How to Improve Customer Experience: The Definitive Net Promoter Guide

Transcription

1 How to Improve Customer Experience: The Definitive Net Promoter Guide

2 Table of Contents Part One: Overview Part Two: Why NPS?... 4 Part Three: Think you know your customers? Looking through the NPS lens at your most valuable asset Part Four: This isn t just research. Do something! Part Five: Net Promoter is a game for the entire family. (Make loyalty a top priority) Part Six: Show em the Money Part Seven: Get Started

3 Part 1: Overview Net Promoter is the most popular and proven method in the world for measuring and acting upon customer loyalty data. Don t take our word for it. Ask some of the best global brands who use Net Promoter what they think. Companies like Dell, ING, Experian, Philips, Xerox and Virgin Media. As part of the team that created the methodology, that makes us pretty proud parents. Yet there is one thing we have learned from more than a decade of experience and hundreds of software implementations around the globe. The simplicity of the Net Promoter Score, or NPS, itself can shroud the incredible range of tools it offers for business success. Net Promoter is simple enough to draw on a napkin. No kidding, click here to check it out. What this guide will provide you are tips, best practices and a few of our secrets to do Net Promoter right. Not just as a research methodology, but as an actionable customer strategy to increase business performance. Ideas and tools that will help you dig in to join the 5% that do it right to create loyal, profitable customers efficiently. Globally, 35% of companies use Net Promoter. However, only 5% of those companies have actually maximized their business performance with a fully operationalized system. Fred Reichheld, Net Promoter Conference, London 2012 It s all here. Read on! 3

4 Part 2: Why NPS? We have 10 years of empirical proof demonstrating that the Net Promoter Score is the best way to measure customer loyalty. NPS leaders have higher retention rates because their loyal customers, i.e. Promoters (we ll get to that later), stick with them. They have more profitable relationships with their customers, since loyal customers are more efficient and less costly to serve because they need less support than disgruntled customers. They re also less pricesensitive, willing to pay more for the value your brand delivers. You know what else they do for you? They generate new customers. Loyal customers can bring in between 80% and 90% of positive referrals. If you want your business to grow, you need to become an NPS leader in your industry. All of this leads to $$. There is a proven link between customer loyalty and financial performance. The research we originally conducted with Bain and Company and Fred Reichheld, and the research we continue to conduct, shows there is a powerful connection between industry leaders who had the best Net Promoter Score and their business results. NPS leaders grew faster, and enjoyed higher profitability and lower customer churn than NPS laggards. NET PROMOTER LEADERS Source: Satmetrix 2012 Net Promoter Benchmark Study of U.S. Consumers Company NPS USAA - Banking 83% Amazon.com - Online Shopping 76% USAA - Auto Insurance 74% Trader Joe s - Grocery 73% Wegman s - Grocery 73% Costco - Department Stores 71% Apple - Computer Hardware 71% USAA - Homeowners Insurance 71% Apple - Computer Software 68% HEB - Grocery 68% 2012 Satmetrix Systems, Inc. All rights reserved. Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld. Each year, Satmetrix releases the Net Promoter Benchmarks to celebrate NPS leaders across industries. For more information on the benchmarks, click here to check out the Net Promoter Benchmarking Data. 4

5 Part 2: Why NPS? But measurement is just the beginning. Simply calculating a score and watching it grow alongside the financial returns would be too easy! Your company has to create a plan and act on its voice of the customer feedback. Safelite: Higher NPS = More $$ Although Safelite s overall NPS was in the 80% range, their score from customers who had encountered a service issue after a repair was only 19% on average. Safelite created an elite services team to resolve these customers issues efficiently. From 2008 to 2010, they saw the NPS for this segment increase 205%, from 19% to 58%. Their overall NPS improved 10 percentage points in the same time period. Safelite s NPS has a strong link to financial growth: In only two years, Safelite s revenue increased by $183M. The company attributed the impressive growth to their laser focus on the customer experience. Click here to read the full Safelite case study. 5

6 Part 3: Think you know your customers? Looking through the NPS lens at your most valuable asset Net Promoter starts with asking the ultimate question: How likely is it that you would recommend [your product] to a friend or colleague? This one question allows you to understand the heart of your customer relationship. Recommendation is the most sincere expression of customer and brand loyalty. Our data tells us that the linkage to business value works when the question is: Measured on a scale of 0-10 (other scales just don t work nearly as well). Asked first (to avoid introducing bias through other questions). Used as a measure of the overall customer experience, (i.e. measuring the brand). We have benchmarked its performance across most cultures and languages and, while there are subtle differences in how people respond (you can find out more by downloading our whitepaper), it s as powerful in Japanese, French, Spanish and Mandarin as it is in English. By asking your customers to rate their likeliness to recommend on a numeric scale, you can understand your customers degree of loyalty. 6

7 Part 3: Think you know your customers? Looking through the NPS lens at your most valuable asset More importantly, you can sort your customers! 9 s and 10 s are Promoters, 7 s and 8 s are Passive, and 0 s to 6 are Detractors. How do we know this? Because research tells us that s exactly how these people are going to impact your business. Detractors Passive Promoters Not at all likely Neutral Extremely likely Detractors - Unhappy customers who damage your brand and impede growth through negative word of mouth. Passives - Satisfied but unenthusiastic customers who are vulnerable to competitive offerings or just a lark trial. Promoters - Loyal enthusiasts who will keep buying more and refer others to fuel growth. In the final step, you ll calculate your brand s overall Net Promoter Score through a simple calculation: NPS = - % of Promoters (9s and 10s) % of Detractors (0 through 6) 7

8 Part 3: Think you know your customers? Looking through the NPS lens at your most valuable asset Make the Ask Surveying customers is easy, right? Not so fast. Most companies have poor-quality customer data, so plan carefully. Ask too often, and you ll annoy them. Make sure the customers you survey accurately reflect your overall buyer demographic. Only ask people who know you, use your products regularly and have a vested interest. Business-to-consumer (B2C) companies don t typically have this luxury and will have to use the data set they have. But, business-to-business (B2B) companies should clean up their data to ensure they are selecting the right contacts at each account. And, for extra credit, B2B companies should segment their contacts by decision maker vs. influencer to get better insights. Don t spam your customer list; it s a surefire way to tick off your customers. 8

9 Part 3: Think you know your customers? Looking through the NPS lens at your most valuable asset While you re at it, don t forget about applying Voice According to Value. That means making sure you prioritize your efforts towards your most valuable customers. The feedback from your $2 million a year customer is more valuable than the customer who spends $100,000 a year. Get to know your B2B stakeholders: Budget Holder Decision Maker Influencer End User 9

10 Part 3: Think you know your customers? Looking through the NPS lens at your most valuable asset Choose your [timing] arsenal Like all relationships, your customers have an overall impression of you while, at the same time, they re having dayto-day experiences with you. Either of these can go south or improve. Keeping tabs on both is a good idea. NPS has a big arsenal of survey types, and the right choice depends on your circumstances. Consider the following to be good rules of thumb. Most companies do a periodic, or relationship, survey to measure NPS. You do this by surveying smaller, representative groups of your customers on a regular basis. This way, you survey each customer only once or twice a year, but you still receive a regular drumbeat of feedback, on which you can act. You can segment by geographic location, product, etc. to see exactly what aspects of your business affect your NPS. This method is great for getting overall brand-level NPS, which after all is the big link to financial performance. You ll also want to survey your customers after critical events, like a service call. We refer to these as transactional surveys. Here are some tips: 1. Automatically launch your survey based on an event, such as a customer support call or online purchase. 2. If you are already measuring brand NPS in a relationship survey, it s OK to ask about satisfaction, but not NPS in the transactional survey. It avoids confusion around too many NPS measures in the business. And recommend can seem odd following, say, the resolution of a customer support issue. 3. Only two surveys per contact per year, max! 10

11 Part 3: Think you know your customers? Looking through the NPS lens at your most valuable asset Just the facts, please: how many questions are too many? There are only two core insights you want to learn about your customers. 1) Are they Promoters, Detractors or Passives? 2) Why? The first part is easy. Ask them the recommend question. But if you stop there, you are left knowing about the issues, but not being able to act on them to improve the customer experience. That s why we follow up the recommend questions with diagnostic questions. The easiest way to do this is just to ask your Detractors, What s the one thing we can do to improve? and your Promoters, What do you like most? They ll appreciate that you care and give you a gift genuine voice-of-the-customer feedback. You ll be amazed by their responses. But without some powerful software to quickly and accurately analyze their responses, the open-ended comments will burn your eyes out, and you ll have trouble setting clear priorities based on it. 11

12 Part 3: Think you know your customers? Looking through the NPS lens at your most valuable asset Here s one more tip. While you have their attention, ask them a few key driver questions. These questions reveal the items that have the biggest impact on the score, such as ease of doing business, overall value, online experience, etc. They enable you to prioritize what your next steps should be. Just focus on the upper left quadrant, and you ll see that the company shown below should hop on improving their repairs! Driver Chart Illustrative Example Correlation to Recommend Low Prioritize Very important to your customers but under delivered Improve Less important to your customers but under delivered Repair Assemble Take delivery Average Satisfaction Score Purchase Use Leverage Very important to your customers and being delivered well Visit website Maintain Less important to your customers and being delivered well High 12

13 Part 3: Think you know your customers? Looking through the NPS lens at your most valuable asset Not much use if they don t respond All this data collection seems like a good idea, but it s not much use if nobody tells you what s on their mind. Our B2B customers can get up to 60% response rates, but it takes some focus. Keep your surveys short, no more than 10 questions. Keep a clean customer contact list. Shoot for the moon: if they aren t responding, it s quite possible you have problems you don t even see! Don t assume people who don t reply are Promoters. Better to assume they are Detractors and prove yourself wrong. Now, let s move on and CLOSE THE LOOP! Customer Takes Survey Customer Operational Closed Loop Employee Alert to Action Owner 13

14 Part 4: This isn t just research do something! The most important part of any Net Promoter initiative comes down to this: ACTION. Unfortunately, most survey programs are used only to get score readouts. Net Promoter flips that thinking on its head and focuses on action. How do you do that? It s pretty simple: get the right information to the right people at the right time. It all starts with customers responding to a survey. After the feedback is processed, you need to alert the appropriate employees, such as customer service representatives, to handle a Detractor issue or complaint. Or, in the case of happy customers, you can alert your marketing team to offer these Promoters the ability to share their positive experience easily with friends and colleagues using social media. It needs to be quick and easy to get the information to the right people while it s hot (i.e. less than 48 hours). Even if you don t solve the problem, your customers will appreciate you care. We call this the listening dividend. Once the issue is resolved, log it. Make sure the outcomes of all follow ups are carefully tracked. If you don t capture the outcome, you won t be able to learn from the customer s feedback. And if you don t learn from the feedback and provide resolution to the customer, those future profits will slip away. What does a closed-loop process look like? Pretty simple: 1) The customer responds to a survey. 2) An alert to follow up is generated based on business rules. The alert might be event driven or scheduled, depending on your program design. 3) A follow-up owner contacts the customer. 4) The issue is logged and either resolved or escalated. 5) The outcome is tracked to capture any learning. And shared with the cross functional team. 14

15 Part 4: This isn t just research do something! Frontline, customer-facing employees shouldn t be the only ones taking action. It s best to divide and conquer when closing the loop for maximum effectiveness. For instance, if a C-suite executive customer is upset about your service, make sure your executive handles outreach. Is one specific product having issues? Assign follow up to your product team so they can uncover the root cause. Make sure roles are defined and assigned throughout your company by region, product, department, account tier, position, whatever matters. And here s another tip: use Pareto. Not the Italian economist, but the idea he stood for: prioritize and take advantage of the 80/20 rule. If you can t respond to every Detractor, focus on those with high dollar value who responded with 5 s and 6 s. Low value 0 s are sad to say probably lost, since rescuing them requires a ton of resources. Pareto in Action Dell s customer gave the company a score of 5 on their NPS survey in Q3 of The customer didn t state why. Within 24 hours, Dell s sales team had reconnected with the customer to understand what they could do to resolve the problem. It turned out the customer had trouble placing software orders. Dell s team worked with him on the issue, improving the process and offering a discount. Not only did the customer come back six months later and give Dell a score of 10, he also spent an additional $665,000 in incremental revenue during that time period. Click here to view the video. 15

16 Part 4: This isn t just research do something! Mobilize Promoters: Reward Your Fans It s tempting just to leave the Promoters alone. After all, they re happy, right? Wrong move: you need them. They re money. They are your references and your defenders against negativity in the consumer forum battles. They are the torchbearers for word of mouth, and they attract new customers. We quickly and easily mobilize Promoters by offering them links following our surveys. If, after completing the survey, the respondent designates themselves as a Promoter, we prompt them with a link to share on social media, often with a special offer for their friends. We find that 25% or more will do so to express their support for the brand. That s a lot of free love, and a lot more genuine than trying to incentivize your customers to like you! Thank you for your feedback. Share with your friends to receive a special offer! Receive a free plant to make your new house a home! User Receives a Thank You Share Grab Offering Surveyed Promoters share your special offers through their own social media applications creating broader access to your brand and promotions. To learn more about HouseMaster s success mobilizing Promoters, click here. 16

17 Part 4: This isn t just research do something! Go Big or Go somewhere else? NPS devotees call taking action one customer at a time closing the little loop. That s nice, but you may not have the luxury of going customer by customer, especially if you are a B2C company. That s why you ask the right questions in your survey. Then you ll be able to segment your responses and figure out how to close the big loop with as many Detractors and Promoters as possible through targeted class actions. Strategic Closed-Loop Communications Strategic Planning and Investment Decisions Customer Takes Survey Operational Closed Loop Customer Employee Alert to Action Owner Organizational Learning and Aggregate Results 17

18 Part 4: This isn t just research do something! How do you do this? It s all about those key drivers we mentioned earlier. To take action on those drivers, put a cross functional team together (OK, in your firm that might be just you) and take a close look at those business factors that seem to have the greatest impact on Detractors and Promoters. Those factors are the areas where you should be focusing to create even more Promoters and grow your business. To do this effectively, separate the hygiene factors those things that customers might complain about but won t actually influence their final score from the things they really care about. If you have lots of customer comments, that s great. And, great text analytics tools like the one you find in Satmetrix Xperience customer experience management software can help tremendously. Once you ve figured out what makes your Detractors ticked off and your Promoters just tick, create a strategic hit list of actions to change thinking, focus and behaviors in your company to create more Promoters. This is imperative if you want to put yourself amongst the NPS leaders. It comes down to this: your Promoters think you did a great job. Find out why, and do it again, and again and again. 18

19 Part 4: This isn t just research do something! 7 Steps to Client-Focused Culture At the Net Promoter conference in London, Veronique Tordoff, Customer Experience Leader in the UK and Ireland at Philips, discussed the seven steps to making your company customer-centric. Click here to view the video. Four key success factors: Pick a reliable and robust metric The Net Promoter Score. Discover the root cause The Why? beyond the number to take action. Tie NPS to profitability This helps with buy-in. Close the feedback loop Show the customer that you care. These key success factors are only executable with enablers: Leadership Executives committed to making the best change happen steadily. Management Rhythm NPS embedded continuously in the employee experience. Infrastructure Employees interacting dynamically and comprehensively across functions with the goal of improving the customer experience and NPS. 19

20 Part 5: Net Promoter is a game for the entire family. (Make loyalty a top priority) To be successful, you need to engage everyone. The most successful companies, almost without exception, have high levels of employee engagement from the C-suite to their customer-facing teams. Here s how everyone should be involved: Customer-facing, frontline employees close the loop by recovering Detractors, improving relationships one contact at a time, and mobilizing and proactively creating Promoters. Management closes the loop by making process and policy improvements across functions/the organization based on program results, managing performance, and celebrating high performers and sharing organizational learning. Executives close the loop by creating and maintaining a customer-centric culture, leveraging program results into corporate strategy planning and execution, and reinforcing through active participation, communication and investments. And to motivate your teams, give them data personalized data aligned to their personal goals. Every member of the team should get real-time access to NPS data, have their pulse on real time Detractor alerts and receive customized reporting about their performance and their customers. That s what will have the biggest impact on employee engagement. Finally, keep up the momentum. Get the entire executive team to meet once a quarter, review the trends in data and the progress on key initiatives. With an NP system, it s family game night, all the time. 20

21 Part 6: Show em the Money Net Promoter is money. You wouldn t think twice about paying your team based on profits, wouldn t you? What about future profits? Well, NPS is your future profit stream, and if you don t reward employees based on individual NPS performance you are telling them you don t care. The point of NPS as a methodology is that it links to financial outcomes. So treat NPS data like financial data. Report it alongside your financials. Hold yourselves accountable as you would for financial performance because that s what it is. Every financial reporting unit should report NPS data for their part of the customer base. Best performing companies make sure everyone knows the score, the goals and what matters it can t be financials without NPS! NET LINK TO FINANCIALS AT A RETAIL BANK All Customers Non-Promoters Promoters (n=1050) (n=339) (n=722) Average balance of current account per customer (Feb. 09) 115,335 98, ,318 Average change in account balance per customer* , ,970 % change in account balances over 1 year period per retained customer +0.01% -23% +14% Average charges applied to account per customer 6,403 5,453 6,852 (Source: Satmetrix Retail Bank Client) Click here to check out our study: Net Promoter Drives Word of Mouth Across Industries so reward people like it s money. 21

22 Part 6: Show em the Money Now a word of caution. Paying people out for NPS scores can be a tricky business. Don t rush to tie compensation to poor data. Remember that goal setting is a science itself and should be based on Net Promoter benchmarks, not guess work. Perhaps most importantly, don t forget non-financial rewards really motivate employees. Recognize those who create Promoters frequently; have Promoter responses up on screens in real time and shared by so the real stars of your company know they are appreciated and valued. Celebrate Loyalty Champions There s a time and a place for games. Beware of gaming the NP system: Ensure surveys will not only be delivered to those who are likely to give positive feedback. Educate employees about the benefits of accurate results. Involve management and executives in survey follow up. NPS Game Theory: not much fun. 22

23 Part 7: Get Started If you still think that Net Promoter is just a metric, start at the top and read again. Net Promoter is an entire business system. It s the gold standard to measure, understand and take action on voice-of-the-customer feedback to improve the customer experience. To do Net Promoter right is to: 1) Get everyone in your company in the game 2) Recover Detractors (resolve the issues with your unhappy customers) 3) Mobilize Promoters (get your Promoters promoting you) 4) Identify immediate and long-term strategic changes to create more Promoters (yes, this is that insights bit) 5) Innovate and transform Ready to get started? To learn more about Satmetrix Net Promoter on the cloud software, visit: Want to get even smarter? Attend a Net Promoter certification: Curious to hear more about NP innovation from thought leaders? Our conference is for you: 23