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Thursday, July 24, 2014

Filling The Hole In Your NPS

Corporations large and small depend upon their NPS (Net Promoter Score) to evaluate staff, compare themselves to their competitors, monitor their progress over time, and more. As you probably know it's a survey-based process asking people how likely they are to ‘recommend’ a brand, service or company to others based on their own personal experiences with the brand, service or company.  The key NPS statistic is created by subtracting the number of "detractors" (respondents who score their willingness to recommend at only a 1-6 on a ten-point scale, or 1-6 on an eleven-point scale) from the number of "promoters" (those who rate their willingness to recommend at a high score of 9 or 10).  Hence the construct of ‘net’ promoters (the proportion of a customerbase likely to promote minus those unlikely to promote).

You Really Should Know

The NPS score is frequently criticized both because it only assesses ‘likely behavior’… and because it fails to further probe qualities of the likely behavior.  In short, it fails to provide enough information to help remedy the extent of failure it identifies.  In our work on word of mouth, we’ve addressed the NPS weakness by focusing on actual recommendation behavior; and what was actually communicated.  Here’s how we recommend NPS programs can be enhanced to make them much more useful.  They should be teamed with a 'follow-up' survey that focuses on:


  • Assessing the actual ‘reach’ of recommendations, by itemizing how many people the “promoters” actually did speak to and what they actually said.
  • Comparing how promoters’ messages, tonality and reach differed from those of detractors.
  • Identifying the type of emotion associated with the messages (i.e. “positive”, “negative”, “neutral”).
  • Describing how recommendations are actually being communicated: narrowcast (through private channels: phone, texts, emails, face-to-face) or broadcast (through public channels: Facebook, Twitter, blogs).

One Way You Can Objectively Find Out

While admittedly not the purpose for which we developed it, a tool like our Buzz Barometer® addresses all these missed opportunities and increases the value of NPS programs.  Our approach is simple; we would draw the email addresses of three groups of customers who had responded to a corporation's survey that included the NPS question.  One group would be those who had rated the brand a 9 or 10, a second group would be those who rated the brand a neutral 7 or 8, and a third group who scored the brand a 1-6.

We would invite customers in these three groups to respond to a secondary survey.  Our Buzz Barometer® questionnaire asks customers to report on their own word of mouth behavior (frequency, valence, medium, message summary, etc.).  All this information would allow us to produce qualitative and quantitative pictures that bring promoters (as well as detractors and neutrals for that matter) to life, to help the entire organization better understand the key drivers of promotion and detraction and how energetically these positions are being spread.


10:28 am edt          Comments

Tuesday, June 24, 2014

When Things Go Wrong....
Disaster recovery” is something that large organizations - trained in quality control principles - recognize to be a necessary component of their operations.  They know exactly how they want a process (e.g. guest registration at a hotel) to proceed, but they also recognize that occasionally things won’t go as planned.  In these few instances of failure, they provide a roadmap for employees suggesting specific ways employees can put things right.  These roadmaps (for many different anticipated failures) are their disaster recovery plans.
 
At the Ritz
A disaster recovery policy at one time in place at Ritz Carlton Hotels has become a legendary example.  Reportedly employees were given “Ritz Carlton dollars” to help ameliorate the angst of guests who encountered problems during their stay at a Ritz property.  Maybe requested turn-down service wasn’t rendered.  No problem; the housekeeping staff or front desk personnel could offer the complaining guest a complimentary manicure or dessert.  Employees were kept in reasonable tow by being allocated a fixed number of Ritz dollars every week which they issued to guests to pay for the proffered reparation – at their own discretion.
 
Despite the specifics of the Ritz-Carlton example, disaster recovery is generally not about 'paying to restore' the customer’s satisfaction.  Instead, the generally respected philosophy of disaster recovery is to show concern that an organization didn’t live up to the needs or expectations of a guest and is truly sorry.  Obviously if turn-down service isn’t provided, there’s likely a systemic problem with scheduling or personnel that needs to be corrected – but the more immediate “guest-facing” solution is to show concern and regret by doing something that will be both unexpected and appreciated.  The real skill of successful disaster recovery is in making the reparation both unexpected and truly cherished.
 
Disaster Recovery Isn't Well Known

Our reason for this particular Insights column is that while big organizations generally understand all of this, disaster recovery may not be well understood or practiced by smaller organizations.  Our case in point, a recent dinner at a local restaurant.  We were joined by several couples at a restaurant which had delighted us on several previous meals.  Upon arrival we were greeted by the hostess-co-owner and in turn we introduced our guests as referrals we wished to have experience her restaurant.
 
Uncharacteristic of previous visits to the restaurant, from our arrival the experience deteriorated quickly.  It seemed that the kitchen (the hostess’s husband) was over-taxed by a full house.  Our appetizers came out in a reasonably timely fashion, but then there was an hour’s wait for our entrées.  In short, a disaster was in full bloom.

Thanks, But No Thanks!
When we explained to the Hostess how unfortunate the delay was, we were treated to a defensive discourse about how busy the kitchen was….and that we and our guests should have more patience.  This response illustrates how organizations without instituted disaster recovery plans often extemporaneously attempt to solve a problem.  The general result is to become rationally self-defensive.  But customers almost never want to understand the difficulties a service provider is experiencing.  From their more emotional perspective, they simply wish to enjoy timely and perfect service!  The bottom-line?  When a business lacks a scripted or well thought-out disaster recovery plan, the ad-libbed response may often worsen the disaster rather than curing it.
 
This example also characterizes another failure of many organizations.  Diners at the restaurant weren’t the only ones aware of a problem; the wait-staff and kitchen staff should have been aware of their difficulties in meeting the evening’s demand.  In such situations, some organizations will adopt an ostrich demeanor by stubbornly refusing to acknowledge the developing problem as if ignoring the problem will make it go away.  If a member of the wait-staff had confronted the problem and had actively informed us that the kitchen was having difficulties, we would have been fore-warned and might have accepted conditions more cordially.  In addition, if a gratis appetizer had been offered it could have minimized the pain of the wait avoiding a full-scale disaster.
 
So the key learning here is to assume the worst - that you won’t always properly deliver your customers the experience you wish them to have.  In the few situations when you fail, you need a practiced disaster recovery process.  Staff and management need a well-planned solution that seeks to placate the angst of your affected customers.  These processes will be your disaster recovery systems.
8:31 pm edt          Comments

Wednesday, April 23, 2014

SLCP: Getting More Growth and Profits From Your 'Loyal' Customers

Every brand we encounter wants loyalcan be defined in many different ways. Is a loyal customer an exclusive customer?  Does he generate the highest revenue? Does he advocate for your brand or business?  Is she less demanding of exorbitant support and resources?

 

You Need More than Just Loyal Customers!

With 25 years of working in the category we’ve come to understand that loyalty is not the universal panacea it’s often touted to be.  To achieve profitability and growth you not only need a precise understanding of how you're defining loyalty; you need a set of further qualifications by which to evaluate your ‘loyal’ customers.

Unless you have a very unique business model, your primary motivation for identifying loyal customers is probably the belief that the more of them you have, the more likely it is that you can operate at a profit.  We don’t disagree that loyal customers are a desirable asset, but we can offer a new paradigm for managing which of your loyal customers will lead you to greater profitability.  The crux of this identification is data.  And, in recent years, many of us are beginning to acquire more of the right kind of data to help us find the customers who, when properly treated and ‘cultivated’, can lead a business to the ‘promised land’.

Thanks to today’s acceptance of ‘big data’ we are reaching the point where most businesses can meaningfully score and segment their customers on a myriad of criteria.  We’ve developed our SLCPSM Model specifically to accomplish profit-based customer scoring.  It’s composed of four characteristics that can be observed for every customer:


  1. S - Satisfaction – Businesses continue to expand their satisfaction measurement efforts, but rarely, if ever, are the scores applied to individual customers (instead of being ‘rolled’ up to a business average).  With the proper questions, businesses have the opportunity to judge customers’ current satisfaction levels with a business.
  2. L - Loyalty – By overview of a few activities (Facebook likes, Twitter posts, direct correspondence, participation in company-sponsored events, etc.) we can start to create an emotional affiliation or loyalty score for each of our customers.
  3. C - Costs of Servicing – Each of our customers has a different cost associated with him depending upon how demanding he is of special services and considerations.  Or, she may only buy on deal or by demanding a substantial discount.  By tracking these considerations we can calculate a cost of doing business with for each customer.

  4. P - Potential – And by tracking not only what a customer buys from our brand, but the number of purchases she makes in total, we can create a ‘share of wallet’ or spending proportion for each customer.  Selecting customers with less than a 40%, 50% or 60% proportion identifies a segment of customers with upside potential to spend more.

Four Measures Offer a Better View

Through such a multi-criteria segmentation scheme a business would be in the enviable position to better manage loyal customers; allocating attention and rewards in a very strategic manner.  Not only does the scoring promise to identify logical target-customers for ‘development’, it is also capable of identifying current customers whom a business may be over-serving, costing it resources unlikely to produce increasing revenues.

A ‘pipe dream’?  We don’t think so.  It only takes a business willing to make the appropriate commitment to collecting and consolidating the information.  That does mean some additional spending, but more than that, it requires breaking through the ‘silos’ of all too many businesses in which information is hoarded by discrete departments who are loathe to share it with others.   One current initiative, Chief Customer Officer, begins to empower this pursuit.  We embrace it and look forward to seeing successful applications of SLCP!

 

4:39 pm edt          Comments

Monday, March 17, 2014

Do Satisfied Customers Still Tell Others They Love Your Brand?

Social media has given consumers greater opportunity to talk about the brands they know and love. That means brand advocacy must be skyrocketing, right?

Maybe not. Mindshare World has tracked advocacy-behavior through annual research in which they ask consumers’ agreement with the following statement, “When I see or hear something interesting about a brand, I like to pass it on”.  Their most recent findings serve as a harsh reminder that we can’t necessarily count on the continual growth of frequent and positive word of mouth to drive the growth of our businesses.  One might think that technology should be facilitating advocacy-behavior, but apparently more than just ample online vehicles (for posting) is needed to keep word of mouth healthy.   The trend of advocacy behavior is clearly downward:

  • In 2010 66% agreed they would “pass it on”
  • In 2011 62%
  • In 2012 53%
  • In 2013 only 47% agreed they would “pass it on”.

And, It Might Be Worse Than It Appears!

Think 47% still seems pretty good? Let’s take a closer look. Unless we’re missing something, the study really shouldn’t be interpreted as suggesting that 47% of consumers are currently actively advocating brands – or anything close. What the researcher’s question really seems to ask is: if a brand managed to get something before an individual and the individual considered it “interesting”,  would they then “like to” pass it on?  Do you see the tenuous connections here?   Knowing how many messages are thrown at each one of us every day, there’s a considerable challenge to be met to get any recommendations!

And, a separate recent study from EngageSciences (telling us that fewer than 5% of a brand’s fans generate all of the social media referrals for any brand), further suggests that in the real world there is undoubtedly a huge gap between those who say they would “like to pass it on”, and those who actually take any action!

So, What Does This All Mean?

It‘s clear that it’s going to take new strategies and additional executional effort to maintain (let alone to increase) the frequency, volume, and positive tone of word of mouth for your brand in the future.  Delivering good value for the money and a positive overall customer experience will continue to be essential, but even they won’t nearly be enough.

Success in engendering word of mouth will be dependent upon:

  1. Identifying the best potential advocates (those current customers who have proven behavioral commitment to a brand, have an emotional connection with the brand and, possess the 'communicator gene').  And,
  2. Providing each of them with the necessary motivation, content, and opportunity that will prepare those potential advocates to pass along their own versions of the brand’s story, both online and offline, to friends, neighbors, co-workers, relatives, and even strangers


 

 

11:23 am edt          Comments

Monday, February 24, 2014

Managing Evidence: Getting Credit for Your Brand/Product

In legal circles “tampering with evidence” is strictly taboo...it’s grounds for serious penalties. But in the world of managing customers’ experiences, "managing evidence" is often not only desirable; it may be a tool necessary for survival!

 How Perceptive Are Your Customers?

Most customers fail to recognize the quality built into a product or the efforts extended by a service-provider - even though they may buy your products.  They’re generally unable to fully appreciate the differences between one company’s product and the products of competitors.  They even seldom find the time to consider or appreciate the added value contributed by the perks and niceties that accompany the products and services they buy.  That’s why it’s critical for marketers to call customers’ attention to these values after the purchase has been made.  Otherwise credit isn’t given, increased loyalty (the primary goal for offering the superior services/products in the first place) may never be realized, and positive word of mouth is less likely to be generated.
 
Providing a great customer experience is essential, but it requires additional effort to see that your customers understand and appreciate what’s being delivered to them.  Consider an example.  Norton, the computer security firm, (that might be protecting the computer on which you’re reading this) provides excellent protective software for computers.  But if their software is doing its job, an owner will likely never be bothered; it’s definitely a ‘low profile’ service.  Norton has apparently recognized its need to reinforce its value to customers by managing evidence. It accomplishes this with a monthly top-line report of the number of computer files checked in its latest scan; how many problems it detected; and what it has done to safeguard a computer.  And, each time the service updates its virus-detecting database it informs owners with a pop-up.  Norton is doing a great job of managing evidence to remind owners it’s more than ‘paying for itself’.

'Tootin' Our Own Horn

Most executives seem uncomfortable with the concept of managing evidence.  Given our cultural backdrop, this may be understandable.  After all, Western cultures teach the values of modesty.  Further, managers may fall victim to one of two false assumptions:  1.) Assuming customers will be insulted by having good performance pointed out to them; or 2.) Assuming that all existing customers already understand the added benefits offered by their products.  In both cases managers accepting either of these assumptions are going to be wrong.

Astute managers need to learn how much (or how little) of the value they’re delivering is actually being perceived by their customers and credited to them.  Trusting that one is receiving credit for the value actually being delivered to customers is a fool's hope.


6:18 pm est          Comments

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Customer Experience Partners, LLC
Measurement, Management, Optimization
Contact us at: 203-655-0090 or
pruden@customerexperiencepartners.com

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