Trust-O-Meter
One of the keynote speakers at our recent event made a very thoughtful comment. He said that the products his customers most prized were “speed and trust”. Leaving aside the convenience of a speedy delivery, trust is perhaps the most interesting and elusive quality that any vendor can supply.
We know from our experience as consumers (and sellers) that ‘trust’ helps a vendor charge a higher price – as security and lack of risk means less chance of a vendor walking away with a payment, or more usually, not delivering the right products. Consumers value a vendor that can be relied on to keep their word.
But I was reminded about the importance of trust when reading an excellent article in this week’s Economist “The faith that moves Mammon“. Commenting that the current economic issues are resulting in a lack of credit – and the very word comes from the Latin credere, to trust – the writer explains that two helpful human traits underpin our society: one, the capacity to weigh up costs and benefits of trusting others; the other, an instinct to return favours in kind (and seek revenge when trust is betrayed). When workers are treated generously, they work hard; when customers are swindled, they raise a fuss. These are reinforced by habits and social norms.
Usually, humans can be counted on to make reciprocal ties, especially where there are frequent meetings or trades. Supporting this are state institutions: regulators, bankruptcy procedures, courts and ombudsmen. But these are only used to settle a small minority of disputes. The state is just a backstop – in stable societies, transactions between strangers are mostly self-policing. And a reputation for honest dealing is valuable for both firms and employees.
The sentence in the article that made me stop and think: Suppliers gamble rewards from future commerce for a short term gain when they bilk [mistreat] their customers.
However, let’s take it further: suppliers who INVEST in excellent customer service, COMMUNICATE well with customers, seek out FREQUENT contacts can breed trust. And that means a more secure FUTURE revenue stream. These are long term bets that cost now, but that will predictably pay off in returning customers (or a good reputation, and so gain new customers from word-of-mouth).
There is often a battle for resources and costs played out between marketers and finance heads. I remember many arguments about how much to spend on a call centre (“it’s a cost”, insisted the Finance Director, “we should outsource, cut call times, charge for the calls”). On one occasion the finance-driven cost-reduction plan was implemented. It turned out to be a short sighted idea. The cost reductions were not significant enough to balance the business lost from the unhurried, expert help the customers valued. And they truly hated having to pay for calls. They said so many times, and after six months of the cost-cutting experiment, the call centre was brought back into the company, and call costs dispensed with.
How can a company know how much to invest? Too little, and the result is lost future business. Too much: not enough margin to operate effectively. The trick is finding the ‘Goldilocks’ or ‘just right’ amount. Here is where the Net Promoter Score®* comes in. By asking all the customers if they would recommend the company, the number of ‘recommenders’ and ‘detractors’ can be calculated. With a few assumptions, one can predict future business lost and won. And as the score can be tracked in real time (using survey systems like CustomerGauge for example) improvements in the score can indicate how an investment is working.
I read arguments against using Net Promoter Score (NPS) with interest. They mainly consist of saying that Net Promoter is ‘too simple’. Actually, that is its very strength. Used as a tool for Operational Feedback, NPS is the closest thing we have to a ‘Trust Gauge‘. Used with or without a complex predictive model to put some sort of Net Present Value on actions that result in Trust; a Net Promoter Score that climbs just one or two percentage points each month is about the most reliable indicator a company can get that it is doing the right thing.
Or in simple terms, a meter that shows Net Promoter Score is a company’s ‘Future Business Indicator’.
Manufacturers D2C Best Practice – Part 2: How do world-class organisations sell direct?
In Manufacturers D2C Best Practice – Part 1 I looked at the “Why” of selling direct to consumers. In this post I wanted to pick out some of the top ideas that 20 Manufacturer e-commerce managers discussed at our recent industry table event in Amsterdam.
All participants agreed that success with Manufacturer D2C (Direct to Consumer) depends a great deal on the following points:
- Strategy
- Defining a solid value proposition
- Clear communication internally and externally
- Persistence
- Operational excellence
- Customer focus
The issue of Channel Conflict so dominates the setting up of a manufacturer direct sales operation that it’s essential to have strategy at the top of the agenda. We largely covered “permission”, or overall mission in Part 1.
But once the go-ahead from the board has been given to sell directly – how can it be sold internally?
1. Set Clear Objectives
What is the expectation for direct sales? Is it possible to define a revenue target, or number of customers served? Around the table (and in private discussions) several revenue numbers were mentioned, in the EURmillions. But without the ability to control all the marketing mix a solid target is tough to achieve (more on mix later).
A more common way of starting is to set a target of a proportion of sales in a category, or country. Example: “5% of accessory sales to be sold direct in 2 years”, or “1.5% of high end ‘X’ to be sold direct by 2010, without cannibalising channel sales”. The last phrase implies that direct sales can be incremental, which was accepted and agreed by the group (of course, retailers might disagree!).
Key to consider: How to bonus internally. Best practice is to include direct sales in same organisation as channel sales – then the channel sales manager can balance apparent conflict, and still meet revenue targets.
Once the targets have been defined, it should be clearly communicated internally.
2. Create a real value proposition
Manufacturers are not able to compete in the same way as retailers. Of course there are advantages of web traffic, brand name, and trust – but one delegate likened D2C selling as “fighting with both arms behind your back”
The traditional “4P” marketing mix components of Price, Product, Promotion, Place should be used with care.
Price setting: Sell at low “internet prices” (to discounter levels), and the result is punishment by high-street retail partners de-stocking lines. In fact nearly all of the delegates reported that their pricing policy is “recommended price” (where allowed in law), which in practice means at, or above retail prices. This mitigates any accusation of price-cutting. Some delegates admitted to occasionally dropping prices to boost sales, but usually got around the issue by putting together premium bundles – a collection on products with slight discount.
Product range: Best practice seems to be to work towards stocking ENTIRE product range. Stocking in depth is a key value proposition. This translates to:
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- wide range of accessories, especially hard-to-find items for ‘end of life’ products;
- latest products (sometimes available for pre-order)
- Limited product editions (colour, spec variations, bundles)
- Stock highly available
Products in short supply should not unfairly be only available in the D2C store, but should also be sensibly rationed among ALL channels.
Promotion: D2C stores are normally on separate platforms to manufacturer “catalogue” sites. Best practice is to include channel partners in a “where-to-buy” box on a catalogue page, with one of the options “buy direct”. Sensible monitoring of traffic can help predict channel sales.
“Place” - for this part of the mix read convenience, and premium customer care. Some of the organisations use call-centres to provide concierge services.
Interestingly, the D2C channels had adopted generous and flexible Terms and Conditions – well above those demanded in the EU Distant Selling Directive. The leading companies are making it easy to buy and return, after the statutory minimums.
A new trend here is widening use of personalization: Engraving and gifting, plus software or image/music pre-loading.
Services are becoming more important: Installations, extended warranties and insurance.
3. Clear communication internally and externally
The most advanced D2C organisations had spent time and energy consulting with channel partners, had explained strategy, value proposition and looked for ways to work more closely with retailers. However, progress towards joint ventures like “collect in store” was slow, or had stalled (even though this has been talked about 5+ years) so maybe it was not a real objection or need for retailers.
4. Persistence
“Not giving up” was the message from both keynote speakers. One organisation had tried, failed, tried again, failed again many times before hitting its stride. Pushback had not been as a result of sales, but perceived channel conflict. Winning over internal politics was seen as most essential to succeed.
5. Operational excellence
The steepest learning curve is in perfecting the operation. Manufacturers struggle to build the consumer distribution systems that retailers nailed years ago. Typical weaknesses are in logistics, returns, cash collection (and fraud prevention), and credits. One keynote speaker noted: “Nice website is good, but great back office is key”.
Monitoring metrics is the first step. “If you can’t count it, you can’t get better”. See our article “77 Essential Metrics” for a few hints…
Best way of improving the operation: Listening to customers, measuring Net Promoter Score®, which leads us to…
6. Customer focus
Biggest surprise of the round table session was the emphasis on customer feedback and Net Promoter Score as measure of success. One keynote speaker held the room in thrall as he outlined how they act on EVERY customer feedback, DAILY, and reply to every comment. Success in customer focus had been due to understanding Net Promoter Score. All staff in the department had been schooled in NPS, including call centre staff, to the extent that team managers had asked their boss to be bonused on NPS. Bonusing managers on Net Promoter Score helped to improve scores. After two years of tracking NPS they had ramped up score by 100%. They also attributed their significant growth to using the Net Promoter Score.
Some useful stats from one company:
- Web conversion improved +40%
- Contact centre conversion improved +25%
- Revenue ratio from returning customers increased +100%
- Daily monitoring of customer feedback helped reduce support issues later – Ratio of goodwill funding reduced 50%
All the organisations who were using NPS were prioritising customer feedbacks and taking actions each month to improve. Examples: making phone support line free for customers, extending delivery hours to Saturdays, reduing packaging material (and 28 others!). NPS focus means that the D2C organisation can also set a (good) benchmark for the channel, and help enhance brand.
The state of art is calculating value of promoter or detractor in revenue terms, and using for ROI purposes. Net Promoter Score then becomes a growth and profit driver rather than quality exercise.
Some other learnings:
Customer direct contact had produced some surprising facts, namely that customer profile can be completely different to previous assumption. The thinking was that hip young things were the main buyers. Reality was that the typical customer had been retired three years.
Final soundbites from the round table:
- “Speed and trust are the most demanded products”
- Agents should not be upselling, but rather “Right-Selling”
- Arguments with resellers over “who owns the customer” should be combated with “No one owns the customer”
Resources:
If you work in a manufacturer and wish to know more, I recommend you join the LinkedIn group of professionals “Manufacturer D2C e-commerce Europe” – the group is limited to managers and execs who work for major-brand, wishing to sell direct. News of future events are posted here, forums for sharing best practice, plus some presentations are available.
Hearing the Voice of Customers
Are you able to hear what they are saying out in Customerland? What did your company learn from your customers this month? Or are you choosing not to listen?
Over the course of a long career I have found that many companies are not ready to listen to what their customers are saying, or sometimes shouting at them. Causes vary – sometimes it’s cultural: “We know best”. Or structural: “We don’t have the tools”. Organisations are bombarded by customer feedback every day – in the form of complaints or praise, but few companies have an integrated view of customer sentiment. Therefore, no means of organising or archiving comments.
A new discipline of Enterprise Feedback Management is being grown up around this, and software vendors are rushing to help companies understand a holistic view of the client base. CustomerGauge has had feedback management built in from the start, and we have been helping our client companies improve by simply routing customer comments through to the correct people, and categorising them in ways that help them prioritise changes.
I thought I would share a sample of real (anonymised) customer comments to show this in action. These are some comments from the last week I picked at random. These are tagged to help understand major issues, but the main strength is the verbatim response from customers. Would this work to help your organisation?
Positive Comments (use as testimonials)
“Fantastic piece of equipment! I am fascinated by the creativity & cleverness of the design. I get a lot of use out of it & am proud to show it off! thank you!”
“This is one of the best online shopping experiences I have had in a long time. The price of the product was the best I could fine and the order process and delivery was flawless.”
“Very easy to use site with fast delivery. well packed goods. Excellent.”
Constructive Criticism (use to help tune up services):
“Purchased [XXX Product]. To fit the connecting lead into the power box was very difficult, resulting in me having to contact customer support. They were very helpful and the problem was sorted.”
“Delivery company required a signature for a relatively low value item. i work six days/week and had to take time of work to collect item.”
“I don’t understand why the outside packaging (plain cardboard box) was so big.”
“The [Product MMM] was much harder to load photos on, then expected and the up/down arrows make navigation on the system difficult even for a seasoned geek head.”
“Web page needs to be much more user friendly and order status needs to be improved.”
“Your purchase/online system seemed to stop and I wasn’t sure that it had taken the order or not, somewhat disconcerting.”
“I left a telephone message but no-one replied.”
“When I called for support, I was on hold an extremely long time before I got to talk to someone.”
Suggestions (use for improvements)
“The service provided was excellent. The only improvements which could be made are: (i) The ability to specify a different delivery date to the address registered with the Credit Card Used, and (ii) an option to extend the warranty would be useful.”
” recently bought from your website your new [Product XYZ] which are great. But, it would have been very useful to have had a bag or container to put every thing in for storage.”
“Would like to be given an option for faster shipping.”
“Still too many steps (clicks) to complete tasks such as updates.”
Of course, you need to do something about the comments if you want to improve performance. Here’s a graph from a company that classified feedback in CustomerGauge, and prioritised what to fix. The chart illustrates the trend over a year period, showing how some issues were more important to customers over time.
In this time, the Net Promoter Score rose each month, showing the changes were having a positive effect.
You don’t have to feel under siege from your customers! To learn more about how CustomerGauge helps companies please contact us or read our Product Description.
New Workflow feature: Your customers will probably be more excited than you are…
In my experience, Marketing folk tend to be less process oriented than other people in the enterprise, and when one talks to them about business workflow you can see their eyes glazing over. One gets the feeling that they would rather be watching a presentation on Paint Drying.
But if you subtly rebrand workflow as “Feedback Management” and explain that it helps to keep promises to customers” the excitement visibly level rises. In simple terms, that’s workflow in CustomerGauge. It stops you forgetting that Client X wanted his missing part sent that you promised. By the way, if you do forget this, you’ll definitely turn he/she into a detractor.
Workflow in CustomerGauge
If you are a regular reader, you will not be surprised to learn that CustomerGauge has a built in workflow Feedback Management system (another clue is in our tagline: Measure, Understand, Respond). It works like this: The customer (or internal user) can trigger a workflow item – a message is sent to the relevant department saying an issue with Client X is OPEN and the item is put in a queue; they then follow it up and mark it CLOSED; the loop is closed by a report showing the age of any OPEN items in a queue. That way any customer issue (complaint or praise) can be put to bed.
CustomerGauge has a template for a basic workflow “out of the box” which can be implemented rapidly (our design principle was “Just Add Water”, or in this case “Just Add Customer Service Agents”). More extensive workflows can be built including a final loop with the customer asking “Did we fix your problem?” and so on.
See a 2-minute presentation here (click for full size).
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You may not find it workflow exciting, but your customers will. Often, all they ask for is that you keep your promises. Remember, the reason that most customers defect is Indifference to Complaint.
Historical Note:
Actually the whole simple workflow thing came about because of a visionary Vice President I worked for at Sony in 2004. Until I met him, I worked under the Marketing Manager Customer Survey Standard Operating Procedure which is largely Ignoring Customer Feedback from Surveys or At Least Waiting Until Enough Time Has Gone By That It Can Be Safely Ignored It. I’m sure all marketing people know what I mean – yes, you! With your results from the 2007 survey locked in your desk with no responses – I’m talking to you!
But VP Gildas P insisted to me that we follow up all 250 customer feedback items we had just gathered within a week! An impossible task – I told him. However, it wasn’t. Of course it was possible (with some effort – we did it using Excel and scraps of paper). And it changed the way I thought about feedback. Dealing with the Voice of the Customer plus Net Promoter was the way forward. So that’s why CustomerGauge has this stuff built in – because if you ask the Customer for feedback, and the take the time to give it to you, we think you should be polite enough to deal with it and make sure you acknowledge it! Did I tell you about our built-in email engine as well? Ah well, maybe another time…
New Google-like Search in CustomerGauge
According to Norse legend, the god Odin went to great lengths to acquire wisdom, sometimes enduring pain and self sacrifice. To learn how to cast powerful magic from ancient runes, he hanged himself upside down from the tree Yggdrasil at the end of the world for nine nights.Well, who’s got that much time these days to get the answers from a simple question? To save you the troubles of Odin (a man so dedicated to learning wisdom he even gave up an eye for a drink from the well of knowledge), we bring the ability to make a Google-type search for customer feedback (or other order information) in CustomerGauge.
Now you can do a free-text search of the messages that CustomerGauge is collecting from your customers. For example: Which customers used the word “excellent” when referring to service? Or who said that delivery was “disgusting” in conjunction with Product A, but nor Product B.
In addition, you can instantly search through any of the fields captured in CustomerGauge: Order number, Customer Number, email, name, dates, product information etc. Like Google, you can use Boolean search terms: “+excellent -not”. We have optimised it, so it’s super speedy, even through 100,000 records.
We’ve used many ecommerce products, and think that this is better and faster than regular systems for searching through customer information. It’s part of our tool set to help you manage your customer feedback better.
Like to try it? We prefilled a search for you here.
We think Odin would have liked the idea, but would have likely rejected it as “too girly”.
