Given today’s lean economic times the need to make the right investment in technology tools for your company is critical. In the last few years, the challenge has been “Can we do this task better/cheaper by using people or software?”
In the case of Net Promoter® Score surveying and reporting the debate is the same. Companies can certainly choose from a vast array of inexpensive survey tools, coupled with mass e-mail systems and MS Excel for the calculations, analytics and graphing. The problem with this solution is that it requires extensive man-hours to customize, execute and report usually leaving little time for the actual analysis. From an unscientific straw poll I did, we believe it’s around 1.5 to 2 days a month to pull together data, graph and present it in a meaningful way to clients. That’s a lot of Excel and Powerpoint time, and a real cost – it’s eating into valuable billable consulting time.
“I’m gonna keep eating smoke, and bringing out bodies… ” quips Steve McQueen, playing the courageous fire chief O’Hallorhan at the very end of The Towering Inferno, closing one of the defining firefighter portrayals in movie history. The “Firefighter as a hero” with all the attendant risks and valour is a popular image both in film and real life, so is it possible that something so humdrum as “Fire Prevention” could be somehow more heroic?
Yes, it can – in the world of customer surveys, and in the number of lives saved.
I guess with Easter around the corner, I have chocolate on the brain, and I was reminded of how one of the World’s most famous chocolate makers carried out his research. I refer of course to Mr Willy Wonka, and his rather unique model “Golden Ticket” model of customer research (and succession planning). For those not familiar, the premise is that the lucky individuals that find one of the five golden tickets hidden amongst millions of chocolate bars will get a special tour of the famous factory.
My experience in the business improvement area (whether as employee or an outside consultant) has been a continual search for a “Golden Ticket”, a lucky “Ah Ha” moment where one realizes one has found the root cause of the problem. Once found, we set about fixing the issues, testing to see if it is getting better, sign it off and look for the next issue to solve – a simple procedure, a sort of “Process Improvement 101”.
The real question is “How do we find that most important issues to fix?” in the first place. Well, you ask people, do in-depth research on a few select customers, do some focus groups, ask lots of questions, but of financial or logistic necessity, to just a few individuals. This is a “Wonka-ista” method of hoping the best people get the Golden Tickets and give you the right information, probably once a year. In Wonka’s case, he was relaxed enough to do it just once in his lifetime.
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.
An article in Time Magazine (Botox for Barbie, Jan. 29, 2009) reports how Mattel are taking the Barbie concept direct to consumers with dedicated Barbie concept stores (“think Nike Store, but exceedingly pink”). In March, Mattel will begin direct to consumer (D2C) marketing by opening a 38,000-sq.-ft. (3,500 sq m) House of Barbie – the first of its kind in the world.
“What we’re doing in Shanghai is an indication for the future of the Barbie brand,” Dickson says. Mattel is already planning similar stores in Brazil and Mexico.
Comment: Like Apple, Casio, Sony, Lego and Nike before it, Mattel is the latest in a string of manufacturers adding a direct-to-consumer approach to their channel mix – the online Barbie shop is already selling Barbie Collectables (presumably to an older audience)
In my line of work, I regularly meet executives from manufacturers who have started direct to consumer (D2C) online sales operations. And I can almost guarantee that by the time I’m stirring my coffee we are swapping stories about channel conflict, and about how many knives we have had to pull out of our back as result of internal politics.
Well, it’s time to for this battle to stop. Manufacturers are selling direct to consumers – they have been for many years. And the sky has not fallen. Manfacturers D2C did not cause the current slowdown in retail. In fact, selling direct to consumers is likely to benefit the channel, as the makers get a taste directly of consumers problems (or delighted experiences) with their products.
Here’s our olive branch to warring factions in the retailer v manufacturer conflict: A direct sales toolkit put together as a result of talking to many manufacturers (including Consumer Electronics market). It contains best practices (“Why sell direct?”) plus a communication plan to help trust and transparency between parties. It also features a broad strategy plan, plus a traffic light report card to help guide parts of the business.
Of course it’s just a start, but I hope it helps you if you are thinking of starting to sell online, or are struggling with apparent channel conflict.
You can find the the full presentation on the LinkedIn group of professionals “Manufacturer D2C e-commerce Europe” – the group is limited to managers and execs who work for major-brands, wishing to sell direct.
Or email me: info at directness.net and I can send you a copy.
In 2005 an influential report by a UN body predicted “The Internet of Things” – a ubiquitous wireless network linking household objects and appliances, all talking to each other. The Internet of objects may encode and track up to 100,000 billion objects. Every human being is surrounded by between 1,000 to 5,000 objects.
No more lost keys, no running out of milk, waste is a thing of the past, and so on…
In our industry that means that “things” will report back to home base on their operation: “Running out of disk space – help!”. For CustomerGauge of the future, it may mean that systems have their own built-in survey mechanism that gathers feedback at the most appropriate moment. And, yes – we are working on that.
In the meantime, I can report that CustomerGauge has a small part of this future available from the November release.
We call this new report “Recommendation Score of Products” – or more snappily: “Score by SKU“, to help show customer satisfaction of each product. The results are compatible with the Net Promoter Score®, (jointly developed by SatMetrix and Fred Reicheld, also known as NPS®), and come from the question “Would you recommend this product to a friend?”
Until now, manufacturers have struggled to keep track of what customers thought of individual products (or stock-keeping units), and at best have relied on omnibus surveys taken once or twice a year. Results can be poor due to lengthy time lag, and low response rates (which mean that similar products can show markedly differing results).
CustomerGauge can be used to survey ALL transactions of a manufacturers online shop, or ALL product registrations. Automatically. And in a volume that gives reliable scores.
Results are shown in real time, and feedback can go straight to Product Managers.
We have already been piloting “Recommendation Score by SKU” with some of our clients over the last 90 days. One organisation has been using the report to sort their 2000 products by ranking into “Top 20 Best” and “Top 20 Worst” products, and examining the related voice-of-customer feedback. They distributed customer comments to product managers, de-listed many of the poor performers immediately, and changed instruction manuals on several others to help usability. On the best performers, some actions taken included more prominent marketing, re-pricing, and including some customer testimonials on web pages. The results have been impressive, with overall Recommendation Score (compatible with NPS®) increasing by several points.
Another organisation is taking the product feedback and recommendation scores from the direct sales division and distributing to product managers in the entire organisation. Although the direct division represents only small percentage of overall sales, the results give an excellent representation of total sales, and are available within 15 days of product purchase. This contrasts with 90 days or more from channel sales, and the results are unfiltered by store managers and account managers.
It’s one of the many new features on the ever-growing CustomerGauge platform that is already helping major organisations understand and measure customer sentiment. So until your products start to phone home with the latest user gossip, please let us know if we can arrange a demonstration for your organisation.
Local boy Erasmus once wrote “In the land of the blind, the one eyed man is king”, which means something like knowledge is power, and having more knowledge than others is commanding power.
When you are setting up a division of a large manufacturer, and starting to sell directly to consumers, how can you measure your new business? That was the challenge my colleagues and I over the last 10 years that I’ve worked in e-commerce.
Two years ago I distilled my knowledge of how to measure the system onto a single page. I reviewed it recently, and it still holds up. Trouble is, there are at least 77 measurements that I consider essential to running a successful, large e-commerce organisation. Some are financial, some logistical, and naturally the Net Promoter Score is on there. It’s not easy to track these all down – even less simple to put on a dashboard that is updated weekly – but mastering the metrics will help you run your e-commerce business.
One day, I’ll figure out how to automate getting the information on a single dashboard. But for now, I hope this is a useful free tool that you can download and use in your business. Let me know your comments.
CAMILLA SCHOLTEN writes about Strategic Change:
Where do you start when you are tasked with changing the company to become more customer focused?
An ever returning topic for many large multinational organisations is “how to become more customer focused” and in spite of the effort put into this by many hard-working employees I still don’t have the impression that the logic and the methods are clear to everybody in these organisations.
Some companies are lucky enough to have a CEO or influential board member that drives the vision to become more customer focused. They might have adopted a metric on customer experience to hold the company accountable. But further down in the organisation, practical business life is struggling to embrace the change towards the customer and could be trying to keep the Customer Voice outside the business rather than letting customer feedback in.
Some examples of where the customer needs are forgotten: For many marketers the quest for customer focus has translated itself into complicated loyalty programmes or meaningless (e)-direct marketing activities which deliver one-way communication to the customer only, with no back channel (“Please Do Not Reply to This Email”). For sales people the focus is still revenue + sales targets and any direct dealing with end-customers is seen as a threat to the channel that they serve. And contact centres are so engrossed into dealing with issues efficiently that their priority is a maximum time spent on the call rather than genuine customer engagement.
CLEAR LEADERSHIP NEEDED
Business visionaries understand that a critical factor for future success is how well their large companies can transform themselves to open up and embrace their customers. For real. Meaning nothing less than having products and services in place that continuously want to serve and add value to its users. Operating with customer satisfaction at the forefront of every employees brain. Allowing all business processes to be built around serving the end-customer. And all this with the purpose of generating ever-growing revenue for the enterprise.
Now that might be a very ambitious goal and for many, a ten if not twenty year plan. By itself an intimidating thought. But before you kick-off the long-term plan, where do you start? How much change can a company handle without drastic implications on business today?
If you are starting down this road, I have a few best practices to share today.
- Get going with your existing customers. Have you got a direct sales operation or a call cantre that deals with existing customers? Collecting names on your website? Run a competition recently? Use these opportunities to tap into your existing customer base. This is by far the most practical way to get going. Don’t delay – do it today!
- Decide what are the basics: What is key to know on how these customers feel about your company and product/service – that’s your starting point. You want some simple insights on what they are thinking. And before you think about spending thousands on a new database project, just stop. Don’t design new databases unless you have no database to start from. Instead, use anything to get you going today – a spreadsheet will do.
- Adopt Net Promoter Score (NPS). Or at least settle on one company-wide metric that you will use to measure and improve customer experience around. The simplicity of NPS will help you drive the logic and methodology of ‘moving closer to the customer’ throughout your organisation. And you can benchmark yourself against others.
- Now ask the questions. Once you have your existing customer base you start by sending recent purchasers or recent users of your services a very short questionnaire tailored around their experience. Minimise the number of questions and focus on Net Promoter Score for maximum response. Don’t worry about statistically relevant samples. Information (any) information is power
- Care and Caution! As you start getting real customer feedback on how they value and perceive your company, treat this information must be treated with care and caution.
- Care because you don’t want to throw away this valuable feedback or not use it
- Caution because you need to sell it into the organisation while minimising resistance
- Minimise internal resistance by sharing Net Promoter Score results without initially linking the result to good or bad. You need to do these quick surveys on a continuous basis in order to study trends. Combine the general result with areas for improvement based on customer feedback. i.e. these are the top-2 issues our customers tell us we need to improve.
- Accent the positive. It’s important to note that if you have feedback on say, the service-desk of your company, the people working in this department can see this as an attack on their performance. You can minimise this negative perception by presenting the results in a simple format to the respective department first. Also make sure you involve them when designing the plan for improvement. And remind them how good it will be once these improvement start to impact the score on their part of the business. Also if the issue is investment in this particular area, NPS might help generate some of the necessary funding!
So in short, start with highly professional yet easy to understand measurement and reporting of the customer experience. This will help identify next steps as they can be different for all companies. Once you have weekly or monthly measurement and reporting up and running you can take the next step of analysing the feedback in relation to your customers profitability.
That I will write about in our next news update. Until then happy customers!
Camilla Scholten has worked on the strategic marketing as well as operations and direct sales side of large multi-nationals, running teams to drive customer focus. She engineered a measurement tool for customer experience and later adopted an existing Net Promoter Score measurement tool to deliver insight into customer experience based on the Reicheldmethodology of promoters and detractors.
All you need to know about the Net Promoter Score® – in cartoon strip format. As keen evangelists of Fred Reichheld’s work, we found ourselves explaining the concept behind Net Promoter so many times that we thought it would be fun to put into a comic format. Seems to be quite popular so we put it on the site as a free PDF download (1.3Mb).
We hope you like it.
This Net Promoter Cartoon by Directness is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Based on a work at customergauge.com (and of course respecting trademarks of Bain, Fred Reicheld and Satmetrix)