CustomerGauge is very excited to welcome back Dr. James Borderick, Head of Customer Experience Analytics at HPE Software, for the second part of our interview series with HPE Software. Last time, James sat down with us to discuss some NPS® 101 - why HPE Software started using NPS, the challenges it faced, frequency of surveying and the NPS target and goals. You can read part one of the interview, along with the AMA (ask me anything) discussion that followed with James here. This week we take our HPE Software interview to the next level, by discussing three main topics - closing the loop, company buy-in with NPS and linking NPS to revenue growth. We finish by giving you a step-by-step overview of what to do when starting with NPS.
1. How does HPE Software Respond to Customer Feedback? (closing the loop)
(a) from Customer Interviews (b) from the Competitive Loyalty study (c) from 1:1 customer feedback and communication, both in person and remotely e.g. design partner programs, Customer Advisory Boards etc.
(a) Customer Interviews: Our engagement begins with actively listening to our most valued customers. The Customer Experience Lead conducts a series of in-person and/or phone interviews and executes an improvement plan, at the customer’s discretion, to improve the overall relationship. The main points are:
1. Voice experiences through regular engagement
2. Drive improvement efforts, which increases satisfaction and success with HPE Software products and services
3. The Customer Experience Lead serves as an additional resource for assistance within HPE Software
4. Enhancing collaboration, and support, between the customer and the HPE Software Account Team.
The improvement plan methodology is shown below:
What we learn during the interview process is submitted to the account leads to action.
We categorise the responses by sentiment and demographic/firmographic categories to look at overall trends.
(b) The Competitive Loyalty study is slightly different. Since we do not know who the respondents are, which is one of the caveats of a double-blind survey, we cannot technically ‘close the loop’ in a traditional Net Promoter sense. What we can do however is analyse what the respondents of our competitors are sayings about our competitor’s products, which is a real game-changer. We can subsequently set in motion actionable insights both at the 10,000-ft. level and on the ground to dominate our market space.
(c) We also have various customer success and advocacy groups throughout HPE Software, which provide customer follow up. The customers participate, in context, and discuss how elements of their feedback have been incorporated into our plans. As we develop our internal best practices, these are areas that we plan to increase our investment.
Dr. James Borderick has outlined HPE Software’s diligent process of responding to customer feedback. Customer insights are carefully analysed on ground and overview level, shared internally and acted upon. Closing the loop process starts with an improvement plan, which includes 5 steps (see graph attached). What is important to highlight is HPE Software’s customer centric built-in DNA - customer feedback is shared internally, breaking organisational silos and engaging the C-suite. Now this is extremely important especially when it comes to customer retention. According to our whitepaper Next-Generation Net Promoter® - How to Monetize a Net Promoter System® and Create Profitable Growth. In fact, CustomerGauge found out that when there is internal communication on closing the loop, customer retention increases 4.7%.
Now, let's talk about double-blind benchmarking surveying. Double-blind benchmarking falls into the traditional market research. Researchers, typically from a third-party firm, ask respondents which companies they love. Bain & Company emphasize that double-blind benchmarking surveys are different than traditional competitive benchmarking as “ the respondents don’t know which company is asking the questions, and the customers remain anonymous to the company.” As such, the research is more independent and objective. However, as Dr. James Borderick mentioned, because you do not know who the customers are, you cannot follow-up with them and close the loop. You can however have an understanding of your competitor’s strengths and weaknesses based on the survey results.
2. What have you gotten out from closing the loop? e.g. happier customers, more recommendations, turning detractors to promoters, etc.
I think the main phrase here is happier customers. Happier customers equal more loyal customers. Regardless of results, the main aspect here is that customers wish to feel that they are listened to, and at HPE Software, we make sure we action what suggestions are given to us, and we feed that back to the customer in subsequent interviews. To quote Fred Reichheld in the Net Promoter Certified Associate course, “Profitable growth and the loyalty of customers and employees IS the same thing.” In addition, we value the time taken by our customers to complete the survey, and as such, we are starting to ensure that these customers are included in key strategic updates as well as personal one-to-one communications.
In order to obtain best results, it’s best if companies know some best practices when it comes to closing the loop. Thankfully, we have these the best tricks to share with you. According to CustomerGauge’s Next Generation Net Promoter Score whitepaper, closing the loop comes in three levels to create a “cross-company customer experience”:
In this way customer feedback and the need to close the loop is build in the company’s DNA as all organisational silos are engaged with it. As discussed before, closing the loop is directly linked with customer retention. Figure 22 below shows the average retention increase when your company’s front line closes the loop with detractors - up to 6.0% of your customers can be saved from churning. Furthermore, CustomerGauge has also found a direct correlation between the speed of closing the loop and customer retention. Figure 22 below shows that if you close the loop in less than 48hrs, customer retention can increase up to 5.4%. Imagine that! For more information on closing the loop, be sure to download the Next Generation Net Promoter Score whitepaper.
3. What is the correlation you have found between NPS and revenue growth? What about the correlation of NPS to retention?
Along with the correlations between Net Promoter and Customer Effort Score, NPS and Revenue correlations are one of my greatest achievements at HPE Software. I do not wish to go into too much depth on the ‘how’ except to say that this is definitely a non-linear relationship. The main aim of any research is to make the result simple to action. That is precisely what I have done with NPS and Revenue, by working out, with error of measurement, how much one NPS point is worth to our business. This result, combined with knowing why our customers gave the Net Promoter Score that they did, provides real actionable insight for the business.
With regards to retention I think one needs to be very careful about how you action the data. NPS is really more about whom you ask than pure sample count. Yes, this goes slightly against my beliefs as a scientist, but the logic is sound. If you ask the majority of end-users about a product, and they completely love it, this usually has very little impact on whether that company will continue to leverage your products. The main point here is that the decision makers and influencers within an organisation have more weight with regards to retention. Now if we have a high promoter population within the influencers and decision makers, that’s a different story, yes continued retention is likely, but in a B2B setting, we must always be on the lookout for ‘Blockbuster and Netflix’ scenarios. How are we on the lookout you may ask? We listen to our customers. Blockbuster fell foul to the silent passive population that remained ‘passively loyal’ until a better option presented itself. Please visit here for the similarities between NPS categories and relationships.
Here's a question for you - how many of you have thought about linking NPS to revenue or retention? How many of you know the best practices on making the correlation? Most of the companies we speak to implement the Net Promoter Score program for various reasons like improving customer experience, but forget that the purpose of the program should be to create long-term growth. HPE Software are a few of the companies we have spoken with who have a mature NPS program enough to enhance it by adding revenue figures. CustomerGauge's whitepaper Next Generation Net Promoter - How to Monetize a Net Promoter System® and Create Profitable Growth goes into details of how and when companies should combine NPS with revenue figures, such as subscription fees, sales revenues, profits and customer lifetime values. One of the most striking figures we found is the one below. Companies that reach Stage 3: Monetize of their NPS program, enjoy up to 6.9% of customer retention once they link NPS to revenue figures. We highly recommend you to read the whitepaper to dive into the details and best practices on how to achieve such results.
4. What response have you seen from within the company in reaction to your NPS program?
NPS has always been top-of-mind at HPE Software. I previously mentioned Meg Whitman, CEO of HPE, being an advocate of NPS since her time at eBay. What I have not mentioned is that HPE will, this year, spin-merge with Micro Focus to create the sixth largest software company in the world.
Chris Hsu, Chief Operating Officer of HPE and Executive Vice President of HPE Software, will be appointed as the new CEO of the go-forward combined company once we merge with Micro Focus. Chris is directly engaged with our portfolio investment strategy, has a keen sense of the market and a strong commitment to a customer-centric culture. I know he’ll take this experience and his HPE values to serve as an excellent leader of the future software company. And, like Meg, Chris is an advocate of NPS. Chris receives my competitive analysis of NPS. Reporting to Chris are the business leaders, which I spoke of previously, to whom I present the quarterly Competitive Loyalty results to.
The response throughout the company has been highly successful to say the least. Especially, when you are armed with NPS and Revenue correlations and prove that NPS is a driver of revenue. As far as I’m concerned, the success is a positive feedback cycle. The more interest, the greater focus and actioning of the points found throughout the NPS process, which consequently drives further NPS growth against our competitors, and thus, increases revenue.
5. Do you have any advice for people looking to use NPS?
For brevity, I detail the most salient of these below:
(a) Make sure you Implement an Effective Sampling Strategy
Ensure you have a governance strategy that ensures your NPS can be measured by these various roles: decision maker, influencer, and end user.
(b) Do not ask the NPS question after a Purchase Experience and do not ask demographic and firmographic questions, which the customer knows you already know the answer to!
The customer has not experienced enough to provide an accurate assessment of loyalty with a purchase experience and the customer will just become annoyed if you ask them questions that they think they have already answered.
(c) Link Transactional Data, which is either Customer Effort Score (CES) or Customer Satisfaction (CSAT), to Net Promoter®
You may ask touchpoint CSAT or CES questions, and ultimately you need to unite these to your relationship NPS.
(d) Close the Loop
(i) Make a point of getting in touch with every dissatisfied customer and close the loop.
(ii) Apologise for the bad experience, and empathise. Apologising works, and you must do it on behalf of the company.
(iii) Tell the customer how you are addressing the issue.
(iv) Listen to the customers who have provided responses to the verbatim questions “Why?” and “What should be improved?” Those that take the time to respond, care (generally longer responses imply that they care more!). They have taken a lot of time providing thoughtful input. Anyone who provides many suggestions is a potential Promoter, regardless of their present status.
(e) Take Action!
(i) The whole point of gathering NPS feedback is to make changes, which improves Customer Experience and builds loyalty. You need to do this as quickly as possible. Six months is too long!
(ii) Loyalty leader companies channel customers’ concerns immediately to frontline employees and supervisors, who are empowered to do what they can to make things better.
(iii) This is a self-directing, self-correcting workforce.
(f) Talk to the Passives!
Passives are the category that are most likely to leave you in a B2B setting, and represent around 40% of your customers. The Detractors have lots of attention, and thus, become happier with time. The Promoters are the category we enjoy speaking with because they love us. Herein is the crucial point, the passives have been forgotten! They will leave you, silently. Naturally, you can leverage this knowledge to your advantage and speak with the passive populations of your competitors…
(g) If you do not plan to do anything positive with the input, you should not waste your customers’ time with surveys.
(h) Regular Communication
Regularly communicate to your customers and employees the key takeaways from your NPS data, and the improvement actions.
We hope you have enjoyed our interview with Dr. James Borderick from HPE Software and have learned a lot of valuable best practices on how to take your NPS to the next level. Make sure you also read HPE Software Moves NPS Beyond Just a Metric, which is part one of these interview series. CustomerGauge is saying a massive "Thank You" to Dr. James Borderick and his team at HPE Software.