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:

How to use customer feedback to directly drive revenue

November 8, 2011 By Leave a Comment

using customer feedback to drive revenueIt’s been a busy six months.  You’ve rolled out a best practice transactional customer feedback process using Net Promoter Score as your KPI of choice.

The whole thing is going great with customer feedback comments flooding in.  You’re driving tactical service recovery processes and starting to look at strategic customer experience changes.

Then it hits you, even though you’re identifying customer advocates like never before, you’re doing nothing to directly drive new sales with that information!

Day in day out customers are putting their hand up and saying, in no uncertain terms, “I really, really, like your company”.  So why aren’t you helping them to spread the word?

Customer advocates can be a powerful sales driver

Working with your customer advocates can drive enormous value for your business.[1]

  • You don’t need to pay customer evangelists – most of the time you just need to get out of their way.
  • It’s effective – I shouldn’t need to convince you that customer recommendations are an incredibly powerful sales tool.
  • It’s fun - How much better can it get than working with people who love your product or service.

How do you find them?

That part is easy.  If you already have a transactional Net Promoter Score process up and running using, say, CustomerGauge, then everyone who scores you a 9 or 10 is likely to be a customer advocate.

If you haven’t implemented transactional Net Promoter Score perhaps you may have another customer feedback process or even a loyalty scheme that you can analyse for high rate purchasers who may also be advocates.  Or you may even have a social media monitoring process that will let you know who is saying great things about you.

Whichever approach you use, try to link it back to the person’s contact and purchasing history.  With that information you will be able to drive the most action.

How do you help them to help you?

Step 1: Segment

Just like the rest of your customers, not all advocates are the same.  You have to be craft an offer that will appeal to them in order to be successful.

Look to the segmentation approaches that have been successful for your business  the past and see if they are applicable in this program.  Perhaps you can create value sensitive programs for low value customers or custom programs for high value customers.  In short, start with what has been proven to work for your business.

Step 2: Craft your offers

Your first impulse may be to send your customer advocate a standard “refer a friend” or discount coupon offer.  Don’t. While these work in other situations, for your customer advocate they are a slap in the face.

Stop and think about it for a moment.  This person has indicated that they are an advocate for you.  If you send them a “refer a friend” coupon you become just another company wanting to use their good graces to grab some more sales.

Try a different approach 

How about an offer that goes:

“We really appreciate your recent feedback.  In it you indicated you were a strong supporter of our company.  Thank you. If you do recommend us to a friend or colleague please have them use this special telephone number/access code/restricted portal.  This is our priority customer line and will ensure that they get the very best service when they contact us.”

Why this works

  1. Acknowledging the person’s feedback in a sensible way.  Do this and their already high perception of you will go up.
  2. They feel special: almost like a Platinum Frequent Flyer but without the overhead of all those gate lounges.
  3. They are reassured that their friend will get a great customer experience so their innate fear that their friend might have a bad experience and think poorly of them is abated.
  4. They will want to pass on this special privilege as quickly as possible.

Of course you have to be able to deliver on that priority service experience, but that’s a given.

Step 3: Do it now

The program you see here is a classic triggered marketing program.  As in all such programs; speed of the essence.  In fact: speed beats perfection every time.

If you already have a transactional Net Promoter Score process then you probably already have the data source and initial processes you need to get this up and running.

 

More Information

If you’re looking for a transactional Net Promoter Score system check out CustomerGauge NPS data collection and reporting system (full disclosure: we sell the CustomerGauge system in Asia).

If you’re new to trigger based marketing why not download our free “Implementing Trigger-based Marketing to Drive Customer Loyalty” presentation.  It includes lots of success statistics, case studies and is a good introduction to this valuable approach.

For a full presentation of these ideas check out the full webinar: Harvesting you Company’s Advocates

 

[1] Adapted from Forward to the book, Creating customer evangelists, by Ben McConnell and Jackie Huba

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 Feedback Process, Customer Strategy, Marketing Automation, Net Promoter Score

Proof: NPS is much more sensitive than Customer Satisfaction

October 5, 2011 By 2 Comments

doctorRecent analysis of Net Promoter Score data from one of our clients indicates that NPS is almost three times more sensitive at predicting customer churn than customer satisfaction. In addition, Detractors are 1.5 times more likely to terminate than Promoters.

nib health funds is one of Australia’s leading and fastest growing health funds.  As an organisation, nib has embraced the Net Promoter Score process.  They have integrated transactional measurement of NPS into the Customer Care Centre and other key customer touch points using the CustomerGauge NPS data collection and reporting system (full disclosure: we sell the CustomerGauge system in Asia).

As a company, nib uses daily feedback from its NPS survey to coach Customer Care Centre consultants, perform service recovery and drive improvement in products.  In short, nib is working hard to listen to its customers and deliver the best possible service.

During this process we wanted to look more closely at nib’s data and see exactly how NPS linked to business outcomes for the health fund.  A couple of months ago nib generously agreed to provide us with some de-identified data that included customer response scores and termination information. This gave us a great opportunity to test the link between NPS and customer retention.

Background

Private health insurance is an interesting industry because you essentially pay upfront for a service that you hope never to use.  In Australia we also have a system where health insurance companies are not allowed to “risk rate” their pricing.   In simple terms it means companies must provide private health insurance cover and charge the same premium irrespective of your age and sex. All this means that the most important customer facing driver of business success in health insurance is customer retention.  While the idea of upselling to a higher level of cover does exist, keeping customers longer is key.

Results

With data from 20,000 Transactional NPS surveys and 12 months of termination history for those accounts we had a great set of information with which to work.

Also, the nib survey is a little different to the standard Transactional Survey in that it includes a “Customer Satisfaction” question as well as the “Would recommend” question. This made it possible to for us to look at the effectiveness of each question.

In summary we found that:

  • A one point increase in “Would Recommend” score results in a decreased of risk of termination by 7.8%
  • A one point increase in “Customer Satisfaction” score results in a decrease of risk of termination by 2.9%

This means that as a predictor of customer attrition the standard “Would recommend” question is 2.7 times as effective as customer satisfaction.

We also found that:

  • The risk of attrition for Detractor respondents is 1.5 times that of Promoter respondents

I don’t really have to spell out why this is important. You can see that Promoters are linked much more strongly to retention success.

To us this was great confirmation that the NPS approach works. For nib it means that they must keep delivering a great service for their customers, secure in the knowledge that NPS is a great way to determine which customers are happy and which are not.

We would like to acknowledge the support of nib and thank the health fund for allowing us to publish these findings.

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, Case Studies and Statisitics, Net Promoter Score

B2B Customer Feedback: Relationship Vs Transactional approaches

September 19, 2011 By Leave a Comment

transactional feedbackSelecting between the two styles of customer feedback survey, relationship and transactional, is relatively straight forward for most business to consumer organisations.

Use Transactional feedback surveys for understanding what drives day to day customer loyalty.  Use Relationship feedback surveys to benchmark yourself against your competitors.  However, it is not nearly so simple in a business to business (B2B) or business to government (B2G) environment.

Relationship Vs Transactional: What is the difference?

There are two key differences:

Timing

Transactional (or Bottom-up) surveys occur shortly after a customer has interacted with your organisation.  This could be completing a sale, receiving an invoice, contact a service centre, etc.

On the other hand, Relationship (or top down) surveys occur on a regular timeframe: say monthly, quarterly or annually.

Content

Transactional surveys are very short; often just 2 or 3 questions.  They rely on a high number of responses and lots of qualitative data in order to be successful.

Relationship surveys are longer (20 or more questions) and rely on getting more information from each customer to be successful.

Neither approach is right or wrong and both have their advantages.

B2B: When would you use Relationship?

Relationship surveys can almost always be used in a B2B business.  In fact this is the type that is most often used.

On an annual or other regular basis, the company will contact their clients to gather their feedback. Data is collected analysed, reported and actioned.

This style of survey also work well for B2B companies because it can handles a range of influencers and decision makers within the client organisation: economic decision maker, technical influencer, etc.  Using the Relationship approach allows you to collect input from each of the perspectives and integrate them together.

B2B: When would you use Transactional?

Transactional surveys are not always applicable in a B2B situation. They key attribute required for this approach is, not surprisingly, a regular, high volume, stream of transactions. You might think that all organisations have a good stream of transaction but this is not the case.

Many B2B companies have only a relatively few, very high value transactions. For instance, consider a company that performs mainly project based work (IT companies, engineering companies, construction companies) or companies with relatively large per customer sales (heavy equipment suppliers).

If you are one of these companies it may be difficult to identify meaningful transactions against which you can implement a Transaction style survey.

So which should you use?

My overall preference is to use Transactional surveys whenever possible.  This is for several reasons:

  1. I have seen this approach very quickly drive customer focus into an organisation; it’s hard to ignore the feedback when customers are telling you every day what you are doing right and wrong.
  2. The constant stream of feedback informs ongoing tactical change in the company, which in turn demonstrates the value of feedback to the whole organisation.
  3. Rather than a once a year “hit” of feedback that can get forgotten, the constant stream of feedback keeps it top of mind for all staff and management.

Having said that, in a B2B company there are sometimes just not enough transactions or they are not of the right sort to make transactional approaches work.

In these cases relationship approaches are invaluable.  They give deep insight into what is motivating the customer and can provide an excellent understanding how to help you make changes to improve customer loyalty.

What is the impact on your NPS program?

Not much actually.  Net Promoter Score can be used in both Transactional and Relationship approaches.

You should note that the scores from each approach are not comparable but you can, and should, use the Net Promoter Score questions and approach in both Relationship and Transactional feedback approaches.

More Information

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

Transactional Approach: CustomerGauge is an excellent software tool for implementing and managing transactional NPS surveys.

Relationship Approach: The Genroe High Value B2B Customer Feedback Process is a Relationship feedback approach specifically designed for B2B organisations.

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 Feedback Process, Net Promoter Score
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