Hen’s teeth? An Australian company with high Net Promoter Scores…

 

Australian NPS study

 

Back in 2006 the Melbourne Business School researched Australian customer satisfaction / loyalty using Net Promoter Score (NPS) as the metric. They looked at a range of service and product categories and found generally poor NPS results (apart from Broome being a great holiday destination).

This research has recently been (coincidentally) updated in this report which looked at the NPS in Australian Banks, Insurance, Mobile, Health Insurance and online shopping.

Several of these categories overlap with the 3 year old MBS study and I thought it would be good to look at how some of our national icons have progressed in the last 3 years – from a customer perspective. No illusion of precision here as I am sure the customer samples are not apples to apples, but illuminating never the less.

So – some example changes in NPS follow…

Banks

Bendigo topped both studies with an NPS of +7 in 2006 and +33 in 2009 for a whopping increase of 26!

ANZ went from -24 to -5 increase of +19

St George went backwards from -29 to -30 decrease of -1

Westpac from -39 to -18 increase of +21

NAB from -42 to -30 for an increase of +12

CBA, last in both studies, from -54 to -39 for an increase of +15

Property Insurance – generally has improved

APIA was not in the 2006 study but overwhelmed the field with NPS of +69, world class

AAMI from -22 to +5

RACV from -25 to +2

NRMA from -33 to -10

CGU from -41 to -15

GIO still at the bottom but moved from -53 to -20 a +33 increase!

Health Insurance – generally getting better, but still low as a category

HBF on top, from -15 to -4

HCF from -30 to -18

MBF from -46 to -23

NIB from -27 to -23

Medibank from -48 to -30

Mobile Phones

Virgin with a bullet! From -29 in 2006 to 0 in 2009

Vodafone from -26 to -4

Three from -24 to -7

Optus from -34 to -22

Telstra still at the bottom but up 10 points from -44 to -34

Overall, there appears to have been a general improvement in customers’ willingness to promote Australian companies in these categories. But this is no cause for celebration – there were only 7 positive scores in the 2009 study and only 2 companies achieve world-class scores; APIA and Bendigo Bank.

Time to look to your Customer Experience Management (CEM) efforts integrated with your Customer Relationship Management (CRM) systems to improve your Net promoter Score (NPS) in this world of Three Latter Acronyms (TLAs).

On-line Service Quality

The pioneering authors of SERVQUAL have turned their attention to online shopping service quality and the result is a measurement instrument that we think has ‘legs’; E-S-QUAL

Research on service quality has typically concentrated on services delivered by people; the instruments that have been widely used for measuring service quality may not be appropriate or useful when evaluating the quality of no-people e-service.  And many of the commonly used measures of online behaviour are just that – behavioural – frequency, time and click-based.

At the same time, Satmetrix & Reichheld’s Net Promoter Score (NPS) has proven to be an effective foundation for integrated customer relationship / service programs. It does a great job of highlighting when things are going well or badly (or unremarkably) but does not tell you, on its own, what exactly is the cause / appropriate action.

Mmmmm… an opportunity?

The E-S-QUAL instrument measures 4 empirically derived dimensions important to customer perception of e-service quality (Amazon and Walmart sites were used to confirm the instruments’ validity and reliability);

1. Efficiency: The site can be used easily and quickly
2. Fulfillment: The site fulfills its promises about order delivery and item availability
3. System Availability: the site functions properly
4. Privacy: The site is safe and protects customer information

  The E-RecS-QUAL instrument measures the 3 dimensions important to service recovery quality following service failure;

1. Responsiveness: The site handles problems (and returns) effectively
2. Compensation: The site compensates customers for problems
3. Contact: Assistance is available through telephone or online representatives

E-S-QUAL also measures Perceived Value received on the site – NPS seems to be a valid alternative to these questions.

Idea – combine the 2 into a single instrument for the measurement and management of service quality while shopping online. Customers could tell you what they think and why, so you know what remedial action is required.

Amplifying the “Voice of the Customer”

The term “Voice of the Customer” (VoC) is a very useful term for initiatives designed to improve customer experience but it is also a term that has been bandied about in a very loose manner. So it is good to see from Bruce Temkin (Forrester) some definition of terms and analysis of how the concept can be translated into practical action!

The use of online communities to amplify and validate these VoC initiatives I believe can take these initiatives to new levels of effectiveness.

Bruce Temkin provides the following definition for a VoC Program:

“A systematic approach to incorporating the needs of customers into the design of customer experiences.”

He then identifies five distinct levels of activities in a VoC Program: (my comments in parenthesis)

1. Relationship tracking. Organisations need to track the health of customer relationships over time… Why is this important? Because an easy-to-grasp report card helps align everyone in the organisation around a common purpose. And focuses investments in key areas that correlate with improvements.

This, of course, is the challenge addressed by metrics such as Net Promoter Score. Online communities can make these efforts more dynamic by incorporating NPS results into subsequent conversations and prompting – eg. “why did you vote the way you did”; “how can we increase the propect of you recommending to a friend in future…”.  

2. Interaction monitoring. Every customer interaction – from an online transaction to a call into the call centre – is important. Firms need a way to monitor how effectively they handle these customer touches. This can provide detailed (& immediate) feedback to/about frontline employees and help spot problematic trends.

Incorporating this touchpoint feedback into an online community setting – helps to validate how widespread or problematic the feedback is and may of course prompt suggested improvements.

3. Continuous listening.  Structured feedback through customer surveys provides enormous opportunities for analysis. But this (data only view) should be supplemented by executives regularly listening to customers – such as listening to calls in the call centre, reading blogs, reading inbound emails and visiting retail outlets.  

We would argue that online communities can take this to another level with the more social component (customers talking to customers as well as the brand) and with the use of voting and ranking as appropriate. 

4. Project infusion. Projects that affect customers should incorporate insights about customers. Despite the clear need for this type of effort, many companies lack a formalised approach for infusing customer insights into projects. To make sure that this doesn’t happen, some firms are incorporating customer insight steps in the front-end of their Sigma processes.

One simple step… ask the online community! Employees and/or customers. “Is this project a good idea?” “Are we missing something?” “Could this project be executed in a more effective manner?”. Particularly in a pilot or scoping phase – this type of feedback can represent a great form of risk mitigation.

5. Periodic immersion. Every so often, it’s valuable for all employees – especially executives – to spend a significant amount of time interacting directly with customers or working alongside frontline employees. These experiences which should be al least a half day, provides an excellent opportunity for the company to question the status quo.

Whilst nothing will ever quite match dealing with a real live customer in the flesh – online communities are a pretty raw form of customer feedback and interaction; and with so much business be conducted remotely these days (employee-to-employee as well as employee-to-customer) online communities are a very efficient way for a vast number of employees to “stay in touch” with reality. 

Net Promoter Score: Conversational Compass!

We have talked previously about Net Promoter Score as a simple measure in helping a brand to discern changes in the perceived customer experience. Not surprisingly therefore, NPS can be an extremely useful measure in online communities – providing a simple tracking device - helping us to interpret results and suggesting future directions.

NPS can be measured at several different levels: brand, sub-brand, category, product line, program etc over time and against a multitude of demographic and behavioural data. Identifying the large variances is where it gets really interesting…

In a recent example, we found that differences between Brand NPS and that of a newly introduced program were insignificant at a national level but that differences of program NPS accross national outlets varied dramatically. This pointed to possible poor execution of the program in some outlets or perhaps other more deep seated problems at these outlets. 

An online community also informs NPS as a segmentation device. What sorts of ideas are initiated or supported by Promoters? What is important to Neutrals? How could we “neutralise” Detractors? When combined with transactional data this becomes extremely powerful. The question then becomes: which ideas are supported by which NPS segment and what is the likely impact on purchasing behaviour…

As a conversational technique, the NPS question also suggests great follow-up questions, for example - why did you respond the way you did? And what would improve your NPS rating?

Our experience is that NPS helps to keep a strong quantitative framework around some very rich qualitative data. And It certainly lends weight to that old management credo: “if you can’t measure it, you can’t manage it”.

NPS, CEM and Brand

“A brand is the sum total of the good, the bad and the ugly…your best product and your worst…your best ad and your worst…your receptionist and your CEO…your best customer experience and your worst”*

 We have previously pointed out the connection between Customer Experience Management (CEM) and the Net Promoter Score (NPS); NPS is a ’simple but not simplistic’ way of measuring how well you are managing your customers’ experience.

But where does ‘brand’ fit in this mashup?

These authors argue that the Product/CEM/CRM mashup is the brand.

This is not the first time I have come across a wholistic view of service – product – brand. Leonard Berry and his team wrote on this subject after a decade of study, in 1993. I used a 2003 paper published by the Marketing Science Institute to refresh my memory.

First impression - Berry’s work also produced an index/metric that focusses attention on the experience elements that are important to the customer (not the company). His is called SERVQUAL and involves separately asking customers what they consider important then asking how the experience measured up. The largest gaps between expectations and delivery are the experience areas that need the most attention. We used this vehicle about 5 years ago for a client with very good results. It convinced them that further precision in service areas that the customers did not value really was a waste of money.

NPS, when implemented as a process-change guide, also allows companies to focus on the things important to the customers, not the company.

From the perspective of experience = brand however, it is worth taking a look at the 10 lessons these CEM pioneers taught us. Good food for thought.

1. Listening. Quality is defined by the customer (we now have more effective ways of listening, online)
2. Reliability. Little else matters to customers when a service firm is unreliable.
3. Basic Service. Fundamentals not fanciness; performance not empty promises.
4. Service Design. Service design must be a fluid process of continuous improvement – ‘If it ain’t been fixed it will break’
5. Recovery. Encourage complaints, respond quickly & personally, develop a problem resolution system.
6. Surprising Customers. Exceed customer expectations, especially with assurance, responsiveness & empathy.
7. Fair Play. Airline example – ‘An industry that charges one customer $300 and another $1,300…with the only difference the timing of the reservation…cannot and will not earn the confidence and loyalty of customers.’
8. Teamwork. Service team building cannot be left to chance.
9. Employee research. As important as customer research.
10. Servant Leadership. Serve the servers, inspiring & enabling them to achieve.

 I am sure these 10 components do not appear in the brand bible of the average organisation.

Perhaps they should.

*A New Brand World Scott Bedbury & Stephen Fenichell

What’s your NPS for your CEM using your CRM?

The man that many say was the catalyst for the CRM industry through his work on customer loyalty, Fred Reichheld, has promoted a way to measure how well you are doing at meeting customer expectations; the Net Promoter Score (NPS). Fred’s ‘Ultimate Question’ is “On a scale from 0 to 10 how likely are you to recommend us to your family and friends?” Promoters give you 9 or 10, Neutrals give 7’s and 8’s all else are Detractors. % Promoters minus % Detractors gives your Net Promoter Score.

We have found this ‘simple but not simplistic’ metric a very effective way of focussing our clients on the important moments of truth so they can be ‘fixed’ in customer experience terms. CRM tells us which customers are valuable or potentially so, NPS identifies unhappy high value customers and we can investigate why and what to do about it.

To investigate on a large scale, here in Australia we have been using the Satmetrix Adaptive Community platform (known as ‘Informative’ before being acquired late in 2007). This platform allows us to conduct online surveys, quick polls and blogs and convert a mass of qualitative data into actionable quantitative insight quickly.

The NPS authors went further, claiming that NPS is a superior predictor of company growth rates and the market research industry reacted, creating a debate that is interesting but has not impacted our focus on valuable customers. For a good post on the debate look here,for a response from the co-authors, Satmetrix;

A sporting club client of ours asked their on-line Advisory Panel of members what they could do to convert detractors (the actual question was along the lines – “what could we do to make you more likely to recommend a membership…?”).

Watching the dynamics of a large community with visibility of opinion between peers gives almost visceral pleasure to a marketer raised on dusty research reports or the thin gruel of focus groups. Undiluted customer input, lots of it, immediately! Marketing really can be a conversation as Jaffe says ‘Join the Conversation’ !

The consensus advice from the community was implemented, to the great benefit of the club’s member recruiting program.

Where do these communities fit in the mash-up model we are constructing, if anywhere?

I think this is a new 4^th P; Place. This is NOT to say that on-line communities are just another channel, this is a Place to market that has no resemblance to the uni-directional communications implied by the word ‘channel’. It is a productive place to talk with customers and listen as they talk to each other.

We have experienced 2 distinct benefits from using this platform and Place for clients;

1. We find out things, in a research sense, very quickly and from a large number of customers, including their attitude towards promoting the product/service and
2. The very act of asking and listening creates advocates who help promote the client’s business, a classic outcome of the “Hawthorne Effect” (a definition).

Keep in mind the context here please; we are typically providing a place where registered customers, with an interest in the brand can express their opinions and inspect the opinions of peer customers. This is not, in our case, a blog naked to the world.This new Place has a different set of rules. Carefully crafted marketing messages cannot sustain the scrutiny of a group of self-selecting engaged customers for very long. ‘Seed’ ideas used by the marketers to start the conversation almost never end up in the top 25 of ideas as rated by the community for popularity and importance. Honesty and openness are the currencies and exchange at a good rate for customer insight and unfiltered advice from our best, most engaged customers.