10/30/2012. Linking Net Promoter to Financial Metrics

Transcription

1 Linking Net Promoter to Financial Metrics 1

2 Net Promoter Score Identify related Operational KPIs for each driver: 4 Stages in the KPI audit: 1. What metrics currently exist? Operational scorecards Internal Performance / Productivity metrics 2. Define each metric How collected Scope 3. What is the unit of analysis? Customer/account level, Team /segment / region level etc, time periods? 4. Where is data held? Who do we need to contact to collect raw data? Which systems / databases 2

3 Building Customer Economic Model 6-12 months Survey Response Policy Value Retained Additional spend Promoter1 1,000 y 500 Promoter2 1,000 y 300 Promoter3 750 n 0 Passive1 1,000 y 0 Passive2 700 n 100 Detractor1 800 y 0 Detractor2 800 n 0 CRM Data Value Retention Purchase Promoter: Retention Rate: 67% Increase in spend: 29% Detractor: Retention Rate: 50% Increase in spend: 0% Insurance customer level financial linkage Relationship between Likelihood to Recommend and Increase in Spend Average % change in spend (2008 to 2009) LIKELIHOOD TO RECOMMEND Average increase by NPS category Detractors 2.6% Passive 10.3% Promoter 9.5% Base: All Renew survey (Surveyed Oct-Dec 2008, n=703) 3

4 Increasing NPS by 10 points leads to additional 2.94m contribution annually Financial Services Average increase in contribution from March to August +9.53% +8.28% +7.97% Average total increase in contribution NPS 18% 28% +8.64% +8.72% This difference is the equivalent of 1.47m when applied to all 2.1m live customers in March 2010 Banking branch level financial linkage Real example of branch level analysis exploring link between NPS and future growth in operational income 82 branches were identified where a minimum of 100 customers had provided a rating between January and June 2010 (H1 2010) We analysed the growth in operating income of these branches between H and H Column containing branch names removed for confidentiality 4

5 Source: Net Promoter Conference 2008 (Source: Allianz at Satmetrix Net Promoter Conference) 5

6 Retail bank s first proof of Promoter profitability (Source: Satmetrix Retail Bank Client) THERE IS A CLEAR LINK BETWEEN NPS AND FUTURE GROWTH IN RETAIL BANK Growth in Operational Income between H and H % 600% 500% 400% 300% WHEN NPS IS BELOW 60%*: MEDIAN GROWTH = 1% WHEN NPS IS ABOVE 60%*: MEDIAN GROWTH = 27% Using the median to compare removes influence of these 2 extreme outliers 200% 100% 0% 100% 200% *Why 60%? This just allows us to compare 2 similar sized groups of branches to show any differences in average growth rates NPS in H (Source: Satmetrix Retail Bank Client) 6

7 Return on Investment (Source: Satmetrix Symantec Case Study) Case Study from Lego: The more connected the customers are, the more they spend and recommend SPEND NPS 90 Families 6x$ AFOL 10x$ 70 x$ 50 (Source: Lego) 7

8 Telecommunications : Business To Consumer Detractors resulting from a fault transaction were found to churn at 2x the rate of Promoters. This produced a forecast revenue decay of 4x that of Promoters over a 12 month period %2x $4x SOURCE: Transactional survey data, churn rates and average monthly revenue figures from Satmetrix Telecommunications customer Computer Hardware : Business To Consumer The gap between Promoters and the other categories widens as more time elapses post survey. For responses in the FY11 Q1 cohort, post survey revenue is almost twice that of Detractors Average Post Survey Revenue* for consumers who answered the NPS survey between 1 st Jan 2010 and 31 st Mar 2011 By Cohort Time elapsed post survey Sample includes all consumers who submitted a response to Likelihood To Recommend for the stated period, that could be matched with an order record submitted between 22 nd Aug 1997 and 1 st June 2011 * Post Survey Revenue calculated as sum of revenue for all orders that were recorded for a date SUBSEQUENT to the receipt of completed survey response 8

9 9

10 First Mortgage Case Study Net Promoter Category Year 1 Year 4 Promoter 64.41% 70.66% Passive 22.90% 19.80% Detractor 12.69% 9.54% NPS 51.72% 61.12% First Mortgage Case Study 10

11 % Members With a 1 st Mortgage Net Promoter Category Year 1 % With a Mortgage Year 4 % With a Mortgage Promoter 6.17% 7.86% Passive 4.08% 5.64% Detractor 2.92% 3.21% Relative Mortgage Participation Net Promoter Category Year 1 % With a Mortgage Year 4 % With a Mortgage Promoter Passive Detractor

12 Change in Mortgage # Net Promoter Category Year 1 Year 4 YR1 100,000 Members X % NPS Category YR4 100,000 Members X % NPS Category Promoter 64.41% 70.66% 64,410 70,660 6,250 Passive 22.90% 19.80% 22,900 19,800-3,100 Detractor 12.69% 9.54% 12,690 9,540-3,150 NPS 51.72% 61.12% Net Change in Mortgages Net Promoter Category Year 1 Year 4 # Member change in NPS Categories New Loans X$100,000 Average Loan New Loan $ * 1.0% Net Income Per Promoter 6, % 491 Passive -3, % -174 Detractor -3, % $21,529,500 $215,295 12

13 Process Improvement Improved Market Response Rates 13

14 Growth & Retention 7.00% NPS 65% NPS 70% NPS 67% 6.00% 5.00% 4.00% 3.00% 12 Month Annualized Growth Rate Lost Households Gross New Percentage Net New Percentage 2.00% 1.00% 0.00% Other ROI Ideas Increased Balances Deeper Relationship for referred New members Branch to Branch growth comparisons Member Service Rep Sales 14