Posts Tagged ‘loyalty measurement’

Would your employees recommend your company as a place to work? Would they recommend you as a person to work for?

Net Promoter Score® is an effective and efficient method to use to check the health of the customer relationship. But, don’t forget the health of the employee relationship. Employee loyalty is just as critical as customer loyalty.

At the recent Net Promoter conference, Fred Reichheld, the creator of the Net Promoter Score® practice reminded us how important it is to include employees in the feedback process and not to separate employee engagement from customer engagement. To read a summary of Reichheld’s thoughts, as presented by Destination CRM, click here.

Reichheld makes that point that engaged, loyal customers create engaged and loyal customers. We have all had the experience of being served by a miserable customer service agent and how that can ruin your day. On the other hand, being served by someone who is happy in their job and committed to providing excellent customer service makes all the difference in the world. Guess which one is going to create a loyal customer?

So, why don’t companies make more use of NPS® to measure employee loyalty and engagement? Perhaps they don’t feel the need, or they may not want to know the answers.  But, according the Reichheld, it is as easy as asking just two questions:  “How likely are you to recommend this company as a place to work?” and “How likely are you to recommend your team leader as a person to work for?”

Measure the health of your employee relationship and you’ll have an insight into the health of your customer relationship.

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.

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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.

If you’re like me, your wallet (or purse) is crammed with so-called loyalty cards. They come from grocery stores, pharmacies, gas stations and even credit card companies themselves. But, are they really loyalty cards or are they just rewarding frequent purchases? Are they effective?

Do these cards increase purchase frequency? In my case they do. I will buy my gas at the same station every week because it offers Air Miles.

Do these cards drive product preference? Yes, because I try to use only my MasterCard credit card because, again, I can accumulate more Air Miles.

Do these cards result in brand switching? Yes, because I will select a brand (within my substitutable set of brands or commodity products) if there are reward points associated with the purchase.

So, the cards can influence purchase behaviors, which is good for marketers, but do they drive loyalty? Do the cards create Promoters. My response is emphatically NO!

Loyalty is based on an emotional attachment for a product or brand. To paraphrase Fred Reichheld, author of The Ultimate Question, “Have I been treated in a way that is worthy of my loyalty?”. If I have been treated well, received good value, had my expectations exceeded and developed an emotional attachment to the product or service, then I have become a loyal customer and will  recommend a product or service.

Plastic cards are no guarantee that I will be treated well or fairly. They do not create those intangible “warm and fuzzy” feelings that signify loyalty. My use of these cards is a very rational decision, and nothing to do with loyalty. For example, I shopped at a local grocery store for years to amass more Air Miles. On the surface, the retailer would see me as a loyal customer who shopped there on a regular basis and spent lots of money. In fact, I hated the store and shopped there only because it was conveniently located, open 24 hours and offered Air Miles. As soon as a better store open closer to my home, I was gone even though the new store did not offer reward points. I became a former customer overnight because I had a better option. Had I been a loyal customer, they would still have my business.

On the other hand, I have owned 12 Toyotas since 1976. They don’t offer reward points but I have developed a deep emotional attachment with the brand and that has overcome all the disappointments that the brand has experienced in the past year or so. I don’t need a plastic card to give them my business provided they continue to treat me fairly, offer good value and exceed my expectations. I just feel good about the brand.

Those little plastic cards can influence purchase decisions. They can provide incentives to change behaviors. But call them what they really are – reward cards not loyalty cards.

My loyalty is not for sale.

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 read my earlier blogs, you’ll know that I have been a devoted and loyal Toyota owner since 1976. In the past, I’ve recommended Toyotas to anyone within hearing distance. The cars have been dependable, reliable and, in spite of ongoing price creep, a good value in cars.

But now what do I do? With all the recalls for Toyota products, do I continue to recommend freely, or do I qualify my recommendation? Would anybody even believe my recommendation? Have I suddenly become a Passive?

To make matters worse, the lease on my 2006 Camry ends in April 2010. I’ve been shopping the Toyota dealerships looking for a replacement, but every model I considered has been recalled. I even test drove the Prius hybrid and was seriously considering leasing the new 2010 model. Then, surprise surprise, the Prius seemed to develop software issues with the brakes. How discouraging!

This is really testing the limits of my Net Promoter instincts. Promoters, by definition, are tolerant of missteps by manufacturers to whom they are loyal. They give manufactures a lot of latitude and expect (or pray) that defects are anomalies that will be resolved and fixed. As a long time Toyota owner, that’s what I’m doing.

A report by Reuters indicates that Toyota Canada has ramped up its advertising spending, but the ads are aimed at its existing customers, rather than at new ones. A company spokesperson says that the future is in the hands of customers driving the cars today, not some potential customers. Toyota seems to understand the importance of their Promoters and wants to keep them that way. OK, Mr. Toyoda, I’m waiting to be convinced that all is good in Toyota Land. I’ve got to get a new car and soon. As a Promoter, I’ll give you my business, but you’ve got to give me back my peace of mind.

In the meantime, I’m going to check out the new Hyundai Tucson. Maybe even take it for a test drive. I don’t think I’m going to like this one bit!

 

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.

In my previous blog I offered some advice on the implementation of a Net Promoter Score® program within your organization. That blog created some further discussion as to which methodology is the best for NPS® data collection – telephone, online or a combination of both. The answer?

It depends.

Online data collection offers speed, efficiency, broad reach and (sometimes) lower costs. Online would be appropriate if you have a current, qualified customer contact list. If you do not have a list of your current customers or competitive customers, you’ll need to acquire a list from a panel provider who will supply profiled email addresses from commercially available list brokers. The participation (or response rate) varies greatly depending on the quality of the list, the relationship with the respondent and the list source. Client provided lists may get a response as high as 40% while a purchased list that is poorly profile may be well under 5%. Considering that the overall cost is relevant to the participation rates, online data collection may not always be the lowest cost alternative.

Since online surveys are self administered, they are also self-selected. The respondent decides if they want to complete the questionnaire, creating a sample bias. There are many potential respondents who never make the email list because they are not readily accessible or they do not have an email account. This is another source of sample bias which shows that online data collection, which has its advantages, is not truly representative of the target profile. Too many potential respondents fall through the cracks.

 

Telephone data collection (CATI) has been around for decades and is still a widely used methodology for research data collection. While many complain that it is intrusive and an invasion of privacy, the truth is that telephone data collection is a viable option for NPS. The greatest advantage of telephone is the human element – the personal contact. For a NPS relationship-type study, a telephone interview conducted by a skilled, well trained interviewer can be a very positive experience for both the sponsor client and the respondent. This is especially true when conducting NPS studies with B2B respondents, senior executives and high value customers. The interviewer becomes a representative of the company. You’re not going to get that with online data collection.

Nothing beats telephone to get directly to the voice of the customer. There is a proactive element of the personal interaction of a telephone interview that generates a high level of information. We’ve understood this for quite a while and have developed a new service called Question-Based Digital Voice Recordings (QB-DVR). This allows us to record each and every telephone interview and play them back at the question level. This is a unique and effective tool to hear the actual discussion behind the quantitative data. Now you can hear the actual voice of the Promoters and the Detractors.

 

Your immediate reaction might be that telephone date collection is far more expensive than online. Our experience has shown that a well executed, brief NPS telephone questionnaire 3 to 5 minutes in length and using a qualified client provided list can be just as cost effective as an online study. The time and effort required for the programming and hosting the online questionnaire as well as the lower response/participation rates may. in fact, result in a completed online questionnaire similar in cost to a telephone interview.

What about those occasions when the target respondents cannot be reached by email? If you are committed to an online format then you’re out of options, but if you are working with a data collection partner that does both telephone and online you have a viable solution. With the proper configurations and training, a skilled telephone interviewer is able to contact the respondent, qualify them, acquire their email address and then immediately send them a link to an online questionnaire. This works well with senior execs and high value financial customers where confidentiality is an issue.

So, you do have several options when it comes to collecting NPS data – telephone, online or a combination of both. The methodology you select really depends on the situation and the research objectives. Just be cautious that you don’t blindly select online data collection without considering all the options. Think about it and do it right the first time.

eith 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.

 

You’ve bought the book “The Ultimate Question” by Fred Reichheld, visited the websites, read the blogs (maybe even mine) and downloaded the white papers. You’re convinced Net Promoter Score® and customer loyalty tracking will work for your company, but how do you begin?

You’re not alone in feeling a bit overwhelmed. Just this week, while attending seminar on customer loyalty, I met the marketing manager of a regional insurance company who was convinced her company needed an NPS®implementation. She told me that the company was interested in NPS but they didn’t know how to get started. This gave me a chance to explain my 5 step approach to implementing a Net Promoter Score® program that I’ve dubbed “The Five A’s to Net Promoter Score®”. Or, if you’re Canadian like me, you might call it “The 5 Eh’s to Net Promoter Score®. (That’s a bit of regional humour/humor, folks.)

The five steps are Align, Aim, Ask, Analyze and Act. Here’s how they work:

Step 1 – Align

Make sure that you company is aligned and ready for an NPS program. This starts at the Executive Offices, flows through all levels of middle management and finishes up on the factory or salesroom floor. You’ll need buy-in from all levels of the company, especially if the NPS results are integrated into employee performance metrics. People tend to act differently when money is involved.

Don’t assume that everyone is aligned and stays aligned. Constant communications will be needed throughout the program. You’ll need management and operational commitment at the beginning, middle and end of the process. Create an obsession for NPS and create an obsession for the customer.

Step 2 – Aim

Establish exactly who it is you are targeting. Do this by demographics, behaviors, attitudes, segment or what ever criteria make sense for your business. But, once you’ve identified the target, keep your eye on the target and be consistent. Don’t let your attention wander.

Net Promoter Score is about tracking and improvement of your loyalty measurement, so you’ll need to determine where you are and where you want to be. What is your NPS today and where do you aim to be 3, 6 or 12 months from now?

You’ll probably want to identify measure and track several key attributes of your business that have a direct impact on loyalty, eg. product performance, service, value, cleanliness, friendliness etc. These attributes need to be meaningful and actionable. Set benchmarks for these attributes and then measure and communicate the results. This is how you’ll make operational improvements.

 

Step 3 – Ask

The old adage “Garbage in, garbage out” is very true for a NPS program. The quality of the data is only as good as the quality of the data collection process.

So, ask the right questions. Ask the right customer. Ask at the right time. Ask using the right research methodology. Most importantly, think before you ask. Spend a bit of time thinking through the strategy of asking before making the leap.

If you’re not sure how to ask correctly, ask from some help from an experienced Net Promoter® Partner. Find a partner you can trust who understands NPS and can advise you how to ask correctly.

Step 4 – Analyze

What get measured gets done, and what gets analyzed gets implemented. You’ll end up with some very powerful data when you implement an NPS® program, but it will have very little value unless it is analyzed and acted upon.

The ups and downs of the Net Promoter Score™ indicate the health of your customer relationship. You’ll need to analyze the key attribute ratings and the open-ended responses to identify what structural and/or operational changes will need to be implemented.

Remember that Promoters will tell you the great things you do and how to acquire more customers while Detractors identify those areas that need to be fixed that cost the company money. A little concerted data analysis will soon show you the light.

Step 5 – Act

This could be the hardest step of all. Now, you’ll have to make something happen based on all this knowledge that you’ve acquired. This starts will consistent communications of the NPS results – the good, the bad and the ugly. If the company is aligned from the very beginning, there will be a built-in expectation of regular NPS updates, so don’t disappoint your peers of management.

Promoters and Detractors are talking to you – screaming in some cases – so listen, learn and act. Your Promoters will tell how to improve your marketing message, product offering and benefits statements. Do this and you profits can increase. Detractors, maybe your best friends in this process, will tell you what needs to be fixed. Do this, and you can stop the financial bleeding. Either way, you win.

Communicate the learnings form the NPS process. Use the information to drive change and innovation. Celebrate your successes. Then repeat on a regular basis.

eith 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.