Posts Tagged ‘customer loyalty’

One of the basic concepts of Net Promoter Score® is the idea of Good Profits and Bad Profits. Here’s a quick description :

Bad Profits

Customer feels misled, mistreated, ignored, or coerced.

They may actually dissuade new customers from using the product or service.

Good Profits

Customer feels appreciated and have been treated fairly, or the product exceeds their expectations.

They repurchase and tell their friends, family and colleagues.

Unfortunately, many companies opt for the short term benefits of Bad Profits. If you’ve ever been stuck in a 3 year wireless contract with a company you hate then you know what Bad Profits  are. Personally, I’m doing battle with my auto insurance company who, after  a 41 year relationship, treats me with less respect than they would a new customer. But more about that later.

On the other hand there are companies who really understand Good Profits and are willing to invest profits in order to develop a positive long-term customer relationship – one that results in a loyal customer who recommends. Here are two brief stories about my own recent experiences with Good Profit companies:

Story #1 –New Balance Shoe Store (Bayview Mall, Toronto)

I have fussy feet so I am very fussy about my shoes. The staff in this store really understands shoes and what it means to have a good pair that fit well. I recently purchased a premium priced pair of casual shoes at the store. After wearing them about 5 or 6 times, the leather stretched and the shoes did not fit as well as they did when they were new. On a whim, I took them back to the store with the hope that I might be able to return them and negotiate a discount on a new pair. I knew that I was going back after their “no-hassle” return period, but I figured that I had nothing to lose by trying. I was expecting to meet some resistance from the store staff and I was prepared to haggle on the price of a pair of new shoes. To make a long story short, I was extremely pleased when the store manager, David, offer me a full exchange for a new pair. All I had to pay was the price difference between the two pairs of shoes. He did not have to do this, but he took it upon himself to exchange the shoes for me. What did it cost him? The price of a pair of shoes, $150. What did he get in return? A loyal customer who has freely recommended the store to friends, family and co-workers.  Is a loyal customer worth $150?

Story #2 – Porter Airlines, Toronto

Porter Airlines is a small carrier that flies out of Toronto’s downtown airport. They have gained a well-deserved reputation for customer service excellence and they did not disappoint me.  Last month, I booked two return tickets to New York. The very next day I saw an ad for Porter Airlines offering a 30% discount on flights to New York. I immediately contacted Porter and spoke to one of the agents. I said I saw the ad and asked if I could get a price adjustment on my tickets since I had booked them just the day before. I was prepared for a fight on this one, but after confirming my booking, the agent cheerfully gave me a credit for the difference that could be used on a future flight. I was pleasantly surprised at the ease of which I got the credit/refund. No hassle and no arguments. They seem to appreciate my business and wanted me as a customer. Again, what did it cost them? Less than $130. What did they gain? A loyal customer who recommends and that’s worth much more than $130.

In both cases, companies that focused on short term profits would have tried to push me aside. New Balance would have been correct to say that the return period had expired. Porter could have easily held firm on the price I originally paid for the tickets. But, in both cases, the company representatives were well trained and were empowered to handle the situation. These companies understand the value of investing in the customer experience to create a loyal customer. It would be very interesting to see the Net Promoter Score® for these two companies. I suspect their NPS® is very high.

Now, if I could only get my insurance company to see the light.

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The smallest things can drive customer loyalty. And, the smallest things can drive loyal customers away. It doesn’t take much to make a customer feel valued and appreciated and it takes even less to make them feel abused, cheated and disappointed. Years of effort to build  solid customer relationships can come crashing down over something as insignificant as a pickle.

One way to create loyal customer is to meet or exceed their expectations. Meeting expectations will make customers happy, while exceeding expectations will make customers feel elated. Fail to meet their expectations and they quickly change from Promoters to Detractors and they could be gone forever.

Here is a fun and insightful video from Bob Farrell. It’s about pickles, loyalty and life.

What’s the lesson here? Don’t underestimate the power of the small things that have a large impact on the customer relationship. Don’t underestimate the Power of the Pickle.

Keith Chapin is a Certified Net Promoter® Associate and Consultant with over 35 years of experience in research, marketing and customer insights. He can be reached at kchapin@sympatico.ca.

Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld.

What happens when your expectations are not met? How do feel when a product or service doesn’t live up to the marketing or sales hype? Are you likely to recommend a product that fell short of your expectations?

So much of the “word of mouth” recommendation cycle is based on products or services meeting or exceeding personal expectations. Meet my expectations or just give me what I want, and I may or may not recommend your product. I have become a Passive, in Net Promoter® terms.

However, if you exceed my expectations, give me something that I didn’t expect and make me feel that you value me as a customer, then I will sing your praises to all my friends and family. You’ve made me a Promoter.

Fail to live up to my expectations and I will quickly become a Detractor. I will feel disappointed, cheated and even angry if your product or service doesn’t meet my standards. I won’t be buying a second time and I certainly won’t give you a recommendation. In fact, I may even warn my friends to stay away from whatever it is you have to offer.

So, why are expectations so hard to meet? Too often, the marketing communications and sales team create level of expectations that the product can’t deliver or staff can’t fulfill. Brand positioning, brand image and brand promise are the creations of fertile marketing and advertising minds. I know because I’ve created these statements myself. The sales department offers prices, deal, product performances and deliveries that operations cannot meet. I know because I’ve managed these sales departments.

Let me give you a few examples from my recent trip to Orlando, Florida.

I booked a rental mini van for the week using Hertz. When I booked online, my expectation was to drive a KIA Sorrento van. I actually got a new Toyota Sienna van instead. This widely exceeded my expectations so I would certainly recommend Hertz.

I visited the new Wizardy World of Harry Potter at Universal Studios. I’m not a devotee of Harry Potter, but I was very impressed with the experience, level of construction detail and the Harry Potter ride. It was more than I expected, so I would definitely recommend it.

I had lunch at the Mythos restaurant in Universal Studios. It had a large sign over the door declaring that it was voted the best theme park restaurant in the world, six years in a row. My expectations were very high when my meal was brought to the table. Unfortunately, the meal was mediocre and tepid so I sent it back to the kitchen. Anywhere else, I might just have eaten the meal without a second thought. But I was expecting so much more based on the sign over the door. I would probably not recommend this restaurant to a friend.

Disney not is infallible either. I saw the Cirque de Soleil show for the second time in 8 years. It was the same show I remembered from years ago, but I still enjoyed it, so I would recommend it. However, a dinner at the park’s Wolfgang Pucks Fine Dining Room was very disappointing. Based on Puck’s world-wide reputation, I was expecting a unique dining experience. Instead, I got another mediocre meal at a premium price in a bland environment prepared by an indifferent kitchen staff. I would definitely not recommend this establishment. Turned out that the Puck gastronomical mystique was just that…mystique.

During this trip, I stayed at the Sheraton Vistana Village resort. It was recommended by a friend and it did not disappoint. The facilities were great and the staff seemed to be very customer-centric. They made me feel that they were genuinely glad I was there. My expectations were exceeded so I would recommend this resort.

You probably have many of your experiences, but it is obvious to me that Detractors are created when there is a gap between what you expected and what you experienced. And this is where Marketing and Sales must use caution and common sense. Use marketing and sales skills to acquire new customers but don’t over promise so as to create Detractors. Don’t inadvertently create an Expectation Gap that can harm the customer relationship.

There is an old saying in sales that still holds true – “Under-promise and over-deliver”.  We’re all in the business of creating Promoters not Detractors.

 

Keith Chapin is a Certified Net Promoter® Associate and Consultant with over 35 years of experience in research, marketing and customer insights. He can be reached at kchapin@promotersrecommend.com

Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld.

What if you threw a party and nobody came?

What if you implemented a Net Promoter Score™ program and nobody bought into it?

What if you had a simple process to get your employees engaged in an NPS® program and keep them engaged?

Over the past year, I’ve trained a lot of company employees on Net Promoter Score, the Closed-loop concept and related applications. The employees were “assigned” to take the training with the intent that all employees would gain a basic understanding of the importance of NPS.

When facing these employees in a classroom setting, my first challenge was to address the “WIIFM” attitude – commonly known as “What’s in it for me?” The other issue was often “What’s this got to do with my department? We don’t work directly with customers.” It’s easy for senior executives at the top of the company pyramid to understand the big picture, the long-term horizon and how NPS can drive profit and growth. But is difficult when you’re at the bottom looking up to understand how you fit into the bigger picture.

And who can blame employees for being skeptical of yet another new training initiative? These could be the same employees who have lived through TQC, ISO 9001, 6 Sigma, Search for Excellence, One-to-One Marketing, Emotional Intelligence and Good to Great. Past experience drives future expectations.

So, how do you get the employees interested, engaged and committed? Here is a simple six step process that I’ve developed to ease the pain of implementing a NPS program.

1.Recruit

Employees need to be actively recruited to the NPS program using the same marketing and promotion skills that would be used to acquire new customers. Identify the short and long term benefit of an NPS program and how it may impact their career, future and financial situation. Make it desirable.

2.Re-fit

The basic NPS concept is purposely designed as a “one size fits all”. However, it needs to be tailored specifically to fit the employees and their roles and responsibilities. You must show each employee and each department how they impact the customer experience. Make it personal.

3.Re-word

Every company and department has a unique lexicon that is almost like a secret code. Re-word and re-phrase the NPS program so that is can be easily understood by everyone in the organization. Put it into words and terms that are commonly used around the office and on the factory floor. Make it relevant.

4.Re-set

If you already have a list of employee performance metrics (and who doesn’t) review and reset them to reflect the objectives and outcomes of the NPS program. NPS performance metrics should focus on desired employee behaviours, so watch out for conflicts and contradictions in metrics. Don’t be afraid of tossing out the old, beloved metrics of days gone by. If they didn’t work then, they’re not going to work now. Make it real.

5.Reward

Implementing change is hard work and often a risky venture. If the risk of change exceeds the reward, employees may not want to take the plunge. Implementing an NPS program requires a commitment to change in the organization and culture. Recognize those employees with the fortitude to drive change and challenge the status quo. Reward them for their efforts and sing their praises when they are successful. Make it all worthwhile.

6.Reinforce

A two hour training session does not create an expert. A training manual does not result in commitment. Posters don’t drive change; engaged employees drive change. The tenets of NPS require constant nurturing and reinforcing through communications, review, examples, team meetings, celebrations and demonstrations of corporate commitment. NPS is a way of doing business, not a way of keeping score. Make it part of the company culture.

Implementing a Net Promoter Score program within your company can result in a tidal wave of change throughout the organization. But, that tidal wave of change starts out as a ripple of understanding and commitment from each and every employee.

You need all your employees to come to the party.

Keith Chapin is a Certified Net Promoter® Associate and Consultant with over 35 years of experience in research, marketing and customer insights. He can be reached at kchapin@promotersrecommend.com

Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld.

Net Promoter Score™ is an effective and efficient process to measure the health of your customer relationship. Used correctly, Net Promoter Score can be the driver of superior business performance.  But how is the other team doing?  What is the health of your competitors’ customer relationships?

Business is a very competitive “sport”. Like any pro sports team, businesses are constantly striving to find the competitive edge that will move the ball forward, put the puck in the net, or drop another basket. Pro sports teams have professional scouts checking on the competition throughout the season. They look for weaknesses in the competitive teams that can be exploited for the benefit of their own team. In business we don’t have scouts, but we do have processes like Net Promoter Score that can identify the strengths and weaknesses of the competition. This will help generate customer acquisition, improve retention, grow market share and drive bottom line profits. In short, Net Promoter Score can help you hit the ball out of the park. Just take a look at Apple, a company dedicated to Net Promoter Score that also hits a lot of home runs.

Using Net Promoter Score will identify how many of your customers are Promoters and how many are Detractors. But, do you know how many Promoters your competitor has? How likely are your competitor’s customers to recommend? What are the NPS® verbatim responses telling you about your competitor’s organization, structure and service delivery? Remember that your Detractors will tell you how to fix your business. Consider how much competitive intelligence you’ll get by listening to your competitor’s Detractors. You might just find that golden nugget of information that can turn the game in your favor.

Dig a little deeper into your competitor’s Net Promoter Score. Break it down by geography, demographics, or user segments. You may find that your competitor looks strong on the surface, but analyzing their Net Promoter Score could expose a weak underbelly that you can take advantage of.  Just imagine what you could do if you discovered that your key competitor has a very high number of Detractors on the west coast who are female, under the age of 35 years, single, university educated and hate  their current service provider’s customer service. Perhaps your competitor’s customers on the east coast are less likely to recommend the longer they use their product or service. With this kind of scouting information, you’d be able to call the play that drives right through the defensive line and scores a touchdown. You’d be the hero.

Gathering a competitive Net Promoter Score can be accomplished using telephone or online data collection methodologies. It’s all legal and above board and part of a good competitive intelligence program.  Finding the competitor’s customers might the toughest part of the project. Data collection companies can source customer contact information using a huge array of brokered lists and online panels, but working with a qualified data collection company is critical to ensure the data collected is valid and trustworthy. Do not depend on your own field team or sales force to provide competitive NPS information since you need data that is unbiased and unfiltered.

Still not convinced that you need to track your competitor’s Net Promoter Score? Well, what if they are tracking your score? What would they uncover by listening to your Detractors and how would they exploit this information?  Ever wonder how the competition comes up with that new product, unique service or killer application?  Maybe they did a little scouting on your customers and found a hole in your defense.

Remember! The best defense is a strong offense. Use Net Promoter Score as your strongest offensive strategy.

 

 

Keith Chapin is a Certified Net Promoter® Associate and Consultant with over 35 years of experience in research, marketing and customer insights. He can be reached at kchapin@promotersrecommend.com

Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld.

I recently read on one of the Net Promoter® forums a posting that asked the question “Is my company big enough for an NPS® program?”. The Poster felt that his/her company was too small to benefit from implementing a Net Promoter program.

Although Satmetrix, in their Net Promoter ® Associate training (which I attended in May ’09) claims that nearly 700 of the Top 1000 Companies uses Net Promoter, this does not mean that smaller enterprises cannot benefit from the NPS process and discipline. In fact, NPS could be even more valuable to the smaller company.

In my previous posts, I discussed how NPS identifies the Promoters who become free extensions of a company’s marketing department, not to mention that they are the most profitable customers. So, why should this benefit be limited to only the large organizations like Apple, eBay and Harley Davidson? Small to Medium Enterprises (SMEs) all the way down to the individual Entrepreneur can implement and benefit from NPS. Every company, regardless of size, can use more profitable customers and no-cost marketers to promote their business. And all companies, regardless of size, need to understand the factors that create Detractors.

NPS is very scalable and affordable for the smaller organization. I’ve seen an NPS program implemented for a large North American financial institution as well as a program for a local independent financial advisor with only 300 clients. The basic tenets of NPS apply to both businesses. In other instances, I’ve seen an NPS program put in place for a small entrepreneurial heating and air conditioning service supplier as well as an independent construction crane contractor. Neither company had a large staff nor a long client list, but both CEOs took away some key insights that helped drive their business growth.

The two key issues that seem to be of concern for smaller companies are the costs associated with an NPS program and the internal resources required to manage the program and to analyze the results.

With smaller companies and shorter customer lists, costs are generally contained since the sample size is smaller. In the case of the financial advisor, 100 completed NPS questionnaires were gathered from a base of 300 clients. And since the NPS questionnaire is very short, the telephone data collection (used because of the sensitive nature of the client relationship) proved to be very affordable for the financial advisor. Costs would be even lower for an online survey using a qualified, client identified list. Yes, a larger sample size would improve the statistical significance of the data, but 100 completed interviews from a base of 300 will yield usable data.

Few small companies have a dedicated research department so they should lean on their Net Promoter® Loyalty Partner for the project management as well as the research analysis and reporting. This might cost a bit more, but could pay off in some very valuable insights. In the case of the large financial institution I mentioned, their large research department handled everything but data collection and data tables, while the financial advisor depended on the Net Promoter Partner for the project management, questionnaire construction, list management, data collection, data tables, analysis and final report. One such Net Promoter® Loyalty Partner that provides this type of comprehensive service is Consumer Contact Loyalty Monitor (www.loyaltymonitor.ca)

The frequency of data collection might need adjusting for a smaller company with a smaller client list. The NPS survey might be conducted quarterly instead of monthly, with the data aggregated into a rolling average. Less frequent surveying will also reduce the cost and the risk of over-researching a relatively small client base.

There is one advantage that SMEs have over the large companies when it comes to taking action based on NPS data. The agility of smaller companies allows them to identify the critical issues and swing into action mode very quickly and make any adjustments to the operations or organizational structure. Large organizations, in spite of their best intentions, still take a lot of effort to enact the changes indicated by the NPS data.

A Net Promoter Score™ program does require an effort and investment, but for the smaller enterprise it could prove to be one the best investments they could make to drive business growth and profit. You don’t have to be one of the Big Guys to benefit from NPS.

 

Keith Chapin is a Certified Net Promoter® Associate and Consultant with over 35 years of experience in research, marketing and customer insights. He can be reached at kchapin@promotersrecommend.com

Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld.

 

If you’re a homeowner you probably understand the concept of spending to save money. You’re encouraged by many levels of government to invest in new energy efficient windows, furnaces and water heaters to save money on your monthly fuel bill. If you own a car, you can trade in your old clunker and invest in a new energy efficient hybrid to save on gas over the next five years. The overall message is to invest today to save money tomorrow.

The message for Net Promoter® is the same. Invest in an integrated Net Promoter program today to reduce your costs and save money down the road. I know we’re in a brutal recession and funds are scare, but investing to measure customer loyalty and save money is still a viable fiscal strategy. And, it delivers a very positive ROI. CFOs and accountants like positive ROIs.

So, let’s have a look at how Net Promoter can reduce your costs:

Promoters recommend. When they recommend, they help you acquire new customers at a very low acquisition cost. This reduces costs and makes your acquisition budget go further. As a bonus, referred customers (according to SatMetrix® research data) have fewer problems and complaints which reduces your administration costs. Another cost savings in the bag.

Promoters stay longer, use more of your product or services and they complain less. Over the long term, they generate more profit and cost less in maintenance costs. The acquisition costs can be amortized over a longer period, increasing the ROI on Promoters. This will make your accountant smile.

Promoters rarely take legal action (again, according to the SatMetrix® data). They like your company so why would they take you to court? Promoters are not likely to generate expensive lawsuits. This will make your legal department smile.

Promoters are a forgiving bunch and will overlook the minor transgressions that eventually befall all companies at some point. Promoters will forgive you when your company suffers a public embarrassment so that the need for an expensive Public Relations defensive smoke screen is lessened. Just don’t take them for granted. They will not forgive you forever.

Because Promoters are experienced customers, their demand curve is smoother and reduces the need for inventories to cover the peaks and valleys of unpredictable demand. Reduced inventories translate into reduced costs. This will make your CEO smile.

Finally, Promoters are nicer people to deal with. They like nearly everything about your company’s products and services so they treat your front line staff with respect and decency. Happy Promoters create happy employees. Happy employees are more productive employees and that means profits. This will make everyone in your company smile.

We’ve all heard that old chestnut. “You gotta’ spend money to make money”. Well, spending on a Net Promoter® program will make money and companies like Apple, ebay, Enterprise and Harley Davidson have proven that it works. They’re all smiling.

So, invest in a Net Promoter program and reduce your costs. It will bring a smile to your face.

 

Keith Chapin is a Certified Net Promoter® Associate and Consultant with over 35 years of experience in research, marketing and customer insights. He can be reached at kchapin@promotersrecommend.com

Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld.