Posts Tagged ‘NPS’

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.

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.

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.

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.