A Simple Customer Rescue and Reward Plan

We’d like to share a short 6-step plan for customer retention, based on some years working in e-commerce. We’re going to find some key customers that you can rescue, and others that you can reward. Then help you reach them and increase sales.

Step 1. Segment your customer base. Rank your customers by amount of spend, then make the cut at a suitable point – somewhere like 10 – 20% of your total customers.  You’ll probably be aware of the 80-20 rule (sometimes named the Pareto rule) which helps explain how a small number of customers are responsible for much of the sales (20% customers drive 80% sales). In the case of e-commerce, it’s often more extreme. We found on some sites that around 10% of the customer base brought in 50% of the revenue (and even more profit if you take into account acquisition costs). When you do the analysis, you may find it’s just a few hundred customers who make a sizable contribution.

Step 2. Identify your loyal customers. Survey your customers using the Net Promoter® Score question. You can find out how to do it in our 2-minute guide to the Net Promoter Score.   Ask “Would you recommend us to a friend of colleague?”, with a 0 – 10 scale. Use the results to understand who in your customer base are “promoters” or “detractors”. You may get up to 30% of your customers responding, so this is a very good way of dividing up the base. Don’t forget to ask for customer comments.

Step 3.  Draw up the matrix. See the chart above. On one axis, plot customer spend (or value). On the other, loyalty. In the top boxes you should have a manageable number of customers who represent a sizable portion of business, divided into those who would recommend you (promoters) and those who would not recommend you (detractors).

Step 4. “Customer Rescue”: Find the customers who are most at risk from defecting: High value customers that scored low ratings. If you do nothing, you risk losing repeat sales, or lose them to a competitor. At worst, they may warn their friends from buying from you. By reading their comments you can understand what the issues are. Don’t waste time – divide up the numbers and get your team on the phone to them within 24 hours of harvesting their comments. Failing that, personal emails will do. Acknowledge any problems, apologise if needed, and ask what it will take to put it right. Often, customers will make allowances for errors – and if you can surprise them by over-delivering on a fix, you may even turn them into evangelists.

Step 5. “Customer Reward”: Identify the high spenders who rate you highly. These are customers who are likely to make a repeat purchase, and with luck, bring you new customers. So give them the tools to do so. In the excellent book  Creating Customer Evangelists (Huba/McConnell) you can get some good ideas on how to turn customers into referral machines – offer new product information, ask for product feedback, give small gifts. Surprisingly, there are more effective actions than  financial incentives.

Step 6. Automate and track the progress. This retention model is not a one-off task – the successful companies bake these process steps into their sales DNA, and monitor which actions are most successful, while reducing the number of detractors. Keeping a customer is far cheaper than finding a new one.

Do the hard work, easily

Yes, you can do all the above steps using manual analysis. You can do it for next to nothing with low cost survey tools, if you have spreadsheet skills and plenty of time.

However, there is an easier way: CustomerGauge automates all the steps for you: segmenting, surveying, reporting, closing the loop. By integrating with e-commerce systems, CustomerGauge can survey every transaction with the Net Promoter Score question, and can often reach 30% response. Thanks to special reporting, the system automatically ranks customers (and repeat orders) by value, showing results in real-time, and providing call- and email-lists for actions. CustomerGauge even tracks open customer issues with internal workflow, and reports on returning customers.

Now all you have to do is come up with some creative ways of keeping your best customers recommending you to others!

Learn for free

Our upcoming webinar  “Learn how to increase customer loyalty and grow online sales automatically” on 10 Feb 2010 has additional resources on how to keep customers. Details/sign-up here.

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CustomerGauge introduces new b2b survey tool for Net Promoter Score with publishable Document of Record

CustomerGauge announce new Net Promoter® Score tool for small and medium enterprises. The online system makes b2b surveys quick and inexpensive, includes many high-end features, and features Net Promoter Document of Record for publishing online.

Amsterdam, 1 Feb 2010 – Press Release:

CustomerGauge, provider of a hosted software solution for automatically surveying customers and calculating Net Promoter® Score,  announces a new tool designed for small and medium enterprises. The new tool, “CustomerGauge b2b Edition”, allows companies to survey their customers or channel partners using the enterprise-standard Net Promoter Score, quickly, easily and at a breakthrough cost.

In response to the recent trend of companies announcing a Net Promoter Score without  qualifications, the new CustomerGauge tool features a Net Promoter Score “Document of Record” listing the relevant information. This document acts as a certificate, and can be published internally within the organisation, or displayed online publicly to support press releases and act as a benchmark.

“We have been collecting company scores on press releases for our Net Promoter News site for over a year,” says Adam Dorrell, Managing Director, CustomerGauge “and we have seen a wide variety of reporting methodology, using different scales or with no sample size detail. To help the growing Net Promoter community, we have developed a Document of Record, which lists the relevant information in a certificate format. Using this certificate will allow companies to establish a new credibility with their Net Promoter Score reporting”.

View our AcmeB2B demo site certificate online here

CustomerGauge b2b Edition also features HTML branded emailing with reminders, surveying in multiple languages, a real-time dashboard, advanced reporting showing scores for customer companies and individuals, segmented scoring and classification of “voice of the customer” comments. It also includes many features found on high-end systems – for example, results for separate divisions can be rolled up on to a single dashboard for internal comparison.

CustomerGauge b2b Edition is available immediately. Clients can be surveying within a few days, with results usually with 24 hours. System pricing starts at €3900 (approx US $5490), including three month subscription.

http://www.customergauge.com

For product details and online demo, please contact info@customergauge.com.

About CustomerGauge

CustomerGauge measures loyalty and collects feedback to help companies to understand customer sentiment, centered around the Net Promoter Score standard. It is optimized for e-commerce and can be rapidly deployed anywhere in an organization, without investment in capital equipment or IT assistance. Customers include Philips, Canon and CMC Markets. The company is based in Amsterdam, NL.

About the Net Promoter Score:

Net Promoter® is both a loyalty metric and a discipline for using customer feedback to fuel profitable growth in businesses. Developed by Satmetrix, Bain & Company, and Fred Reichheld, the concept was first popularized through Reichheld’s book The Ultimate Question, and has since been embraced by leading companies worldwide as the standard for measuring and improving customer loyalty. Details: www.netpromoter.com *Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld.

Co Jest Grane? Net Promoter Score Comic, in Polish

We were delighted to be contacted by Marcin Malinowski, a Poland-based Certified Net Promoter® Associate from Philips, who asked if we minded a translation of our famous cartoon guide to the Net Promoter Score®.

He also is happy to share his work here, so we would like to present to the Net Promoter community his Polish translation of our comic as an image (1.7Mb PNG)  or PDF (14Mb). Please enjoy!

Marcin, Dziękuję!

PS If you would like to translate into other languages please let us know.

Free Webinar: The “Loyalty Robot”: Learn how to increase customer loyalty and grow online sales automatically

(How a handful of customers can make or break you…)

One of the surprising secrets of e-commerce is that a small number of customers account for a large amount of sales. In fact, on a recent sample of large sites, just 7% of the customers accounted for 50% of sales revenue. For most e-commerce sites, this means if a few hundred customers decide to return or leave, it can make a big difference to hitting sales targets. In this webinar, aimed  at e-commerce professionals, we promise you will pick up some useful tips to improve customer retention.

• How to identify and segment your top spending customers
• Learn how to save money on acquisition and grow revenue from existing customers
• Build a “Loyalty Robot” to automatically develop repeat business

Adam Dorrell (Managing Director of CustomerGauge) and Melanie Otersen (ex- SonyStyle online store, Europe) will outline how to succeed using a customer loyalty strategy, and show real-life examples with impressive  revenue growth.

Wednesday, 10 February, 2010.
Starting time:   17.00 Europe (Amsterdam, Paris), 16.00 London, 11.00 AM New York
Duration about 30 minutes. Free of charge, but limited places.

Mail for more info.

Register now!

Net Promoter News: The Annual 2009, with Company NPS Results Table

“How likely are you to recommend the year 2009 to a friend or a colleague?” If you could rate a year, 2009 would have probably got a negative Net Promoter Score. But as the business world picked up in the last few months, it seems companies have started to focus on Customer Loyalty again. So as the year draws to a close, it’s time for a round-up of 2009’s Net Promoter Score® News. We list all the companies and scores we covered, and have a few thoughts on Net Promoter for this year and next.

Trends:

In 2009 there was a steady increase in Net Promoter interest. Noticeably, we saw a lot of companies reporting self-calculated Net Promoter Scores in press-releases (in so-called “self-puffers”. We reported nearly 100 companies through the year in Net Promoter News and expect to see this double in 2010. Biggest uptake seemed to be in B2B – with many business service companies measuring Net Promoter. Marketing press also mostly getting behind Net Promoter. And from Twitter, a quote we liked “Net Promoter is the Cliffs Notes of market research.” @celeduc

Earnings reports continue to feature Net Promoter Scores – top marks for Home Depot, CoinStar, Hertz. We saw commentary from stock-pickers on looking out for “high net promoter scores” – see CostCo below. Expect more of this, but tempered with critical examination of the numbers (just as investors question profit reports).

Job ads are starting to feature NPS as a Key Metric including RackSpace (for a SAN Storage Engineer: “Strive towards a world class target of 80% for the Net Promoter Score”). Seen similar  a few times,  which should widen the pool of knowledge.

Easier ways to get to NPS – new instant Net Promoter features in tools including CustomerGauge: Daily NPS report and customer feedback, Real-Time via Twitter,  and visualisations based on “Loyalty Spectrum Analysis“

A sign that Net Promoter is moving in to the mainstream: This year we saw NPS-Spam. SEO merchants are harvesting Net Promoter keywords to sell “male enhancement” products!

To look forward to in 2010: More rigorous reporting of scores – listing at least sample size and notes on methodology, and that PR people start to understand better   – see Standardising on Net Promoter Score Reporting. We trust more scores move out of the “Twilight Zone” of unknown origin. Companies reporting over 99: we are looking at you!

Finally, we leave you with an excellent informative (although rather serious)  video from Bain’s NPS guru Rob Markey. A useful 4-minute primer to start 2010 with.

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Happy New Year from the CustomerGauge team and here’s to a recommendable 2010!

Company Results

These were the scores we reported this year. Most are self reported, and perhaps have dubious value, but on a very positive note it’s good to see that business is starting to use a common metric. Rigour will come later.

Name	Sector	Results and Link
Public Radio	Broadcast	76
CoinStar	Business Services	80
CoinStar	Business Services	83
EG Employment Group	Business Services	52
GMT Workforce	Business Services	47
HCL	Business Services	“highest NPS”
HD Supply	Business Services	“up 6″
MailChimp	Business Services	69
OSG Billing Services	Business Services	72
Point of Reference	Business Services	100
Puroclean	Business Services	93
Smart Resources temp agency	Business Services	74
Sure Payroll	Business Services	NPS “World Class”
Hertz	Car Rental	50
LG	Consumer Electronics	64 average
Philips	Consumer Electronics	“Revenue follows NPS”
Sony Backstage 101	Consumer Electronics	44
British Gas	Energy	30
DragonAge	Entertainment	“NPS Useful”
Theatre Group, Sweden	Entertainment	76
NES	Equipment Rental	72
NES Rentals	Equipment Rental	80
RSC Rental	Equipment Rental	64
ANZ	Financial Services	-32
Australian Banks	financial services	NPS study
Bank of Montreal	financial services	44
Boeing Credit Union (BECU)	Financial services	75
Capital Systems leasing	financial services	63
CBA	Financial Services	-40
Charles Schwab	Financial Services	-34 to +26
Fidelity Advisor Funds, Fidelity Investments	Financial Services	Average: 29. Range: -63 to +21
Investors Capital	Financial Services	66
Kiwibank	Financial Services	60
Members Equity Bank (MEB)	Financial Services	62
Minnesota Life	Financial Services	87
NAB	Financial Services	-60
St George	Financial Services	-40
Vanguard	Financial Services	Average: 29. Range: -63 to +21
Verity Credit Union:	Financial Services	Adopting NPS
Westpac	Financial Services	-29
Westpac	Financial Services	-18
Grohe	Hard goods	“revenue up 7″
Cancer Treatment Centers America	Healthcare	Adopting NPS
EasyNet Connect	ISP	“industry standard”
iiNet	ISP	“40 to 50″
InetU	ISP	58
Apple	IT	77
Google	IT	71
ServerBeach Hosting	IT	49
SmartPen	IT	54
Blue Dart Express	Logistics	“committed to NPS”
Amazon	Online Retail	74
eBay	online retail	“adopting NPS”
eBay	online retail	More on NPS
Overstock	Online retail	73
Bonobos	Retail	74
Brooks Brothers	Retail	Adopting NPS
CostCo	Retail	“High NPS”
GameStop	Retail	“record NPS”
Home Depot	Retail	62
Home Depot	retail	63
Home Depot	Retail	64
Adobe	Software	48
Atlassian Software	Software	52
ClearSwift	software	Adopting NPS
Lawson	software	Adopting NPS
MWH Soft	Software	83
Qlikview	Software	48
Quark	Software	50
Sage	Software	“up 15 points”
SAP	software	60
Schooldude	Software	93
Symantec	Software	leading indicator, employee NPS
TSS (Tennessee Software)	Software	87
VeriSign	software	NPS Study
KPN	Telco	“Adopting NPS”
FIFA: SA 96, Germany 88	travel	88 to 96
People to People Ambassadors	travel	61
SkiButlers	travel	89
SkiButlers	Travel	89
Travel Counsellers	Travel	94
Whistler	Travel	“up 6″
Polaris	Vehicles	NPS: “Key Metric”

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