The recently deceased Arthur C. Clarke once said: “New ideas pass through three periods: 1) It can’t be done. 2) It probably can be done, but it’s not worth doing. 3) I knew it was a good idea all along!“.
I am definitely in this third period with our newest CustomerGauge feature – the “Voice of Customer” report. And really, I can’t claim to have had the idea. It was given to me by the very dynamic Vincenzo Maggio, who is an expert CustomerGauge user and one of our key customers.
Vincenzo wanted to show the customer comments at each stage of the sales cycle. He designed the feature and sent me a Powerpoint with what he called “bubbles – speech bubbles” of customer comments and said “Can you make that?”
Well, we found a way of showing the customer comments he’d previously marked (and we were showing in a dull and uninteresting table). The Voice of Customer “bubbles” was the result.
“I needed to put the comments in a Powerpoint each month – and this was the way I wanted best to show it” he says. I hope you like it, Vincenzo – grazie!
We think it’s worked out really well and shows just how you can improve by listening to customers. It’s available as a feature in CustomerGauge from April. If you need some help organising your Voice of Customer feedback, we’ll be happy to listen to your voice.
See screenshot of report here.
If you work in the e-commerce business, you’ll know that customer retention is maybe not the sexiest part of the operation, but it’s one of the most important. Too often I’ve seen a relentless drive for customer acquisition – spending $20 – $50 on getting customers to buy.
So how does a retention rate of 75% grab you?
Tony Hsieh, CEOs of Zappos, a $1bn US online apparel store showed how they get to these numbers in his recent SXSW presentation, and kindly shares his 10 lessons for success in e-commerce with us.
Summary: Zappo’s Keys to Success:
- Customer-centric Philosophy “Powered By Service”
- 5 weeks of “Culture” training
- Fast, Free shipping and free returns (up to 1 year!)
- Repeat Customers:
- word of mouth really works online
- use lots of testimonials
- Customer Service is an investment (not an expense)
- and others… check the presentation.
More on Tony’s blog.
Credit to BIG Research Executive Briefing Feb 08:
“Word of mouth is a powerful form of advertising beyond the direct control of marketers, so which retailers may be benefiting from positive press from consumers? Using the Net Promoter® Score* (NPS), respondents were asked to rate the likelihood that they would recommend the store they currently shop most often for Electronics on a scale from 0 (Not at All Likely) to 10 (Extremely Likely). Among the top ten stores for Electronics, Amazon and Costco received the highest ratings from customers, while discounters Wal-Mart and Target are the least likely to be recommended to others:”
How likely is it that you would recommend this store for Electronics to a friend or colleague? (Top 10 Stores for Electronics)
|Shop Most Often at:||% Net Promoter Score* (NPS)|
* Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld.
Survey Idols: SAP now using NPS as part of their management DNA it seems. I was passed an invitation for their annual CRM Net Promoter Survey – here is an extract to help establish best practice (names changed to protect the innocent):
“In 2007 we established the CRM dedicated Net Promoter survey … We were able to get great insights from the initial survey, so we have now established this survey as a key part of our product management process. We greatly appreciate your feedback and encourage you to participate. You might have already received an email for this year’s CRM Net Promoter survey, which is just running. The invitation comprised a direct link to the online questionnaire and was sent from the following e-mail address: sapXXXX@ccsurvey.com CRM Net Promoter Survey – details
When? Through Mid-April 2008.
Who? All CRM customers who made any form of experience with SAP CRM are invited to provide their feedback. XXXX Company is conducting the survey on behalf of SAP.
Why? We are committed to listening to our customers. As part of that commitment the CRM Organization has established a Net Promoter survey to measure customer loyalty and satisfaction with our CRM solutions and services. The information collected will be reviewed and acted upon as part of our continuous efforts to improve the products and services we offer. For example, your feedback from the prior survey has already impacted our latest CRM 2007 product release and future plans as well.
How? The questionnaire should take no longer than 15 minutes and you can choose to remain anonymous. The flow of questions are personalized depending on your experience with our CRM products, so only questions relevant to you are posed.If you are lacking the personalized link to the questionnaire included in the invitation email, or if you would like to register yourself or a colleague for the survey participation, please contact XXXX. Make use of this genuine channel, we will make use of your feedback. Thank you and regards, [Name]“
More on benchmarking NPS scores. This from an article in The Age from Australia: “Change is one thing you can bank on”.
Melbourne Business School research in 2006 found that Australian banks were poor performers in a Net Promoter Score survey:
“Associate Professor Mark Ritson found that nearly all Australian banks all pulled up negative scores. In other words, the banks, unlike most businesses, had a majority of customers that disliked them. For example, almost two-thirds of Commonwealth Bank’s customers were detractors. While the bank might comfort itself that it has the biggest mortgage market in Australia, most of its customers would not recommend it. The only bank that pulled up a remotely positive score in Ritson’s study was Bendigo, the self-styled community bank, that scored 7.”
Details on the original Nov 2006 NPS survey here: Mark Ritson – Associate Professor of Marketing
“Is realtime customer feedback really that new? Adam Dorrell puts it into perspective and gives us a short history of customer experience measurement from film focus groups to online customer feedback”
Dial M for Measurement
How gauging customer experience has roots in movie history
In the darkness at the back of a Century City movie theater, Alfred E. Green turns away from the screen to look intently at the red line from a pen recording machine as it edges towards the right hand edge of the paper roll. On the screen, Larry Parks mimes to “Mammy” at the climax of a rough cut of the “Jolson story”.
And in the laps of the hand-picked preview audience is an electrical gadget about the size of a flashlight with a dial that can be easily turned by the fingers. A turn to the right means “Like”. Far right “Like Very Much”. A twist to the left registers as “Dull”, or further, “Very Dull”. The emotional reactions from the audience flow into the central machine which combines them in a single wavy line. At this stage in the movie, it seems that every audience member has excitedly dialed the indicators all the way to the end stops. The pen lurches to the right as the orchestra builds to a crescendo, and Green permits himself to smile, now certain that his film will be a hit.
It is 1946, and The Jolson Story goes on to be a critical and commercial success. It is also another hit for Audience Research Inc, one of the companies started by George Gallup, pioneer of measuring public opinion.
That was sixty years ago, and even then Hollywood was not leaving anything to chance. Audience Research Inc (ARI) was testing hundreds of movies a year with sophisticated techniques. Often the results were distilled into a few simple words for the movie moguls. “It’s a flop – Slash the ad budget” or “We’ve got a blockbuster – Rush out more prints!”
Gallup was a pioneer of polling, practically inventing the quota system. In 1936, he made a name for himself by predicting the result of that year’s presidential election from the replies of only 5,000 respondents. Gallup’s prediction contradicted the respected Literary Digest magazine who had sampled over two million returned questionnaires – but got the eventual result wrong.
The art of prediction was rapidly elevated into a science. This type of quota survey was ideal for new products, or one off events. A small focus group could be exposed to a new product (or concept), provide excellent feedback – and be representative of an entire market or nation.
The Usual Suspects
Gallup’s legacy paved the way for long, complicated marketing surveys that could only be conducted once a year (because of expense), had many questions (because if you didn’t ask a question now you had to wait a year) and then had to be interpreted by high priests of mathematics (to see if X correlated to Y). Each survey company jealously guarded its own techniques, and for business people it was impossible to easily compare results across industries – or even internally.
But unlike holding a presidential election or releasing a blockbuster movie, few businesses host one-off events – instead conducting many similar transactions every day, with individual customers.
Over the last twenty years, almost all major companies have embarked on a yearly customer satisfaction survey to see how well the company performed. And it has become ritualized with a tradition that goes as follows:
- Reminder from CEO: “Customer Satisfaction is very important to us. All senior managers are bonused on this metric. So everyone, please focus on it”.
- Marketing department to sales: “Make sure records are updated of your customers so we can survey them”
- Sales: “Let’s find our tamest customers”
- In depth interviews with a very few (happy) customers
- “Gaming” of the results – coaching some customers, dropping poor responses
- Survey result interpretation: Lots of questions + answers. No one really knows what it all means: An average of 0.71 – is that good? Or bad?
- Customer comments or suggestions: One month after the survey the questions get passed around – quantity to high to react, and anyway, they are out of date – best ignored.
- Survey goes on shelf, gathers dust for a year.
At the end, these surveys are rarely used to change anything. Part of the reason is that employees don’t feel connected with the survey. After all, the surveys are only for a small percentage of customers, and they take place a long time after purchase.
One solution would be to survey a customer after EVERY transaction. Although previously impossible to do due to technical difficulties and cost, it is now becoming possible to do so. It is even the norm in the e-commerce business.
One of the best examples is eBay. Each transaction ends with an email for both buyer and seller: “Please rate the seller” and “please rate the buyer”. The eBay community relies on the outcome as an indication of trust. It works so well because of three basic concepts:
- Simplicity: choose a Positive/Negative rating and add a short comment.
- Participation: There is a high proportion of comments (above 90%) – probably due to the simplicity and ease of use
- Transparency: Comments are on show to all – and are believable.
What counts is the number of positives: “98% positive!” shout the powersellers. And with good reason to – it’s a system that can’t easily be fixed, and so if someone has a high rating, it’s a good benchmark of trust and customer service.
Other vendors also email, or even send SMS to ask each customer to rate the experience. Technically this is not difficult, but what matters is asking the right questions and then how the information is interpreted.
Luckily there is an excellent template for this, which uses a single question.
Back to the Future
The roots of an idea to simplify and standardize customer surveys came from Fred Reichheld of Bain Consulting. In his seminal paper “The One Number You Need to Grow”, published in December 2003, he suggested that you could measure Customer Loyalty by simply asking “Would you recommend company X to a friend?”. By counting the number of customers who would recommend, Reichheld found an indicator to future growth in profits. He called it the “Net Promoter Score®”.
This simple idea – using one question, and a single number – is changing the customer survey industry. Companies are rallying around the concept of Net Promoter, finding it easy to explain to staff, and easy to implement. Net Promoter even has possibilities of becoming an industry benchmark, given that the same question and methodology can be used.
Using electronic communications (email and increasingly SMS) organisations can now get almost real-time feedback on customer experience using dashboards, and look at which segments are performing better than others.
The Sixth Sense
Asking customers to rate companies and producing a numerical score is a good start on improvement. It allows companies to track and see how they are improving over time, and to compare to other organizations.
In addition, most companies know much of their weak spots, and can do work to change. But true change rarely comes unless the input of customers is taken into account.
Customers provide input every day: on the phone to customer support, complaining about poor service, making suggestions to staff, even writing letters to the CEO with praise. Rarely however are these brought together in one place to make sense of the “Voice of the Customer”.
Some companies are confused about talking with customers. When I asked the Sales Director of a major company who his customers where he listed the major retailers who were buying more than 80% of his product offering: Wrong answer! He had named the Channel Partners who have the selling relationship with the real customers. In fact, many companies are not organized to have a dialogue with consumers, preferring to leave it in the hands of a variable quality channel. Result: frustrated consumers who are familiar with email, web and call-centres but can’t reach a real person in their brand of choice.
Some successful organizations are now actively soliciting the “Voice of the Customer” - organizing the various touch-points into an integrated set of messages. Urgent issues are handled in a timely way by support staff. Praise is routed to those who deserve it who it.
By categorizing comments, and organizing by number and value a good picture of customer sentiment can be produced. In companies that are truly customer focused, customer feedback is reviewed by senior managers monthly and forms a constantly updated list of priorities that can change the business.
Some Like it Hot
Becoming a customer focused organization is difficult for many companies, and requires a great deal of culture change. But there are some simple tips to help the process for companies of all sizes.
- Survey all transactions if possible. Keep it simple for you and the customers.
- Get a numerical rating, based on Net Promoter Score. Publish it internally. Make sure everyone knows about this.
- Ask customers for comments. Read every one. Classify and sort them. Prioritise what has to be changed.
- Publish the good comments on your website as Testimonials.
- Try to personally answer any critical comments.
Adam Dorrell is the founder of Directness, which produces the software CustomerGauge to help organisations measure customer loyalty, understand customer sentiment, and respond to customer comments. Compatible with the Net Promoter® Score*, CustomerGauge allows organisations improve customer relationships and encourage loyalty, most immediately in e-commerce functions.
His blog is on www.engaugement.net
Sources: Time Magazine. Cinema: A. P. & Want-to-See, July 1946
This comment article appeared online at Internet Retailing. March 2008, text below.
The story should have the following graphic with it – if you want to find out more, read the article! (update 6 May 2010, article now offline, copy reproduced above)
Useful informative article on Marketing Sherpa outlining a simple approach to using Net Promoter methodology in Business-Business context.
SUMMARY: B-to-B marketers usually focus on lead generation, usually forgetting about the need for customer retention. This case study is how one company took a seven step approach to understanding customer sentiment and improving satisfaction. This initiative came from the marketing department, and used an online survey, much like CustomerGauge.
- Step #1. Create online survey
- Just two questions – based on Net Promoter Score (NPS): “If a friend or colleague asked you for a referral, how likely is it that you would recommend us…” with score 0 – 10, followed up if a promoter: “What did we do particularly well to earn your recommendation?” or if detractor/passive: “What would we need to do to earn a better recommendation?”
- Step #2. Email survey invitation
- Sent to b2b contacts in company database. Inviting to complete online survey, explaining that they could offer advice on how the company could improve its services. Goal: survey all clients 2x a year.
- Step #3. Target non-responders.
- Two weeks after initial survey, a reminder email sent to non-respondents. One week after that, a telephone call…
- Step #4. Compile survey scores.
- NPS methodology used. Scores by client, plus overall company scores.
- Step #5. Follow-up interviews:
- Dug deeper with people who gave negative comments. Also some random follow up with positive comments to understand “good stories”.
- Step #6. Analyze results:
- Were problems strategic or operational? How best to address problems? Results presented back to all in company.
- Step #7. Send thank-you email.
- Directly to clients from CEO, outlining specific changes the company has made, or is making, as a result of feedback from the survey – closing loop with client.
The company’s Net Promoter Score doubled in a year. Customer retention improved. Key to customer retention was better understanding. Survey response: 60 – 70%. Full article here.
Would you like to run a similar project in your company for b2b clients? CustomerGauge is a useful tool to help companies with steps 1 -7. To get going you just need to have the confidence that a short survey will get you the answers you need, and the willingness to tackle the issues that the customers will give you! Call us if you need help or advice.
“There ain’t nobody here but us chickens
There ain’t nobody here at all
So calm yourself,
And stop your fuss
There ain’t nobody here but us…”
(Louis Jordan, 1947)
I was musing this morning on the arguments between the Anti-Net Promoter Scorites and the Net Promoter Promoters – seems somewhat akin to ancient arguments about how many angels can dance on the head of a pin.
The “Anti’s” are grouping around the paper from Prof. Bruce Cooil from Vanderbilt University “Research suggests that companies should ask more than just ‘would you recommend this product?‘” which states “You probably want to use all the available information from a customer about attitudes toward the product or service, their satisfaction and their buying behavior – all the available information on their attitudes, intentions and behavior – rather than just one score.”
The “Pro’s” counter that it’s the very simplicity of the Net Promoter Score (NPS) that is the key.
Our approach at CustomerGauge has been to keep our heads down and keep doing what we know best. Just like Louis’s Chickens. We use the simple NPS metric, ask a few other questions, and supplement with an open ended question to get customer comments. It’s proven to improve customer satisfaction, and grow revenue.
Discussion is useful to understand how the metric works, but researchers arguing to defend proprietary models are counter-productive. The most reasoned arguments for both are in this excellent three-page article “Customer advocacy metrics: the NPS theory in practice” from Admap.
Kudos to Justin Kirby, DMC, and Alain Samson, LSE/LRCG, on their evenhanded report on how UK companies are using the NPS, and ways in which its use can be improved. The money quote is “We encourage managers and researchers alike to embrace the NPS as what it is: a handy tool for your measurement toolbox and a potential vehicle for healthy profits if you are in the driver’s seat.”
And now, enjoy “Ain’t nobody here but us chickens” as sung by the Muppets. What could be better?
Q1 2008 Bank Of Montreal Earnings Conference Call
Thanks to Insurance News Net (press release) – Harrisburg,PA,USA
From a press release on Bank of Montreal Earnings showing them measuring NPS: “we’re encouraged by improvements in net promoter score across most of our operating districts in the last three months”
And although not calling out the numbers publicly, you can see the trend for CEOs wanting to show Analysts that they are understanding that Customer Satisfaction is important.
Somebody told me a few years ago that the best salespeople have a highly developed “Reptile Brain”. I’ve thought about this over the years, and concluded this is not necessarily insulting. But it seems to me that the type of personality who can bring in the big deals (and pay all our salaries) has what might be called “the old mammalian brain” – less concerned with higher emotions, and good at what might be called the “Four Fs” (Feeding, Fighting, Fleeing, and er, Sexual Behaviour).
Traditionally, motivating a salesperson is based on simple rewards and a big stick. So I was interested in this good article about how the role of the salesperson is changing in the age of the internet, relevant to CustomerGauge. It’s an interview with Tom Snyder of sales consultancy Huthwaite, and can be found on Smart Company Australia [Sales jobs: On the road to nowhere (unless we detour)]
Snyder argues that to get the best outcome for your company, you can’t just commission salespeople on just revenue. You need to give them commission which is based partially on three different things. Profit, revenue and customer satisfaction.
He proposes the most effective way he has found to measure customer satisfaction is on the Net Promoter Score. Exactly what a tool like CustomerGauge can help with.
Worth reading through, even if it’s just for the fantastically simple “voice mail” sales technique that I shall be trying myself, as I still consider myself to have a somewhat Reptile Brain, and still a salesperson. You’ll have to read the article yourself for that gem!