“Reach over 350 million active users on Facebook. Learn how to connect your business with real customers through Facebook Ads” – so goes the Facebook online pitch.
From a marketing viewpoint, when you look at the large public social sites such as Facebook, Youtube, Twitter – are you just looking at traditional mass media advertising applied to a new channel?
Not too long ago one of the people I follow on twitter posed the rhetorical question; ‘when is the last time your loyalty programs showed it was loyal to you? ‘ Mmmm go me thinking.
Loyalty program operators, once the program is up and running, tend to focus on the ‘earn’ since this is the customer behaviour the program is meant to encourage. We like to keep track of how many points are being earned and how this translates into longer term customer value and short term profits. The CFO, who has to make balance sheet provisions for the points being accumulated by these valuable members/customers is generally single-minded in her focus on this key driver of program expense. And I am sure she often secretly hopes the points will ‘break’ before they are converted to rewards.
But this view is self serving surely. It is us watching customers behave the way we want them to behave (if we have designed the program well).
What about the ‘burn’?
(Please excuse the loyalty program jargon, ‘burn’ is shorthand for the exchange of points for rewards, also known as a ‘redemption’ i.e. when you redeem points for rewards).
We do loyalty program ‘audits’ and one of the common, generally surprising to them insights we show clients is the impact of redemptions on their program members. By looking at data from literally dozens of programs, we can safely predict what impact the redemption event has on the behaviour of your program members.
‘Redeemers’, (those members who remember receiving a reward in the last 6 months or so) versus ‘non-Redeemers’ of the same value to you;
- stay with you longer, 30% longer in credit card programs in Asia Pacific for example
- like the program more, we have seen 20% point Net Promoter Score increases, comparing cohorts before and after redemption for example
- talk about your brand positively, Colloquy found that 68% of brand champions are so because of the reward program they are engaged with
- in retail programs that issue vouchers as rewards, redeemers measurably increase their response to your point promotions, to accumulate bonus points
- in voucher programs, redeemers spend their voucher then keep spending, making redemption baskets significantly richer. The smaller the reward voucher the larger the sales lift is proportionately (within limits)
Sounds obvious I know, but I see a lot of programs where the redemption part of the process is given insufficient attention, where there is no careful (data driven) matching of the rewards available to the needs/preferences of the redeemers, where there is no use of recognition as a supplementary reward that requires no points but engages customers impressively if genuine…
And where there is no invitation to a conversation just after the redemption when customers are most likely to be open to a relationship offer from you. I am still surprised when I see consumer loyalty programs that are not tightly coupled with a branded community where customers can converse with the program and each other.
Redemption is how your program shows it is loyal to your customers, it deserves more attention than it often receives.
I recently undertook the Net Promoter Score (NPS) certification course, the online version offered by Satmetrix. Overall, quite a good experience and the knowledge will come in handy as we work with our clients’ relationship strategies.
There is much that is ‘traditional’ CRM in the NPS program methodology (with no negative connotations implied), so my years at Peppers and Rogers Group on projects where we struggled to make companies more ‘customer-centric’ were relevant. In fact the organisational change processes outlined are very similar to the framework we built (way back in the early 2000’s) and still use for this type of project – it was originally borrowed from McKinsey and others (in my case) I think.
To successfully change the way an organisation looks after and thinks about its customers requires work. This work sets out to achieve;
- Front line staff teams that understand the rationale behind a customer-focus and the impact it has on their daily work. This includes establishing a single view of customers, i.e. a customer segmentation and treatment plans that are useful in guiding staff to treat different customers differently (and appropriately). Reichheld says basically the same thing when he says that if your segmentation framework does not explain the difference between your Detractors and your Promoters it is not useful for you.
- Staff that have the skills required to provide the new improved customer experience.
- A remuneration system that unambiguously rewards the new, desired behaviour by staff, not the old
- A management team that publicly demonstrates commitment to the changes – asks about customers first and regularly.
CRM strategy projects tended to revolve around the definition and then implementation of these deceptively simple things. Deceptive because they sound simple, but several of my projects took better than 12 months, some are still effectively going 6 years later (and not because I am a slow worker). Keeping project teams focussed for these long periods, with a lack of short term leading indicators is just plain hard.
Relationship marketing generically uses customer loyalty, value, equity and profit as measures of success, correctly so, but many of these dials take a long time to move. Making them difficult metrics, especially in the impatient environment of quarterly reporting and short-tenure CEOs.
The NPS folks make a distinction between top-down and bottom-up implementation. Top-down measures customer satisfaction with the overall relationship, bottom-up measures customer satisfaction with the particular transaction, or interaction.
Top-down does not strike me as being very different from traditional measures of customer satisfaction with a brand.
In bottom-up is the magic. Bottom-up involves mapping the customer transactional experience, identifying the moments-of-truth in that experience, then asking the NPS recommend question and ‘why?’ of enough customers at that moment of truth to get an indication of what is happening in the process. Short and sharp. As scores vary with transaction variables you can do a root cause analysis (guided by the customer verbatim responses) to determine what best to change to improve the customer experience – and therefore likelihood to recommend.
Today.
And measure how you are doing tomorrow.
The difference this regular and immediate measurement of customer reaction makes to work-force transformation projects is significant. It makes them action oriented, execution projects for customer facing staff, not consult-speak heavy management fads that will pass as long as we keep our heads down and ignore them…. especially if closing the loop requires key staff to talk with unhappy and happy customers personally and often.
Exciting.
My only, presumptuous, suggestion; the Customer Experience Management (CEM) industry has a body of tools available that could be productively integrated into bottom-up NPS. These include moment mapping, peak-end experience design and touch point mapping…. Satmetrix talk about a ‘customer corridor’ in describing the over-time interactions customers have with you, this corridor is already a consulting industry in its own right; borrow from it.
The emergence of a networked information economy (Yochai Benkler) has always had an interesting implication for consumer activism. It is one thing to share a scrap of information, some random thoughts, and holiday snaps with family and friends online. It is quite another to become conscious of your own power as a consumer – and the consequences of acting in concert with others.
… read more
It looks like we may be involved in a ‘bottom-up’ NPS project shortly and this has set me to refreshing my working knowledge of Net Promoter Scores, customer satisfaction measurement and Customer Experience Management (CEM).
‘Bottom-up NPS’?
One of the best resources for understanding the difference between bottom-up and top-down NPS can be found on the NPS official site (provided by Satmetrix). The case studies are particularly useful to practitioners, with the Allianz presentation being one of my favourites, though the Aviva entry has a more evocative title; “You don’t Fatten the Pig by Weighing it…”

Bottom-up NPS is about feeding customer satisfaction not just measuring it
Simplistically, bottom-up NPS requires a focus on individual customers at moments of truth in the service experience. It involves asking enough customers as close in time to the experience as possible -
- the NPS question (‘Would you recommend to family and friends?”) and
- the open-ended “Why did you give us that score?”
so that you can isolate the key drivers of bad and good experiences and fix and reinforce them respectively.
The closer the sample is to a census the better, but if you have ever been annoyed by the ubiquitous ‘Do you have a FlyBuys card?’ question when grocery shopping you will understand that with overuse the NPS question can itself become a driver of dissatisfaction. Marketing’s own uncertainty principle. So a statistical middle ground is required.
The results of the actions taken to fix / reinforce experience drivers are monitored through the on-going use of this bottom-up measurement – it is not intended to be a once a quarter snapshot, rather an analog gauge of how well you are pleasing your customers.
This is contrasted to the ‘top-down’ measurement of NPS, which is more common (also easier to do) and controversially a predictor of relative company growth. A good example is industry wide studies such as this one. Top down NPS does not pass my, ‘Specifically what do we have to do Monday morning?’ test, bottom-up NPS is all about answering that exact question. You should do both, and the 2 should meet in the middle of course.
For years now I have been a (eyes wide open) fan of SERVQUAL as a useful tool for guiding customer experience management (CEM) initiatives. This is partly because the developers of this instrument started with an analysis of the drivers of customer experience satisfaction and then set out to measure the gaps in perceived importance and actual delivery – for both customer and organisation.
With the clear objective to make sure organisations focussed actions on the areas of CEM that were either most important to customers or seen as most broken by customers. I like the action emphasis.
In the analysis of drivers they discovered that customer trust is a prerequisite to a good experience, trust built by high levels of reliability (always keep your promises). Here are the generic dimensions of service measured by SERVQUAL (aka RATER);
Now as we run the bottom-up NPS initiative and mine verbatim customer comments for drivers of customer ‘promotion’ & ‘detraction’ it will be really interesting to see if these drivers line up with the SERVQUAL dimensions. We routinely mine customer contributions for ‘actionable themes’ in our online communities but there may be a short-cut here.
A CEM approach that;
- starts with SERVQUAL to identify the largest & most important service shortfalls, currently and periodically
- confirms improvements as these are addressed through bottom-up NPS
- fine tunes process changes through bottom-up NPS
- measures the impact on brand perception with top-down NPS
May make the successful project path just that little bit shorter and more direct for your customers.
What do you think? Have you tried mixing these two instruments?

Beware of survey fatigue in your customers
The folks at Vovici have an interesting series of whitepapers on the use of surveys – and how to use them to build customer community. I found ‘Survey Rating Scale Best Practices’ particularly useful.
Please read the paper in full if this subject is interesting to you and your relationship marketing efforts, but here is a short summary of their published recommendations;
- Use 5 point scales when rating against one attribute in a ‘unipolar’ scale – for example, from ‘Not at all satisfied’ to ‘Completely satisfied’
- Use 7 points scales when rating against polar opposites in a ‘bipolar’ scale – for example ‘Extremely likely to recommend against’ through ‘Extremely likely to recommend’
- Use fully labeled scales with no numeric ratings shown. These are preferred by respondents and have higher reliability and predictive validity than numeric scales
- Exclude ‘Don’t know’ and ‘No opinion’ as a choice
- Use unipolar scales instead of bipolar scales wherever possible – they are shorter and less confusing
- list rating scales with the most negative item first – to prevent results inflation from order-effects
- Use common scales where possible rather than write your own
- Respondents need different things than analysis – you can map scales to a 0-10 scale for reporting
- Stick with common scales across your organisation so you can compare results
An example scale for a 5 point numeric – to illustrate a unipolar scale;
- Not at all satisfied
- Slightly satisfied
- Moderately satisfied
- Very satisfied
- Completely satisfied
And finally a 7 point example of a bipolar scale;
- Absolutely inappropriate
- Inappropriate
- Slightly inappropriate
- Neutral
- Slightly appropriate
- Appropriate
- Absolutely appropriate
There is a science and good experience in this process and customer relationships are too important to mess with unprepared. We recommend you do some reading before asking.

Just find out what your customers want & do that. Sorted.
It has been known for some time now that the ‘physics’ of customer loyalty has an uncertainty principle – the act of measurement changes the event you are trying to measure.
The good news in relationship marketing is that the changes our measurement efforts cause in our customers… are generally positive.
Since the 1920’s experiments in the Hawthorne Works, we have known that the “Hawthorne effect“ is a form of reactivity whereby subjects improve an aspect of their behavior being experimentally measured simply in response to the fact that they are being studied…”
More recently (2002) a study reported in HBR by Dholakia and Morwitz “How Surveys Influence Customers” looked at the impact a short survey had on a test group of customers in a financial services company,
“… A year after the survey was conducted, the customers we surveyed were more than three times as likely to have opened new accounts, were less than half as likely to have defected, and were more profitable than the customers who hadn’t been surveyed. These differences reached their maximum levels several months after the survey was done and persisted throughout the year. Even at the end of the year, surveyed customers continued to open new accounts at a faster rate and defect at a slower rate than the people in the control group.”
Amazing and a little mysterious.
But it does highlight why it is so important to ask and listen to your customers. Even better if you confirm to them that you have heard what they told you and are doing something about it. I believe that survey fatigue destroys this effect over time if you do not clearly demonstrate the implementation of some customer requests.
In the management of online communities this sometimes requires a conversation plan as this is too important to leave to chance. Our colleague; Community Girl recently blogged on her ‘10 Tips for Engaging Your Community’. Amongst the tactical tips are the plan components needed to take advantage of customer’s positive view of brands that ask and listen;
- Listen – sometimes proactively through surveys
- Respond
- Follow up
- etc…
Lessons and approaches that work on and off-line if you are sincere and actually follow through.
Before you start on a customer retention strategy that includes regular customer consultation in this way, pause. When you sincerely ask customers what they want from you, they will rarely ask for things that Marketing alone can give. They do not ask you to use less comic sans in your advertising. They ask you to change products, prices, services. Make sure your colleagues in product management, pricing, logistics, customer service… are as committed to listening and answering as you are.













