How To Drive Customer Experience Innovation Using Transactional NPS

December 6, 2011 By 1 Comment

innovationI wrote recently about how engineers in process plants are never happy with the status quo. They are always looking for improvements and tweaks to the manufacturing process that can drive incremental improvement in profit and efficiency.

This post is about how you can use Transactional Net Promoter Score to do the same thing for customer loyalty, through its key driver; customer experience.

Two types of innovation

Lets start by identifying two key types of innovation: discontinuous and incremental.

Discontinuous innovation creates whole new genres or products: think T-Model Ford replacing the horse, the Sony Walkman creating a whole new product category, the IBM PC. Discontinuous innovation generates major leaps forward but is relatively rare and risky.

Incremental innovation slowly but surely improves a product or category. Incremental innovation is how the car went from the T-Model Ford to the F1 racing car we see today. All the key features of the T-Model are present in the F1 racing car, they are just much, much improved. A million small incremental innovations over 80 years has generated a product that is essentially the same but completely different.

The simple truth is that while discontinuous innovation is sexy, it is also risky and rare. Incremental innovation is less exciting but very low risk, and generates enormous value day in and day out.

Driving incremental customer experience innovation

So how do engineers drive incremental innovation? Not by focusing on the whole process but by breaking it down into sub-areas areas and focusing on the worst performing areas first. To identify the worst performing areas, and how to fix them, engineers then use systems that collect thousands of measurements from all over their manufacturing process.

This very same process can be used to drive incremental innovation in your customer experience. Simply swap the industrial manufacturing process for the customer experience (where we manufacture customer loyalty) and the Transactional Net Promoter Score process for the engineer’s temperature and pressure sensors.

From a practical perspective you can achieve this by breaking your customer experience down into distinct touch-points and sub-processes and then apply Transactional Net Promoter Score to collect data at each of the touchpoints.

Start with the worst

Now you have a series of customer experience manufacturing steps, each with it’s own customer experience sensor to collect data about what works and does not work. Using NPS you can now rank the customer experience manufacturing steps from best to worst; highlight the pain points and focus on those areas that most need attention first.

Put simply; the touch-point with the lowest NPS will be the one that is performing the worst, and the one that you need to start work on first.

If you have implemented Transactional Net Promoter Score correctly you will also have a range of other diagnostic information to let you know what is wrong with the touch-point and how to fix it. It is then up to you to apply the current quality system toolkit that your organization uses (Six Sigma, Lean Six Sigma, etc) to take this information and drive change.

Customer Experience a Process not a Project

Once you have improved the worst touch-point you can move on to the second worst touch-point and repeat the process. Now you can see that customer experience is not a project but a process. It is a never ending cycle of incremental innovation that can and will move you a long way from your Model-T customer experience to a Formula 1 customer experience.

More Information

For more information on Net Promoter Score and how/why it works download our free Introduction to Net Promoter Score (NPS).

If you are thinking about implementing Net Promoter Score (NPS) in your organisation give us a call. We can help you to implement an effective Net Promoter Score customer needs survey program for your business.

Net Promoter, Net Promoter Score and NPS are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.

By Adam Ramshaw

Filed Under: Best Practices, Customer Experience Management, Customer Feedback Process, Net Promoter Score Tagged With: ,

Do Your Customer Experience Initiatives Have These Flaws?

November 29, 2011 By 1 Comment

It seems to me that many customer experience initiatives are deeply flawed. They start out well intentioned but lack the right process improvement mindset to drive long term change.

The customer experience strategy that seems to be best practice at the moment is:

  1. Do some research on what people want: ask a focus group, run a survey, etc,
  2. Design “the best” customer experience based on the research.
  3. Test it in a limited way –asking people what they think, doing some usability testing (i.e. watching what people actually do either actually or via analytics) of your systems.
  4. Roll-it out.
  5. Relax

The critical part is that the design process (steps 1 and 2)  is run only once. Then, having agreed that it is perfect just let it run. This is wrong.

I spent 10 years working in the industrial process control industry. Let me describe how a completely different type of business runs a very similar process in a completely different way.

Consider a manufacturing plant, say an Oil Refinery. In many respects it goes through the very same process:

  1.  Do some research: engineers gather information about the industrial manufacturing process based on relatively well known chemical and physical processes.
  2.  Design the plant: based on the specification and the research, design an appropriate plant.
  3.  Test it in a limited way: often for a new types processes a smaller pilot plant is created to test the idea.
  4.  Roll-it out; Build the full scale plant and start manufacturing. This is often a long and complex task, especially in the case of an Oil Refinery.So far it’s all the same.
  5. Relax Start the work of improving the design of the plant. As soon as the plant is up and running, engineers are looking for ways to improve performance. They have banks of feedback data from sensors all over the plant. Using that data and starting on day one they are trying to work out how to improve production to more than 100% of rated capacity.

This last step is missing in many organizations working on the customer experience. They may design and build lots of different areas of customer experience but this continuous improvement piece is missing. There are two issues that prevent the last step form occurring:

  • The lack of a continuous improvement mindset
  • The lack of real-time feedback data.

Continuous improvement mindset

Engineers are trained to look for problems and fix them. “If it ain’t broke don’t fix it” just doesn’t apply. Continuous, improvement within the process parameters that currently exist, is the order of the day.

You can think of it as a giant test and learn process. You wouldn’t think of running your next direct marketing campaign through a one off design and go approach so why are you trying you do it for your customer experience.

No, instead you constantly test different copy, layout, offers etc.. It should be exactly the same for the customer experience. Never be happy, always be looking for an extra 1% improvement.

In truth this can be hard to do in a customer experience process because of the lack of real time feedback data.

The lack of real-time feedback data

Engineers have access to an extraordinary array of feedback about the manufacturing process. Every pump, valve, heater, switch, etc is monitored in real time and it’s history tracked by the second. That is literally thousands or tens of thousands of separate measurements and history with which to work.

In customer experience what have you got: an annual survey of a small proportion of your customers and a few paltry complaints.

[You also have contact centre reports, sales figures, and web logs but these are indirect measurements.]

At least that was what you use to have. Enter Transactional Net Promoter Score. The customer experience equivalent of all those sensors.

Transactional NPS allows the customer experience professional to get a real time view of the quality of the product that is being manufactured, sorry customer experience delivery, sorry loyalty of the customer. In this case the product being manufactured is loyal customers.

Transactional Net Promoter Score As Your Customer Experience Strategy

But TNPS is more than just a measurement it is also a continuous improvement process. Yes the “would recommend” question is the most well known element of NPS but there is also a full change management, continuous improvement element present in best practice Net promoter implementations.

This means that Transactional Net Promoter Score can be the Customer Experience Strategy for your business. By implementing TNPS you get your customer experience strategy included. No extra charge.

In a future post I’ll expand on exactly how to use Transactional Net Promoter Score to drive business improvement.

More Information

For more information on Net Promoter Score and how/why it works download our free Introduction to Net Promoter Score (NPS).

If you are thinking about implementing Net Promoter Score (NPS) in your organisation give us a call. We can help you to implement an effective Net Promoter Score customer needs survey program for your business.

Net Promoter, Net Promoter Score and NPS are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.

By Adam Ramshaw

Filed Under: Customer Analytics, Customer Experience Management, Net Promoter Score Tagged With:

Managing Customer Loyalty: It has always been about listening and remembering

September 14, 2011 By Leave a Comment

customer loyalty is about remembering“If you strip away all the hype around how to ‘do’ relationships, you are left with one simple concept. The real essence of a relationship is simply a memory of past interactions.” [1]

Learning is at the heart of customer loyalty management and has been ever since the empirical work of Reichheld [2] (and others) in the early 1990’s showed that customer loyalty is directly related to corporate profits. Learning about customers and remembering them is central to the task of managing customer relationships.

Looking back all that way to the pre-Net Promoter Score primordial haze; Reichheld found 3 loyalty effects, each highly correlated with profitability,

The relationship between Customer and Employee loyalty is particularly relevant to loyalty management success, though it takes a longer term view of customer value.

Reichheld wrote that the profit rich relationship between long term employees and loyal customers is a virtuous and self-supporting one; long term employees serving the same customers, over time grow to learn each other’s needs and preferences and establish a self improving relationship.

Just as long term friends and couples begin to intuitively accommodate each other and do not have to repeat their preferences endlessly, good companies learn and remember their customer’s needs and wants and what happened last time we talked.

If the critical ability is to learn customer needs and remember interactions, think for a moment what it means to the customer relationship when we do not know in the branch what our customer did with the call centre yesterday or on the web last night.

This is the same behaviour as a colleague who recognises you at the office but ignores you in the bar, and forgets every third conversation you have with him. It is impossible to have a positive relationship with such a person, or a company that behaves in the same way.

What should you remember?

Some simplistic thoughts on the requirements for good service “memory”; firstly, the learning process should focus on those attributes of the customer that relate to profit. This includes;

  • actual and potential values of the customer, together called the customer’s life time value. This helps you select the investment that should be made with each customer.
  • propensity of the customer to respond to your various marketing tools and channels. Knowing this customer “inclination to collaborate” helps reduce waste. ‘Response propensity models’ take time to build, especially if you have not implemented a campaign automation platform, so do not throw away any old campaign response data.
  • typical behaviour of the customer; generally the number and time between transactions, the size of the transactions.
  • financial risk; the likelihood that this customer will cost you money.

You should also learn the things that are important to the customer;

  • Knowing customer needs allows you to deliver the most valuable of all relationship values, relevance. Customer relevant marketing is more effective, less wasteful and strengthens relationships as it demonstrates you have remembered what customers have been telling you.
  • Their preferred channel of service and communication and (importantly) what the customer considers to be good service. Not all customers want personal attention, some prefer it. One size does not fit all in service any more than it does in product design or marketing.

It is during service interactions that the most learning should occur, especially since customers rate reliability as the most important factor in good service. Reliability is about keeping service and product promises and builds trust, a prerequisite for positive relationships.

It is here that Transactional NPS helps make sure your processes are implementing what you know your customers are expecting you to remember.

Getting Help

Genroe offer a Customer Loyalty Program Health Check that covers all of these areas and provides independent, practical advice on how to improve your customer loyalty program.  For more information, please contact us.

 

Net Promoter, Net Promoter Score and NPS are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.

[1] Greenberg , P. “CRM at the Speed of Light” quoting Michael Simpson. McGraw Hill 2002

[2] Reichheld, F. “The Loyalty Effect”

Filed Under: Customer Experience Management, Customer Loyalty Management, Net Promoter Score

Customer Retention: You already have enough segmentation, take action!

May 31, 2011 By 1 Comment

Think quick: to drive customer retention should you focus on a deeper understanding of your customer segmentation or take action with the data that you already have?

If you said segment your customer data base with greater accuracy you probably picked the wrong answer. According to research by Aberdeen Group (“How the Best in class use customer data to boost retention revenue in 2010″) best in class organizations focus on “doing” more than they do on analyzing. This certainly has the ring of truth to me.

It is a scene that we have observed many times in our customer experience management consulting practice. As we sit with the customer discussing what they would like to achieve we are met with a barrage of “can’t be done” because “our data is no good” or “we don’t know enough about our customers”. The desire to analyse, segment and target with ever greater depth is almost impossible to resist. More data piles on more data but we often seem to lose sight of the customer forest for the data trees.

As an example of this issue I’ll relate a recent customer experience. A few weeks ago I was running a workshop to design the high level segmentation fields that they wanted to use to describe their customers. After the initial flurry of segmentation style data was written up on the board I started to ask: “What will you do differently knowing that piece of information?” Applying this to each data field in turn, we ended up removing all but one key segmentation field and a couple of transactional indicators.

That one key field held the vast a majority of “how should we communicate with this person” information. The additional transaction indicators were then used to tweak the message to that person. All of the rest of the information was interesting but ultimately would never be used to change how they dealt with the customer.

Getting clarity on what drives customer purchases was good but the real value was to dramatically simplify their customer segmentation to the bare essentials.  At the same time they made their ability to execute, simple, straightforward and easy to implement. It is now clear how they should communicate with each customer based on one key segmentation variable.

I think that this is indicative of many customer data segmentation projects and discussions. The desire for an ever more complex, elegant, mathematically perfect segmentation model is almost overwhelming but at the cost of making almost impossible to implement customer communications. When you have 20 segmentation variables you feel the need to use them all in your communications plan but that is hard to do in practice.

Building a solid interactive and relevant communications strategy with just a few variables is complex enough. As you increase the number of variables the design complexity becomes exponentially more complex until it is just too hard to implement.

So have a quick look at your customer database. How many of those segmentation variables actually impact on the messaging that you send to customers and how many are molasses in your process — they are sweet but just slow you down?

If you’re looking to implement a customer experience management project why not start by downloading our free 4 Steps to Great Customer Experience Management report.

By Adam Ramshaw

Filed Under: Customer Analytics, Customer Experience Management, Customer Retention Tagged With: , , ,

Best practice organisational structure to deliver Customer Experience Management

March 27, 2011 By 3 Comments

Over the past week or so there’s been a really great debate on the organisational structure to most effectively deliver Customer Experience Management going on over at LinkedIn.   With more than 70 posts by wide range of experienced professionals in the field, it’s been one of the most interesting discussions I’ve seen on LinkedIn.

However, with 13 pages of content and so many comments it’s hard to get handle on what is being said.  So, I thought I’d summarise the post into a best practice organisational structure approach to delivering customer experience management.

There were some differing opinions, as you would expect but the key items of general agreement are:

  1. CEO/CxO Support – this is not negotiable.The senior leadership of the organisation must fully support the idea that a focus on customer experience management can driver higher share prices and profits.Further, they must walk the walk not just talk the talk.

    If that person does not believe that improved customer experience leads to greater profits the process is pretty much doomed to die a slow, unbudgeted, death.

  2. The organisation must have consistent, and simple to understand customer centric values that are genuinely held by staff and senior management.If you can ingrain this into the organisation then the rest of the process will be simpler.Think Disney or Apple.
  3. Operational Departments are responsible for implementing CEM.They have the critical departmental domain experience to understand their business better than anyone else.The CEM Department (see below) understand CEM and has the tools to support the Operational Departments in implementation but at the end of the day the buck stops with the people that know their part of the business the best.
  4. Operational Departments must have CEM KPIs.These are rolled down from the C suite and go hand in hand with the standard KPIs that they have.The key understanding here is that CEM KPIs are not just an interesting diversion they are  lead profit indicators.  That is the key importance of Net Promoter Score for instance.  It’s not just interesting, it leads revenue growth.

    It goes without saying that the CEM KPIs should be connected to remuneration in the same way that the other KPIs are connected to remuneration.

  5. The CEM Department should be an enabler or centre of excellence for customer experience management skills and systems within the organisation.The simple analogy is with the IT or Accounting departments.Accounting is responsible for counting the money, making sure it’s reported accurately, counselling the rest of the organisation on how best to use the money BUT NOT making sales.  Nobody thinks this is strange.

    CEM is no different.  It is a set of skills and systems that are used by the rest of the organisation to improve their individual CEM performance.

    The CEM Department staff should be viewed as consultants to the rest of the organisation: people with desired skills and the ability to add real value to the whole process.

  6. The CEM department should have CEM KPIs.These should be the same CEM KPIs as the Operational Departments.The goal here it to make the CEM Department and the Operating departments co-dependant.  Operating departments should be seeking out assistance from CEM to help them improve.

In terms of process implementation there are some gems of insight in the comments.

  1. If the CEM Department is large enough, consider having them hot desk around the organisation to become ingrained in the business.
  2. Where does the CEM Department report?  This varies but is generally either directly to a “C” level executive, even the CEO, or into Marketing.  Personally I am less keen on having it roll into Marketing.
  3. As noted above with the sharing of KPIs, the CEM Department is not solely responsible for the customer experience as this will relieve responsibility from the Operational Departments.
  4. The size of the CEM Department: This group does not have to be large.  It can be as small as an outsourced consultant to the CEO and up to 20 people for the largest of organisations.
  5. Cross-customer product silos can be of particular issue.  Consider banks who have mortgage, transaction accounts, personal loans, etc. all interacting with the customer.  These organisations have a particular issue and often the silos will need to report to the same person to allow a customer focus to override the product silo focus.
  6. Steering Committee: If you add a CEM Steering committee comprised of senior executives through the organisation you will also add a high level coordination function to the overall CEM initiative.

If you’re looking to implement a customer experience management project why not start by downloading our free 4 Steps to Great Customer Experience Management report.

By Adam Ramshaw

Filed Under: Best Practices, Customer Experience Management Tagged With: ,
« Older Posts