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

The Qantas Grounding: A strategic customer experience initiative.

November 1, 2011 By 7 Comments

You may find it hard to believe that there is any way that grounding every plane in the Qantas fleet could improve the customer experience but I think it will.

All of the usual pundits are saying that the recent three day grounding of the Qantas fleet has done immeasurable damage to their brand and reputation.  That’s to be expected and in the short term it certainly has caused enormous upset to the tens of thousands of customers, their families and associates.  In short it’s a customer experience nightmare.

But it could have been worse.  Consider the alternative scenario.

For months union strikes have been causing uncertainty and inconvenience for the travelling public and Qantas.  Short union strikes of an hour to a few hours at strategic airports, and often on a Friday, have disrupted the plans of thousands of travellers.  As recently as last Friday (28 October) a short strike in Melbourne and Sydney disrupted the travel plans of people travelling for the Melbourne Cup.  Before that it was the Grand Final plans of thousands of football spectators.

These short strikes had relatively little impact on the people taking the action, just a few hours wages, but a huge impact on the travelling public and Qantas. This imbalance of impact would have allowed the unions to continue the process indefinitely.

Bad enough for the customer experience in the last few months but now let’s look forward to the next 6-8 weeks.  This is the crucial Christmas holiday period where Australians travel the across the country to be with loved ones for the summer holiday season.   Union action in that period would cause enormous uncertainty to the travelling public and still be without an end in sight.

Television images of families sitting in airport terminals on Christmas eve; sombre parents with crying children telling the cameras how sad their kids are not to see Grandma on Christmas day would be all over the evening news.  That’s a customer experience and brand impact that no airline wants.

This is what Qantas could foresee but which the travelling public and pundits were blissfully unaware.

So Qantas pulled the pin, grounded their fleet and forced the matter to a resolution.  From what I understand (I’m not an industrial relations lawyer) no further industrial action is permitted by either party and a resolution must occur within 21 days.  It’s all rather like pulling of a Band-Aid in one quick rip.  It hurts more but just for a few seconds and then it’s over and done with.

Did it work?

It’s impossible to tell whether this short, very painful, action by Qantas is less painful overall than the alternative scenario.  I tend to think that it is.

What it has done is given the travelling public (and Qantas management) much greater certainty that their Qantas flight to see Grandma will not be subject to last minute delays and cancellations.   The long term customer experience has been improved even if it has been very painful for a couple of days.

 

By Adam Ramshaw

Filed Under: General

Why do Australians reject foreign brands?

October 25, 2011 By 4 Comments

Today’s post is a little bit different from our normal posts. This Colloquy study: “The 2011 COLLOQUY Cross-Cultural Loyalty Study” caught my eye. It’s a good study and looks at the different views of customer loyalty in different countries.

The Colloquy guys focused on the differences between the emerging economies (Brazil, China and India), and developed economies (Australia, Canada and the U.S.). However, what hit me was how Australia looked at the world, not to the world, but at the world.

There are two charts in particular that I found to be an interesting comment on Australia and its perspective.

The first one, below, asks the question “Competition from foreign companies is a good thing.” I was surprised or perhaps disheartened to see Australia rank the lowest of any country. Turning this around it says that Australians would prefer no external competition.

It is not clear to me where this perspective comes from.

For many years Australia was far removed from the global competitive arenas due to the “tyranny of distance” but that was 20 or 30 years ago.  Perhaps this is a legacy of that time but in the current global market place this idea must surely be past it’s use by date.

More troubling to me is the apparent rejection of external competition by Australian consumers. A strong competitive market drives innovation, value for money and diverse options. There are constant calls for increased competition across a range of sectors in Australia but it seems that consumers only want local competition.

I find this a strange reaction from a country that prides itself in punching above its weight in many areas on the global stage from mining to biotech to Olympic medals.

The other chart that caught my eye examined optimism for the coming decade.

If the first chart was disheartening then this one is worse.  Australia is the least optimistic for the coming decade of all the countries shown and well below countries in arguably a much worse economic position. We have enormous mineral wealth, a good economy by global standards, low unemployment, and good opportunities for most people. Yet we are caught up in pessimism that just does not seem to be justified.

Perhaps the U.S. is so much more optimistic because they are in a worse economic position at the moment and people there can’t, and don’t want to, imagine that it will get worse over the next 10 years.

On the other hand perhaps the bruising political debate here in Australia over the last two years has really taken a toll on the Australian psyche. If that is the case it is a pity because the “she’ll be right” attitude that Australians have been so proud of, and famous for, in the last 100 years seems to have been tarnished in the process.

Next week back to our normal programing but these two charts seemed too important to skip over.  What do you think they represent?

By Adam Ramshaw

Filed Under: General

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

Protecting Customers from your Marketing

September 27, 2011 By Leave a Comment

“Capturing Customers”, “Luring Customers”, “Attracting Customers” and “Keeping Customers” are all terms used daily in marketing departments.  They invoke images of carefully prepared fly patterns, practiced casts and the adrenalin of a good strike, ending with the satisfaction of a catch of the legal size, a ‘keeper’.

Many organisations view customers in the same way that the fishing industry viewed Atlantic fish stocks.  Stay with me I’ll make this work.

Some marketers, (not you gentle reader) allow various product managers to fish the same customer waters day in day out.  They use nets, lines, perhaps even explosives,in fact  any technique they can to catch all the fish they can for their product line. Large fish, small fish, dolphins and seals, no matter, the sheer weight of fish is all that matters, catch them and the folks in accounts or risk management can sort them out later.

But it can’t go on forever and interesting things happen as fish stocks deplete.

The fish get smarter, other fishermen take too many fish, whatever the reason; basically the fish get harder to catch and the expense per fish climbs. Successful fishing campaigns become rare and marketing more superstitious as ‘luck’ starts to play an increasingly important role in determining which Product Manager gets the good haul. Internal competition for access to the schools of customers increases and increasingly intense fishing worsens the yields.

Sometimes marginal species are harvested in a, short-sighted, effort to keep the canning lines busy; the aquatic equivalent of aggressive discount programs.

Product Managers lobby for increased and more elaborate fishing rigs as they range further and further, perhaps even targeting species considered commercially marginal in the past.

If we are lucky, at some point, governments, alarmed by the threat to their fishing industries, step in. They appoint a governing body to preserve breeding stocks by limiting:

  • the number of product managers allowed to chase the fish,
  • the techniques they use and
  • the times of year they can operate.

Old and inefficient ships are mothballed, replaced with more efficient technology that reduces collateral damage to the customers.

As a group they legislate the number of campaigns allowed and the quality of the fish allowed in a catch.

Importantly they crack down on rouge product managers with “exciting new ways to catch fish” because the problem is not acquisition as much as it is sustained, quality yields. Poaching can ruin decades of planning so all parties sign treaties and help stop uncoordinated campaigns to unsuspecting customers.

They do NOT do this by relying on the self-restraint and self-regulation of individual ship-owning fishermen (product managers). Each and every one of who will insist that the other fishers show restraint first.

Enough fishing

Who “owns” the customer interactions in your company, who makes the rules that govern who does what to whom and when? Marketing? Sales? Accounts Receivables? Branch or Store Managers?

The real objective of defining customer ownership inside the organisation is to allow the enterprise to treat its customers rationally. If your answer is “all of the above”, you run the risk of looking irrational to your customers and overfishing your customer base.

There is nothing rational in offering me a credit card upgrade that is not available when I call the toll-free number provided. It is irrational to offer me a home equity loan and an increased credit card limit in the same mail delivery.  There is nothing rational about writing to me to combine my gas and electricity accounts into one with you when I already have. But I have received these within the last 30 days.

Customer Governor

So the question is; who is ensuring that you act rationally with your customer base and you don’t ruin your long term business?

One answer is establishing the role of Customer Governor, a person or team that researches your customers.  Your organisation needs to understand:

  • customer needs and behaviours,
  • the level of fishing they can sustain before costs exceed the value of the catch and
  • how to profitably sustain the long term relationship between them and your company.

And then sets rules defining customer interaction that are understood, followed and enforced within the company.

The Customer Governor takes on this role and ensures that long term value for the company is maintained and built over time, not squandered.

Customer Experience Management

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.

 

Filed Under: Customer Loyalty Management, Customer Strategy
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