a mildly-edited version of a chapter in one of our books, in this case Net Promoter – Implement the System.]

Where do I start?

Choosing a benchmark research provider for NPS, CSAT or any other customer experience metrics

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I am trying to form my thoughts about what criteria are reasonable when deciding on a benchmark research provider. My current thinking is below. I welcome your additions and corrections.

What is benchmark research?

According to the Merriam-Webster dictionary, a benchmark is ‘something that serves as a standard by which others may be measured or judged’. In the case of customer experience research, understanding your NPS, CSAT, ACSI metrics, trends, and reasons for those trends compared to those of your competitors would be a good example. The challenge lies in how to obtain numbers and other data, such as verbatim responses, for your competitors that are measured in the same way as the information for your own company. This is where the concept of double-blind benchmark research comes in. I don’t see how you could do it on your own, so using a third party seems inevitable.

Why can’t I do my own research?

It seems really unlikely that you could get an accurate contact list for your competitors’ customers. While you may have employees who used to work for your competitors, it is generally illegal for you to ask them for the competitors’ customer lists. Even if you had such a list, phoning or emailing them from your own address will necessarily bias the results. You need something totally neutral and unbiased.

What should you be looking for?

Here the three factors I feel are most important, based on years of using various companies for such research. All of this supposes that you cannot easily find benchmark studies that already cover your industry. For example, if you work for a large company selling to US consumers, the ACSI, Temkin Group, and others may already have what you need.

  1. The single most important factor is the quality of the contact lists for your competitors and for your own company. I feel you should prefer companies that recruit their own panels of respondents, rather than those who source them from third-party panel companies. The reason is quality control. You need to be able to interact directly with the company that recruits panel members. At one point in my work at HP, I noticed that some answers to verbatim questions were pure garbage. People just hit random keys. One even wrote ‘I am just doing this for the points’. There were also cases of NPS scores which were opposite to the sentiment expressed in the verbatim comments. The company with whom you contract has to be able to eliminate such panel members, without your intervention.
  2. A company that has already done this type of research, ideally in your industry. Industry experience helps vendors to correctly identify positions and people who are decision-makers, influencers, and simply end users of your products or services.
  3. Ability to do basic data processing and presentation decks without your intervention. Ideally, they should be able to identify surprises in the research results for you. Over the years I learned that if you have to do a lot of work just to understand your own results, you lose the ability or motivation to dig deeply into your competitors’ results. A vendor who can supply the data in a way that can be directly analyzed using Tableau (or similar software) and text analytics would be ideal.

Syndication is another possibility

Since many companies choose to publish misleading NPS and other metrics, you and your competitors may actually be motivated to cooperate on a common benchmark methodology, and share the cost of hiring a company to do it for you. You could choose to make this into ‘open’ research, meaning you allow additional companies to join the effort and share the cost. This is ‘syndicated research’.

Some vendors

Bain has started an NPS benchmark research certification program. Their certification criteria are not yet public. J.D. Power and ROI Consultancy Services were the first two companies to be certified. You can find a list of research vendors on this page. Note that they do not indicate which vendors have been certified, and that I have no commercial relationship with Bain or any of the research vendors.

Conclusion

The three points above reflect the most important things I have learned over the years. Other factors may matter to you too, and I welcome learning about them. Benchmark research is the only type of research that should be able to accurately predict your revenue trends relative to your competitors. According to Bain and other research, competitive NPS trends explain 20 to 60% of market share trends, for example. Fred Reichheld and Rob Markey’s thoughts on the subject are here. Decent analysis of answers to open questions like ‘Why?’ and ‘What should we improve’ should guide your own efforts and give you competitive insights.

Please let me know what you think below.

#47 – IKEA, Cleveland Clinic, cultural differences, UK service awards and ‘wooden spoon’

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Welcome to the 47th edition of my customer strategy newsletter. The five topics this week are:

  1. IKEA and customer experience – Ingvar Kamprad RIP
  2. The customers (in this case the patients) should not always be given what they want
  3. Latest blog posts
  4. Notable items from other sites
  5. Looking forward
IKEA and customer experience – Ingvar Kamprad RIP

Ingvar Kamprad founded IKEA, lived not far from me for a long time, and pioneered all sorts of interesting things. Following his death, I asked a few people what they thought of IKEA, and what they found memorable. Here is what I retained from that, together with my own views. Yes, it is quite easy to find negative articles about Kamprad’s distant past and some poor experiments with monitoring employees, but I will spare you all of that.

My first encounter with IKEA was shortly after moving to the Netherlands in 1985 to join Digital Equipment Corporation. I moved there from my eighth relocation with the Wrangler jeans company, which was an 18-month stint in Scotland. The clothing industry did not pay very well. While I loved the Scandanavian style I saw in the IKEA store in Arnhem, I had not yet mentally adjusted to having enough money, and bought my furniture from a cheaper Dutch alternative.

IKEA’s first stores outside Sweden were here in Switzerland. While his company was greatly admired in Sweden, Kamprad made himself unpopular by seeming to move to Switzerland to avoid paying Swedish personal income tax. (Wealthy foreigners can negotiate their tax rates when they move here, even with relatively low incomes.)

One of Kamprad’s then innovative great ideas was to outsource manufacturing of his furniture to a low-cost country. In this case, Poland was that country, well before the Berlin wall came down. Making that happen was a major challenge at the time.

He was legendarily frugal. He drove around here in a 20-year-old Volvo.

He set up his stores so that the whole family family could enjoy the trip and stay several hours without getting bored. Store features include cheap food and free play areas for children, along with the considerable labyrinth inside the store itself. Personally, I still like visiting, and feel the model apartments of different specified sizes are a great feature.

Homeless and destitute people often go to the Geneva store early in the morning. For $1.50 anyone can have a croissant, bread, butter, jam/jelly/Nutella and unlimited coffee or tea. Plus the store puts no pressure on people to leave, ideal on cold winter mornings. This is part of a broader phenomenon of trying to do at least some good in the local communities where they are present.

It seems to be an attractive place to work, at least around here. Employees receive a 13th and sometimes a 14th month salary at the end of the year. And there is one day a year where all profits from sales are shared by the employees. IKEA promotes this well, and it always seems to be a busy day.

Customers / patients should not always be given what they want

I feel quite strongly about this subject and will write about it at greater length soon. The current state of customer satisfaction measurement and health fads in medicine is probably killing people. OK, this is just my view, and may be an exaggeration. However, I generally try to base my views on facts.

I write this after listening to a superficially excellent podcast by Jeanne Bliss. She interviewed the Cleveland Clinic Chief Experience Officer, Dr. Adrienne Boissy. You can listen to the podcast here. She described the work Cleveland Clinic has done to implement customer experience measurement and improvement processes.

However… I have to call out two major major (not a typo) issues. One is generic, and applies to all healthcare institutions that survey patients. The second is specific to Cleveland Clinic. (Apparently they have dropped the ‘The’ from their name.)

The first issue is that (in my opinion) measuring patient satisfaction with doctors exclusively at a transactional level is an awful idea. Cleveland Clinic went further and put the doctors’ ratings online. My views on this are based on the third of a three-part Freakonomics podcast series called ‘Bad Medicine’. Stephen Dubner spoke to Marty Makary, a surgical director and health policy scholar at Johns Hopkins. According to Makary:

 “By putting all this attention on customer satisfaction or consumer satisfaction or patient satisfaction, we’re creating a consumerist culture in healthcare. People come in, they want an antibiotic for their kid. They don’t care what your diagnosis or explanation is. They want to walk out with that antibiotic prescription. Or you’re in pain and you want that pain script. If the doctor is under the microscope for their patient-satisfaction scores, you can imagine the perverse incentive here.”

This is supported by a 2012 article in the Journal of the American Medical Association. Of course it is all made worse by people’s tendency to believe their ten-minute Google search is just as robust as a doctor’s ten years of training. I feel that everyone working on patient experience in healthcare needs to remember that the purpose of doctors is to help you, not to please you. 

The second issue is that Cleveland Clinic includes a ‘Wellness Institute‘ that practices ‘integrative medicine’. The principle of integrative medicine is to combine scientifically-proven techniques with others that have no scientific basis at all. You can read this article from the Science-Based Medicine website to get a better understanding of their Wellness Center, and even the personally-held anti-vaccination views of its leader. The issue with ‘Complementary and Alternative Medicine (CAM)’ is that outcomes for serious diseases are worse than for evidence-based medicine. Sometimes much worse. If you scroll about a quarter of the way down this article, you will see a set of graphs that demonstrate that survival rates for people who start off with CAM are far worse than for those who use evidence-based medicine right away. This (according to the biography I read) is what happened to Steve Jobs, who had a rare form of pancreatic cancer that is curable, but he rejected conventional medicine until it was too late to save him.

It should be obvious that I am against CAM, and indeed many nutrition fads that are held to be ‘traditional’. The next time someone tells you that you need to ‘avoid all the chemicals and toxins’ by switching to nutrition or medicine that is hundreds or thousands of years old, ask yourself how long people lived back then. Is that what you want?

As for patient research and doctor ratings, it should be based on outcomes. For example, three or six months after hip replacement surgery, ask the patient ‘How functional is your hip?’ and ‘Are you happy you had the surgery?’. Almost nobody does this. These are far more important questions than whether the receptionist was nice to you, or whether the doctor was in a good mood.

Our latest blog posts

Here are the latest posts. All three listed below are about types of teams you may want to implement if you are designing a new customer experience strategy for your company. Older posts are still available on the blog page.

image Executive Sponsors and Project Sponsors – Teams you may want to implement

This is the third in a series of three articles on types of teams you may want to implement if you want to improve customer experience. This time I cover the concept of assigning senior people to customers and projects to create the environment necessary for success.
image Customer Advisory Boards – One of four types of team you may want to implement

Following on last week’s article about Customer Success teams, here are a few words about Customer Advisory Boards. I provide various hopefully-useful suggestions, including that you must remember who is supposed to be doing the advising…
image Customer Success Team – First of four types of team you may want to implement

There are four types of teams you may want to implement to improve customer experience. I will cover the the membership and work of each in three blog posts. The mission of Customer Success teams is to ensure customer get the ROI they expect from their investments.

Notable customer experience items from other sites

Quora Q&A on adjusting NPS for cultural differences

This Quora question, with an answer by Rob Markey, dates back a bit, and is still informative. “Are there variations to the classic NPS survey that may more accurately account for certain cultural features of emerging markets (e.g. Africa)?” You can read it here.

This is Money article on service awards and ‘wooden spoon’

I particularly like the heartwarming story about what UK mobile provider Three did for a distressed customer. They generally found that service had improved in the UK, though Her Majesty’s Revenue Commission still finished last. Read it here.

Looking forward

I plan to refresh my annual ‘Valentine’s Day’ blog next week. I hope you will enjoy it. The versions I have posted over the last three years have been the most popular articles I have ever written. The story I tell also serves as a basis for my highest-rated speaking and training engagements.

As always, an underlying reason I blog and write newsletters is to encourage interest in our books. Here are links on Amazon.com. Kindle versions are available in all stores. Print versions are avaialble from the major stores only, with the notable exception of Australia, where print versions are not available from amazon.com.au.

Customer Experience Strategy – Design & Implementation

Net Promoter – Implement the System

Customer-centric Cost Reduction

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

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

Other than that, I confirm my increasing motivation to write more about how to avoid destroying customer relationships as companies go through major cost reductions.

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.

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

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

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

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

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

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

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

What is the NPS ‘standard’?

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

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

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

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

 

Our latest blog posts

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

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

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

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

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

Notable customer experience items from other sites

Speaking of cable TV – Comcast price gouging

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

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

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

 

Looking forward

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

Customer Experience Strategy – Design & Implementation

Net Promoter – Implement the System

Customer-centric Cost Reduction

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

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

Please share this newsletter with your friends and colleagues and encourage them to sign up for it here. I have put links to past newsletters on the subscription page. Finally, please feel free to change or cancel your subscription using the link below.

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

To change your subscription, click here.

 

#42 – Customer Experience and Growth, and much more

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

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

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

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

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

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

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

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

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

Relationship between NPS trends and growth

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

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

You can the relevant information from Reichheld and Markey here.

 

Our latest blog posts

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

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

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

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

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

Notable customer experience items from other sites

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

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

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

 Silliness – Jared M. Spool on the Net Promoter Score

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

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

 

Looking forward

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

Customer Experience Strategy – Design & Implementation

Net Promoter – Implement the System

Customer-centric Cost Reduction

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

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

Please share this newsletter with your friends and colleagues and encourage them to sign up for it here. I have put links to past newsletters on the subscription page. Finally, please feel free to change or cancel your subscription using the link below.

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

To change your subscription, click here.

 

Temkin Experience Ratings

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

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

Temkin Loyalty Index

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

Temkin Experience Rating

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

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

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

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

Compaq and HP: The Account Loyalty Index

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

Advantages and disadvantages

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

Conclusion and personal opinion

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

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

Feel free to agree or disagree below.

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

Next time: Journey Mapping

Top 5 blogs

Most-read articles in 2017

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

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

(Drum roll…)

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

(Drum roll…)

The most read post of 2017 is…

Journey mapping – Use with care, if at all

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

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

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

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

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

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

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

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

Thank you

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

Please share this with your friends and colleagues and encourage them to sign up for our newsletter here. I have put links to past newsletters on the subscription page. Finally, please feel free to change or cancel your subscription using the link below

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

To change your subscription, click here.

Wallet Allocation Rule

The main customer experience measurement and improvement systems – Part 5 – The Wallet Allocation Rule

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Authors Keiningham, Aksoy, Williams and Buoye describe the system in the book of the same name. Its focus is a composite metric that combines the list of brands that a customer thinks of and their relative satisfaction with the same brands. Their research on the metric is sound and predicts share of wallet well in consumer businesses. While they focused on consumers, it seems reasonable to believe the same logic would apply to B2B situations. Even though the book documents some incorrect assumptions about how the Net Promoter System works, the conclusions are still valid. I consider this as one of several composite metrics that should indeed have better predictive value than NPS in specific situations. All share the same issue of being relatively difficult to communicate, in part because they are not as simple or popular as NPS.

Six-step measurement and improvement process

Here are the six steps in the Wallet Allocation Rule process:

  1. Survey your customers to find out how they rank you and the competitors they also purchase from. The ranking is based on their satisfaction, NPS or a similar metric. Since this ranking is the numerator, it is fair to say that the overall equation represents a sophisticated manipulation and improvement of the satisfaction or NPS score. Note in passing that the authors disagree strongly with what I have just written, but I believe no other logical conclusion is possible.
  2. Apply the Wallet Allocation Rule to establish the share of wallet for each competitor.
  3. Determine how many of your customers use each competitor.
  4. Calculate the revenue that goes from your customers to each of your competitors.
  5. Identify the primary reasons your customers use your competitors.
  6. Prioritize improvement opportunities.

Let’s consider these steps in more detail, comparing them to other methods.

Survey your customers to find out how they rank you

While the authors did this initially as a one-off high-volume exercise, it is hard to get this step to work well if you do the surveys yourself. If the survey goes out in your name as the authors suggest, the respondents will be biased in their responses. That bias will only affect the answers about your own company. There is no reason to believe the bias would affect the other competitors’ scores relative to each other. You could of course use double-blind benchmark surveys administered by a third party. This is identical to the benchmarks survey method used for other improvement processes.

Apply the Wallet Allocation Rule

First, what precisely is the Wallet Allocation Rule? The formula at the top of this article shows how it is defined in the book.

This should work as a predictive metric providing the customer continues to split their purchases among the same brands. There are industries that are relatively stable and where that logic is sound. There are industries with low barriers to entry, such as SaaS software, where it does not work at all. In fast-changing industries, you are better off using the relative NPS rank in the market, rather than by customer. IBM, Computer Associates and HP learned this the hard way. For many years, the three companies shared the majority of the market for system-management software. Then one fine day, Service Now came on the scene with a new type of software that required no new hardware to run it. They went from nothing to a market-leading position in just a few years, despite awful customer satisfaction at the start. Indeed, with the satisfaction ranking numbers they had in their first couple of years, the Wallet Allocation Rule would have predicted their quick demise. The Net Promoter System, with its focus on trend, correctly predicted the opposite. The source for this statement is double-blind benchmark studies carried out for HP by IPSOS.

Determine how many of your customers use each competitor and the revenue share for each

This exercise is useful in any case, if you want to understand what you have to gain and lose financially. One challenge is making sure your sample is representative of your customers as a whole. Are very large customers adequately represented? Do the people who responded to the survey actually have decision power?

Identify reasons customers use competitors and prioritize improvement opportunities

The processes described in the book for this have the merit of using a reasonably strong financial basis for justification calculations. There is a lot to be learned from reading the explanations. The belief that you will get the predicted financial result is based on a debatable premise, which is that competitors will do nothing while you are driving improvements. If competitors improve at the same pace as you do, you don’t gain share, but at least you don’t lose share. These issues are common to all improvement systems.

Conclusion

I don’t believe the Wallet Allocation Rule method to be fundamentally different to the Net Promoter System. I like the fact that it relies on competitive rankings, and these should be part of a good relationship survey process in the Net Promoter System too. The calculations make the Wallet Allocation Rule more difficult to explain. The book makes questionable references and assumptions about NPS. The most fundamental issue is that it states repeatedly that NPS does not use relative rankings, whereas The Ultimate Question 2.0 repeatedly states that future market trends are predicted by NPS trends relative to those of your competitors. The difference between the two methods is that NPS takes a supplier-side view and the Wallet Allocation Method takes a customer-share-of-wallet view. They should produce similar predictions in stable markets. In software and other dynamic markets, I believe NPS will produce better predictions because it counts competitors that customers may not currently be using.

For reasons that escape me, the authors of The Wallet Allocation Rule disagree with just about anything negative that I have written about their system. I have a feeling that the objections are based on their theory that research done by companies is of less good quality than that done by academics, though they have not directly said that to me. Of course I believe that objection is invalid. I recognize that academics do not have access to the many millions of company-confidential responses that companies have received from double-blind competitive research, so there may be an element of frustration about that. I don’t know really.

Recommendations

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

And as always, feel free to comment on this article below. Next time: Proprietary systems.

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Net Promoter™, Net Promoter System™, Net Promoter Score™, NPS™ and the NPS™-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
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