Satmetrix release their 2009 Net Promoter Benchmark Reports today. Some highlights include loyalty leaders Apple driving NPS of 77, Amazon at 74 and Google at 71. Online services had the highest average Net Promoter Scores of all industries, with Telco bringing up the rear with an average of -7. More details in press release.
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Australia’s MacMillan Shakespeare (“premier provider of workplace benefits”) confidently predict hitting a Net Promoter Score target: “We will achieve high net promoter scores ≥45%” (according their analyst presentation PDF, March 2009)
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Still in Australia, Chris Roberts talks about Generating Growth in a Contracting Economy, and his 1500 customer Net Promoter Score survey of Australian banks. Source: UQ News
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Finally, web-hosters ServerBeach ride a high tide of Net Promoter Scores to reach 49, according to blog.
Franchised tripperco TravelCounsellors climbed to a Net Promoter Score of 94 in early 2008 using a seven country metric. Each Travel Counsellor franchisee can see his/her score on company intranet. More from eTravelBlackboard (note that the reporter seems to have made an error in documenting NPS methodology)
Cherry-picksters NES Rentals do some heavy lifting to get to Net Promoter Score of 72, and trending higher says company spokesman according to Rental Equipment Register. With 15,000 surveys completed since March 2007, NES look set to reach 76 later this year. Recently rival RSC Rental announced NPS of 64 (enGaugement).
Brown-goodsters LG‘s Veep of Comms presents the LG Consumer Electronics Overview 2008, including some Net Promoter Scores of TVs. John Taylor quotes their mean Net Promoter Scores of 64 in LCD range, with a high of NPS 72 for a 42″ LCD, although no mention of methodology or numbers. Grab the presentation from the web before it disappears. In another snippet, agency bravely aims to track online conversations with LG offline Net Promoter Score (New Media Age)
New Zealand Post-owned finco Kiwibank notches up Net Promoter Score of 60, according to twitterer BankingReview. If so, this puts it close to top of the list of Australian Banks (see article enGaugement: Oz Banks Ranks)
Finally, blogger shmula writes about the power of negative word-of-mouth, and how publicising a twitter-powered whinge about HomeDepot experience reached 3,000 people. HomeDepot amazingly picked up the twitter-moan, but since dropped ball. Net Promoter Score: Fail. Follow story here.
“By cutting prices, you are upsetting our customers,” I was told when I presented the sales results of the company’s direct sales division to the UK sales director, “and they are threatening to not buy from us“. I probably should have been more polite, but instead I pointed out that he surely was confusing his retail partners (to him, customers) and end consumers (who buy from retailers). It didn’t help our relationship – let’s face it, nobody likes a smart-ass.
Consumer Electronics companies have for years dealt with the Power Retailer Oligopoly – a few powerful chains controlling 60 – 80% of the market. Over the years, this has evolved into cozy manufacturer-purchaser relationships (especially in Europe) based around golf, annual dealer trips to sunny locations and other “boys club” activities. Despite investigations from the UK’s Competition Commission in the ’90s which eventually led to the prohibition of Recommended Retail Pricing, strong linkages between retailers and major brands still exist.
An article about the success of the iPhone reminded me of how destructive this relationship can be. In “Apple Proves… It pays to be late And ignore the mobile networks“ Andrew Orlowski explains how Apple managed to beat large companies full of clever people who devoted years of planning and expenditure to make a mark in the smart phone market. Ironically, Apple, by coming late to the market could buld a product that consumers wanted, not network executives.
He writes that in the mobile phone business “the customer isn’t you or me, or the billion and a half other phone users in the world. Phone manufacturers have only 800 customers, of which only around 200 really matter: these are the gentlemen from the networks. And one of these stroppy customers can demand changes that cost the manufacturer millions, or cause the cancellation of product lines in which tens of millions have been invested.” According to Orlowski, the network executives decided the “butterfly” design Nokia introduced with the 6800 was too complicated, and that disabling Wi-Fi and charging high prices for data was good for all of us.
Apple, with their close customer relationships (half of their business is direct via internet or own shops) understood that they could offer features consumers wanted, not the telcos.
But with Consumer Electronic companies still mostly dragging their feet on embracing a channel model that includes direct-to-consumer sales, I fear that the best product innovations are still hidden from us. I wonder how many times a Retail Purchasing Executive decided to kill an interesting CE product because of his or her prejudices, or because their business model did not allow for such a price point?
The moral is that CE companies may be iPhoned out of business by not listening to the voice of the customer.
There are solutions to breaking the Power Retailer addiction: You can upset Retail Buyers. Get some help from the Manufacturers D2C Direct to Consumer Support Group. And CustomerGauge will help you measure and understand customer sentiment, and create innovative products.
Pic and Quote: The Few
Australian Big Banks Lose out to Smaller Lenders
Australia’s Broker News carries news of CoreData’s survey of a selection of Net Promoter Scores from Bank Services, with a small bank beating the big boys. In the NPS survey, Banking minnow Members Equity Bank (MEB) scored +61.6.
Other banks appeared to be all negative:
- Westpac –29
- ANZ –32
- CBA -40
- St George –40
- NAB -60
Our previous coverage of Aussie banks (mar 2008) here for comparison of last years scores.
Theatre Group’s excellent Net Promoter performance
Sweden’s Södra Teatern surveyed its audience for the third year running. Their Net Promoter Score (in swedish: Ambassadörsindex) was a standing ovation winning 76%. Source ”Publiken gillar Södra Teatern” here
eBay bonus plan includes Net Promoter
AuctionBytes Ina Steiner reports that eBay are focusing on a customer retention strategy, and using Net Promoter to incent behaviour. In eBays new comp plan, executives may lose up to 20 percent of their bonuses if they don’t meet customer retention targets. Source: AuctionBytes
Small round up of today’s Net Promoter Related articles:
Razorfish-er Shiv Singh lists ten Trends in Social Influence Marketing. In at lucky number seven he states: “Social influence research will become more important than social measurement… There’s going to be an evolution from measuring sentiment to understanding opinion and synchronizing it with the Net Promoter scores. Why? Because marketers care about opinion much more than they do about sentiment.” Agree or disagree with your “friendsters” here.
Pain into Gain
Forbes.com CMO Network has a feature article called “Turning Customer Pain Into Customer Gain” from Donovan Neale-May who writes that care and handling of customers is more important now than ever.
News at Ten headlines: Customer influence and expectations are higher than ever. Good news/bad news travels faster than ever. But most companies are deaf to this – and should react to improve brand and Net Promoter scores. CMOs should take the lead in customer experience as there is money left on the table (but many CMOs do not understand importance). Shocking stats: 76% marketers thought they could squeeze more revenue from existing customers. Less than 50% had good stats on retention rates, customer profitability and lifetime value – even less so in real-time. Solutions include finding the most loyal advocates and help them tell others. Good news: Companies that understand customers better can increase customer lifetime value. Source: Forbes.com
Serge Acker, Senior Director Philips Flagship Store, presented a state-of-the-union address on the Philips webstore at ceBIT last week, to a gathering of hi-tech companies at the DigitalRiver Consumer Electronics Conference.
Following a movie-trailer like taste of the impressive new webstore, Acker highlighted some recent successes (and a few pitfalls) of the recent store migration. Philips were “late to e-commerce” he said, but “determined to do it with excellence“. Success was down to having a clear vision for direct sales, fighting internal battles (especially over channels), a dedicated team, and doggedly measuring the Net Promoter Score (NPS). He gave an example of the importance of customer experience for Philips (“50% of electric shavers are bought as a gift“), and made the point that CE companies today are not just selling televisions any more, they are selling a service.
Answering a question on whether dealers were upset by Philips selling to consumers, Acker said that dealers had lived with direct sales for many years (See also “Retailers Expect Direct Sales“). Customers want choice – some wish to buy direct. He added that selling direct creates “noise” and provides lots of detail in product presentation that ultimately benefits dealers.
The Philips online store Net Promoter Score (as measured by CustomerGauge) had helped them improve customer service, improved products (with voice-of-customer feedback) and grow revenue. Acker had earlier stated that “If we could only do one thing on their Top Ten list, it would be the Net Promoter Score“, and his last piece of advice to the appreciative audience was “Build your NPS, and revenue will follow.”
Contact DigitalRiver for presentation details.
Some other Net Promoter News snippets:
Outsourced invoicer OSG Billing Services announced on its site and by press release that it has achieved a Net Promoter Score (NPS) of 72 percent.
“As a service-based company, OSG Billing Services takes a great amount of pride in receiving such an impressive score,” said Ron Whaley, vice president of sales and marketing. “We are excited to have this metric to measure our customer satisfaction…” Source: Billing and OSS World
There is a new Linked-In group called NPS Ops (Net Promoter Score), set up by Seth Harbaugh of Utah-based service provider DirectPointe. His aim is to openly discuss process improvements, performance documentation and trends in the improvement arena of Net Promoter Score. Joining request should be submitted on the site.
Matti Heikkila was described by a former Nokia President as “Rock and Water”, for his ability to charm people to work together while politely guiding them to his point of view. In his 30-plus years at Nokia he worked during the time of five CEOs, and held various posts including Data Division Export Director, GM of Global Accessory Business and finally running the direct sales operation. He is hugely entertaining; modestly recounting stories from the growth of the mobile business, and has much to tell about organising channels and internet sales. He is now the Chairman of eChannels, a consulting company that works with major brands to help them sell direct.
It’s with my “Manufacturers D2C” hat on that I meet Matti at ceBIT, where he is presenting case studies and “how-to” on reducing channel conflict. He recounts how Nokia had evolved their e-commerce solution, launched before the dot-com boom in 1999. Nokia had watched the PC direct-sales models carefully, deciding to learn about the direct-to-consumer sales model, and “get some practice” so that if there was a sudden shift to online, they would be ready.
The dot-com crash of 2000 meant that plans for further developments were scaled back, and the corporate online sales learning evolved into an extranet for Nokia’s partners to buy online. “It helped us scale,” said Matti, “and meant that we could expand our sales without the need to grow the local sales force massively, especially in the Middle East markets”. He added that Nokia found the productivity gains were significant.
In 2007 Nokia launched the direct-to-consumer store, to sell handsets, accessories and software downloads. Matti had to deal with many issues internally to start the initiative – chiefly with the perception of channel conflict (more later) but also internal competition from other projects. Matti said “Nokia is a democratic company – and several managers had started up e-commerce activities – so alliances had to be forged to bring differing initiatives together, or to terminate some projects”. This Darwinian approach was typically played out in a gentle, Finnish way: ”The culture is forceful, but respectful. Nokia allows strong internal competition, but you need to behave!” he added.
Handling channel conflict opened his eyes. In many instances, the reasons why a local e-commerce initiative had failed had been down to long, comfortable relationships between the senior country executives, and dealers, many lasting a number of years. No one in this circle wanted the possible trouble of a direct sales initiative which could affect the channel equiibrium, so facts (and emotions) were presented to prove “it could not work here”. Matti’s tactic was to go further down the organisation to speak to managers, salespeople and and finance people, and understand the real facts and issues (here is where you can understand how his “Rock and Water” name came about). Presented with the truth, the executives agreed to the corporate “multi-channel” strategy.
In one case, the termination of the existing e-commerce relationship was actually a relief to a channel partner in one large country. Operating it on behalf of Nokia, the initiative had been started early, and the platform was outdated – but there was not an easy way out. However, when the Nokia D2C strategy was rolled out, it improved and clarified the relationship.
Protect the Brand, Sell Direct
I asked Matti why Nokia took the decision to sell direct. His answer “Number one: protect the brand. With so many partners online it’s essential for brand owners to set the right online marketing examples, to guide retailers and gently control the material available”.
Next reason is “Two way communication. The new social media activities, especially in switched-on target markets mean that the brand (and product) is talked about, positively and negatively. A manufacturer needs to be part of that conversation – to listen, and sometimes to contribute”.
This leads onto Matti’s most controversial stance on channels: He sees conflict as a result of “direct v. channel partners” as a largely Web 1.0 phenomenon. “In the 2010’s, channel partners will expect or even demand that a manufacturer has at least some direct sales activity. Web enabled sales is very important for the channel partners.”
“The last 10 years has been eChannels 1.0 – it was all about sell-out to channel partners and consumers – manufacturers just followed the etailers, and there was little or no customer data feedback” says Matti. “We will see eChannels 2.0 next – manufacturers will find ways of having two-way dialogues with consumers through brand communities, direct feedback or social media. They will listen, improve products and services, and in turn share that with the channel. Strong brands will lead the channel, and will communicate customer needs and expectations as a result of this conversation. Manufacturers who do not have some form of direct contact will be left behind by partners who will expect an improved level of communication.”
Matti goes on “Switched on affiliates, bloggers, twitterers or other plugged in networkers will become channel partners, able to get into niches that no-one else can serve. They will operate with no stock, and live on sales commissions from recommendations. And this channel demands a level of engagement not based on personal contact, but on rapid, effective and deep communications with manufacturers. You had better be ready with intimate details of your product specification for example, on recycling (for “green” bloggers), performance (gaming geeks) or industrial design (for the fashion sites). Gaining their loyalty will be key.”
Matti summarises: “Direct sales can help the whole channel – transparency, and efficiency benefit everyone – that’s why I believe that channel conflict is over, and partners will start expecting direct sales as part of the mix”. I observed his audience of manufacturers nodding heads in agreement, so expect this trend to increase.
Sony Backstage 101 program reports Net Promoter of 44.
Sony’s learning centre for Digital photography users, Backstage 101, was recently cited in a case study. The community driven site showed increasing consumer loyalty and advocacy, with 78% of users report that they are more likely to purchase a Sony product as a result of Backstage 101. “Sony’s NPS (Net Promoter Score) for 2008 came in at 44%, with 59% of users classified as “promoters” who are likely to recommend Sony electronics to a family member, friend, or coworker” according to the case study, courtesy Marketing Profs.
“Slumdog” Atlassian Software reports NPS 52
Atlassian, self-styled “Enterprise 2.0 sector’s Slumdog Millionaire” note on their blog their NPS score of 52, and outline methodology of sampling. “500 customers, chosen at random, and our Net Promoter score was: 52%“.
I pulled out this section as I thought it was useful: “We made it clear we only required answering one question to participate in the survey. The other three questions were entirely optional:
* “If you wish to elaborate on your response, do so here…”
* “Is it OK for us to contact you?”
* “If so, what’s your contact information?”
According to Atlassian, the survey had a 40% response rate, and 20% of the customers said it was OK to contact them. “First priority is personally calling every single detractor [...] Passing support problems to support and product problems to development loses this vital analysis. Second we are thanking everyone who participated and is willing to contacted.”. It’s all here.
Enderle on Obama NPS
Rob Enderle, IT industry pundit and expert writes in Tech News World that Barack Obama could learn from Intel among others, and invest in the future to survive. He suggests loyalty is key, and that Obama should measure that with Net Promoter Score. Article: TechNewsWorld.
CustomerGauge: “Net Promoter in Blood”
Bain-ster Rob Markey lists three customer feedback systems and cites one, CustomerGauge as “really interesting, and is based on Net Promoter. The company seems to really have Net Promoter in its blood, and several Bain clients have said they are good” – full details on his blog here.