Posts Tagged ‘measuring net promoter score’

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.

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.

 

Net Promoter™ is the internationally recognized tool that measures the dimensions of loyalty. By asking the simple question, “How likely are you to recommend my company (product, service or brand)?” customer loyalty can be effectively measured and tracked. But loyalty is not a simple concept. Loyalty has many dimensions that involve both the rational (the head) and the emotional (the heart).

The rational dimension of loyalty uses the head in a very logical evaluation of the product or service. Did it have the features I wanted? Did I get the best service? Was it the best price? If all this results in positive answers, then you were probably satisfied with the product or service. It met your expectations and maybe even exceeded them. You were satisfied, but were you loyal?

Satisfaction has a lot to do with initial expectations. I like to use the example of the new owner of a Kia 4 door sedan and the proud new owner of the BMW 335i sedan. After six months a headlight fails and forces both owners back to the dealership for servicing. The Kia owner may be happy that nothing else has gone wrong with this low-cost, entry-level car. However, the BMW is furious that his $60,000 pride and joy is in the shop for something as simple as a headlight. The Kia owner is still very satisfied with the purchase, mainly because expectations were low to begin with. The BMW owner was expecting perfection and is less than pleased that the headlight failed. The Kia owner has a higher level of satisfaction than the BMW owner, based on initial expectations. Who is likely to be more loyal, the owner whose low expectations were exceeded, or the owner whose high expectations were unmet?

The emotional dimension of loyalty engages the heart. Loyalty will be earned when a personal relationship develops between the product or service and the customer. The heart asks the questions: Do they know me? Do they value me as a client? Do they listen to me? Do they share my values? Only when the emotional combines with the rational does true loyalty happen.

Think about the last time you recommended a product or service. How did you feel when asked to make a recommendation? How did you feel when your recommendation was followed? Did you feel good when everything worked out? When you are loyal and recommend a product, you’re really sticking your neck out so you better totally engaged before you do it.

I am a long time Toyota owner and promoter (I’ve owned eleven Toyotas over the years) and I never hesitate to recommend the brand. It feels great when someone follows my recommendation and they become a happy Toyota owner. Needless to say, there are a lot of Toyotas in my neighbors’ driveways. I am very emotionally engaged with the brand.

Promoters, by definition, are emotionally engaged with the product or service they recommend. Passives, however, are not emotionally engaged. Their rational, logical mind may tell them that they are somewhat satisfied, but their heart has not yet created an emotional bond. Passives may not recommend nor stay with the brand. Detractors, on the other hand, may use rationality and emotion for NOT recommending (did not meet my expectations and I do not feel good about recommending).

If you are a quantitative researcher who lives for the numbers, you might be uncomfortable with the simplicity of Net Promoter Score and the short questionnaire used to collect the data. If you are the accountant- type manager who needs massive amounts of data to make business decisions, you may question the wisdom of using a single number to enable organizational change. However, if you are the researcher or manager who understands the complex interactions of the head and heart, you will see Net Promoter Score® as an effective tool to create a customer-centric focus within the organization.

The head and heart work in mysterious ways.

 

 

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.

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.