NPS Blog

Customers have been talking, and companies are finally listening

customers-are-listening-220x207Companies across all industries are seeing the benefits of loyalty and trying harder than ever to foster a dialogue with customers. And best of all, companies are listening.

Sure, not a week goes by without some bizarre story of a poorly handled service call that leaves a customer irate or in tears, but overall, companies are getting better at listening to their customers. Perhaps the rise of crowdsourcing or social media or the wider use of simple customer service metrics is behind this delightful trend. 

In my latest post on LinkedIn, I look at companies that have made feedback to central to their operations.

Read the post: Customers Have Been Talking, and Companies Are Finally Listening

Habitat for Humanity: Nailing Net Promoter at a nonprofit

Net Promoter System podcastLeaders of major companies often assume they have nothing to learn from nonprofits. That’s just not true.

Corporate executives tend to underestimate the sophistication and complexity of successful nonprofits, and nonprofit leaders often overestimate the resources available in big companies. Each one discounts the experience of the other and its relevance to them.

My latest guests on the Net Promoter System Podcast prove my point. They are two leaders from one of the biggest nonprofits in the country, Habitat for Humanity. Ann Goggins Gregory, chief operating officer of the organization’s Greater San Francisco affiliate, and Mark Andrews, vice president of volunteer and institutional engagement at the international headquarters, have been active members of Bain’s Net Promoter Social Impact Forum. And they have spearheaded Habitat’s adoption of the Net Promoter System.

Ann Goggins Gregory of Habitat of Humanity San FranciscoHabitat for Humanity is best known for building houses for families in need (picture former President Jimmy Carter wielding a hammer on a job site), but it’s far larger than many realize. The company helped 1.6 million people around the world in its 2014 fiscal year through home construction, rehabilitation and repairs. Beyond building homes, the organization provided cleanup kits after devastating floods and landslides in Bosnia-Herzegovina, smokeless stoves that make cooking safer in Guatemala and shelter repair kits for typhoon victims in the Philippines.

What does it take to change lives in dozens of countries around the world? More than 2 million volunteers and annual revenue of $1.7 billion.

Mark Andrews of Habitat for Humanity InternationalUnlike big companies, Habitat manages a vastly complex ecosystem of constituents: volunteers, paid staff, aid beneficiaries, government organizations, donors and community members. Each group interacts with the organization in a different way and needs to be managed differently. The organization has been using the Net Promoter System to gauge the volunteer experience and is considering how it might deploy it elsewhere in the organization.

Like many organizations that are early on the Net Promoter journey, Ann and Mark have wrestled with technique and technology, with closing the loop and maintaining a focus on learning instead of evaluation. After years of using long surveys to gather feedback but getting very low response rates, Ann was thrilled to reap more responses and richer answers from her Net Promoter experience. Still, the effort has not been without its pain points.

You can listen to this candid discussion on the Net Promoter System Podcast. Subscribe to the podcast on iTunes, or listen to this episode through the player below. Click here to browse more Net Promoter System podcasts.

Subscribe to the Net Promoter System podcast on iTunes

Birchbox: Unboxing a fantastic customer experience

hayley-barna-120x113I’ve been getting a box in the mail every month this year. Inside I usually find four or five samples of products I’ve never heard of, like Billy Jealousy Liquid Sand Exfoliating Facial Cleanser or PARLOR Re-Workable Hold Paste or Das Boom Everywhere Lotion Detroit, whose distinctive scent is “a trio of tobacco, musk and motor oil that invokes the Motor City,” according to its label.

I would never have purchased these products off a store shelf. These samples were selected and sent to me by Birchbox, a five-year-old e-commerce company that has devised a brilliant business around the idea of getting customers to pay for beauty and grooming samples. Yes, samples. The ones that companies usually give for free to entice customers to buy a full-size product.

For a monthly fee, Birchbox subscribers receive a box each month, and inside they discover several high-end beauty product samples. Early on, each customer shares some personal information to help Birchbox select the right combination of samples. Many go on to buy full-sized products from Birchbox’s website. The most ardent Birchbox fans consider their deliveries a special treat. Some of them even post YouTube videos of themselves opening their boxes with delight.

Net Promoter System podcastCo-founder Hayley Barna, who worked at Bain early in her career, recently joined me on the Net Promoter System Podcast to explain how she came up with the idea for Birchbox, and how it creates this unique customer experience. She shared some of the secrets to maintaining the quality of the experience despite the company’s rapid growth. Birchbox now has more than 1 million subscribers and it’s on its way to becoming a household name.

“The first interaction that we have with a customer is, ‘Tell us a lot of information about yourself, so that we can give you a fantastic experience,’” Hayley says. “So we really live and die by that close relationship to our consumer.”

Those close relationships with customers are the key to the company’s rapid growth. Hayley and her business partner, Katia Beauchamp, track each customer’s purchasing behavior over the span of their Birchbox relationship. They look for patterns that might inform future offers and guide business decisions. They use the Net Promoter System to keep their fingers on the pulse of the customer experience, identify areas of weakness and find new opportunities to improve.

This careful monitoring, along with Birchbox’s vast customer data, makes it a great partner to consumer products companies, which often struggle to learn about and form relationships with the customers who buy their goods. Some of these manufacturers are so eager to work with Birchbox that they produce samples exclusively for its customers.

What’s the secret behind Birchbox’s runaway success? You can unbox it by listening to Hayley on the Net Promoter System Podcast. Subscribe to the podcast on iTunes, or listen to this episode through the player below. Click here to browse more Net Promoter System podcasts.

Subscribe to the Net Promoter System podcast on iTunes

The three qualities of the Net Promoter System’s “outer loop”: Answering the call for culture change at AT&T

Net Promoter System podcast“We have over 5,000 customer experience initiatives currently in flight across the organization. I know two or three of them are probably going to be really high impact. I also suspect that while most of them are really good things to do, I am almost certain a large percentage are just a waste of time. Here’s the problem: I don’t know which two or three will really move the needle. And I can’t stop the thousand or so that are just a waste of time.”

The above statement was made by the president of a business unit at a large insurance company, explaining his frustration with his organization’s ability to make progress on improving the customer experience.

True loyalty leaders solve this problem by creating a portfolio of high-impact investments that will make a big difference for their customers. They assign talented resources to tackle each one, develop a clear implementation plan and cultivate support from across the company. In a large organization, creating and managing this portfolio requires a process for identifying and prioritizing the opportunities that need improvement and allocating the right resources toward that end. True loyalty leaders don’t just tackle the right priorities, they also communicate their progress and results with employees, building trust and pride.

In the Net Promoter System, we call this mechanism the “outer loop.” It identifies, prioritizes, allocates resources to and manages the customer-friendly changes that employees and teams can’t make on their own. The outer loop works in tandem with the Net Promoter System’s “inner loop,” which is the process for fostering rapid individual learning and customer intimacy through immediate, tangible feedback, coaching and follow-up.

A strong outer loop has three qualities:

 It’s robust, using input from customers, employees, benchmarking data and other sources to guide decisions.
 It’s rigorous, so it can gauge how a given initiative might affect retention, revenue and other measures.
It’s transparent, so it inspires confidence among employees who can see the company’s efforts to improve.

John Dwyer of AT&TJohn Dwyer, the senior vice president for customer experience at AT&T, joins me on the latest episode of the Net Promoter System podcast. He and his team have developed a robust, rigorous and transparent outer loop at AT&T that has enabled the company to become a J.D. Power leader in wireless customer service and purchase experience.

AT&T has used the approach to evaluate network upgrades, service improvements and the ways it supports its frontline employees. Its process is so finely tuned that the company knows the 13 tasks that customers need to be able to complete to be happy with their mobile phone service. That allows the company to size up projects based on its potential to deliver what really matters to customers.

AT&T has also forged one of the most well-developed employee “suggestion boxes” that I’ve ever heard of. When a frontline employee faces a question he can’t answer or a problem he can’t immediately fix, he can use AT&T’s homegrown “Hero” system to request a suitable solution from an internal expert. If the employee isn’t happy with the expert’s response, he can challenge the expert to find a better answer.

“There are two kinds of employees inside our company: Those who support our customers and those who support those who support our customers,” John says. “We’ve got to make sure that those frontline employees feel that sense of support within the business.”

When executives use the outer loop effectively, like they do at AT&T, they let employees know that the company supports their efforts to serve the customer. To learn more about the outer loop, check out our latest issue of Loyalty Insights, which explores some of the common challenges and pitfalls that companies face as they develop an outer loop.

To hear John discuss AT&T’s approach to customer experience and the process of improving service at a large company, check out the podcast on iTunes or through the player below. Click here to browse more Net Promoter System podcasts.

Subscribe to the Net Promoter System podcast on iTunes

At Disney, the show must go on

Net Promoter System podcastImagine that 20 million people depend on you to create a magical vacation experience for their family every year. Imagine leading 40,000 employees operating four theme parks and 20 resort hotels spread over an area larger than the city of San Francisco. On top of that, imagine running multiple shopping and entertainment districts, water parks, golf courses and the ESPN sports complex. That was Lee Cockerell’s job for over a decade. He was EVP of operations for Walt Disney World in Orlando. Just the logistical challenges of that role would overwhelm most leaders.

But the logistics aren’t really what interests me. And Lee, who retired a few years ago, mastered the logistics and complexity winningly. Much more fascinating is the question of how Lee and his team so consistently—day in and day out for years on end—created the kind of experiences that left customers so delighted they just couldn’t wait to visit again and tell their friends.

lee-cockerell-disney-120x113And that’s the key to Disney’s success: repeat business and word of mouth. About 70% of Disney’s visitors on any given day have been there before. The average customer comes back every three years for life. Walt Disney World’s economics depend on that repeat business. “That’s why we focus on trying to make the experience so good that they want to come back to us over and over,” says Lee.

Lee is my guest on the latest Net Promoter System podcast. He told me that Disney gathers data on customers’ experience at a level most companies can only dream about. It surveys 2 million guests a year on the Internet. It has teams armed with iPads roaming the park, interviewing guests while they’re still in the middle of the experience. It tracks how guests flow through its transportation system, hotels, restaurants, shops, shows and rides. And it uses this data to fuel its guest experience innovation pipeline for the resort.

Customers told Disney, for example, they wanted more certainty about what they would spend on food in the parks. So Disney introduced a meal plan for the resort, now used by more than 50% of guests. Customers didn’t know they wanted free transportation to and from the airport, but Disney’s research suggested that getting to and from the airport with kids and luggage in tow was a common source of anxiety. Once the company put an airport transportation system in place, complete with end-to-end baggage handling that takes guests’ bags from airport baggage claim to hotel room and back, the company’s hotel occupancy rate rose 10%.

Some of these innovations have direct payoffs. Even though the meal plan offers a great deal for guests, for instance, it increased food revenue because meal plan guests eat almost all their meals at Disney restaurants. Other innovations might seem like pure expense, such as the decision to install Wi-Fi capacity throughout the Disney properties. But it’s all driven by a desire to make the customer experience so seamless and unforgettable that it creates enthusiastic promoters of Walt Disney World.

Ultimately, of course, the key to such an experience lies with tens of thousands of employees—cast members, in Disney parlance. On that front, Disney shows a remarkable combination of what In Search of Excellence authors Tom Peters and Bob Waterman once called loose-tight principles, and what we at Bain call “leading by letting go.”

On the one hand, Disney expects every cast member to look the part, play the part and “act happy” every minute of every working day. “Cinderella can’t have a tattoo on her neck, and Mickey can’t smoke,” Lee points out. “We’re putting on a show, and that show’s got to be the same every single day.” On the other hand, Disney gives individual cast members a great deal of authority to solve any problem they encounter. A little girl gets wet in a rain shower? “The cast member has the authority to give her a [new] dress at no charge, or to replace her Mickey Mouse doll or to get her a new ice cream cone.”

Lee discusses all this and more on the podcast—including what it takes for other companies to emulate Disney’s world-class practices. You can listen to the discussion on iTunes or through the player below. Click here to browse more Net Promoter System podcasts.

Knowing when an interaction needs a human touch

linkedin-dont-send-technology-to-solve-human-problem-220x207Banks, retailers, and companies in just about every industry are expanding their online and mobile tools and finding new ways to serve customers through screens rather than at a counter. Without a doubt, a strong digital presence is critical to success in today’s business world, but it’s not enough. Some customers will always want to talk through complicated problems with another person, especially when the questions are sensitive and personal.

The smartest minds in business know which customer interactions benefit from a human touch, and the best companies know how to blend the best aspects of the digital and physical customer experiences.

In my latest post on LinkedIn, I look at the ways that some companies use technology in a way that undermines their service efforts.

Read the post here: Don’t Send Technology to Solve a Human Problem

Taking the temperature of temps: Building relationships that last (even if they’re not meant to) at Elwood Staffing

Net Promoter System podcastWhen you decide to use temporary employees to fill a role in your company, you generally do it because you don’t want the burden or expense of bringing someone onto the payroll permanently, right? Temp jobs are typically transitory, often unpleasant and rarely central to the mission of the company. That’s why managers are willing to delegate the hiring of temporary workers to an agency.

So why would a staffing firm work hard to gather feedback from the temporary employees it places with temporary employers?

Alan Balmer and Fernando Cadena (pictured right) of Elwood Staffing provided some insight on this puzzle when I spoke to them recently on the Net Promoter System podcast. When you hear them talk about it, the whole thing starts to make perfect sense.

Elwood is a large temporary employment agency based in Indiana. It places temporary employees in many different jobs in a variety of industries—automobile manufacturing, oil and gas, warehousing and so on. Its temporary employees might stay on the job for a month or for many months. Similar to a lot of business-to-business companies, Elwood focuses on building long-term partnerships with its clients so that when a company needs extra help, the first vendor it calls will be Elwood.

Fernando CadenaBut customer loyalty in this business is complex, because human beings are involved. If employees don’t like their placements—or if it’s just a bad fit between an individual and the job to which he or she is assigned—the work will suffer, and turnover will be high. That’s costly both to Elwood and its clients. So it’s in everyone’s interest that the temporary employees feel fairly treated, appropriately paid and listened to when they have concerns.

Fernando, who is director of associate engagement, says that addressing this issue was challenging. The company had to “find a way to collect feedback from our [temporary] employees and then … provide that feedback to the clients where our employees were working and also to our internal teams so that we could make some changes to make it better for our folks and improve their experience.”

Enter Net Promoter. Fernando read The Ultimate Question 2.0 and liked the simplicity of the feedback methodology. Before long he was pulling Elwood associates off the line at clients’ workplaces and asking them how likely they would be to recommend this company to friends or colleagues. He also asked an important follow-up: If the company could make improvements, what would they be?

You can hear on the podcast some of the interesting issues and opportunities he uncovered. But more important than the specifics they raised might be the process: Temporary employees were grateful simply to have a voice. And the systematic feedback data enabled Elwood to have productive conversations with its clients about the workplace issues that temporary employees raised. Clients who acted on the concerns found that turnover decreased and the quality of work improved. Those that failed to act, not surprisingly, found the opposite. As a result, Elwood not only improved the quality of experience for its temps but forged closer relationships with its corporate clients.

This use of the Net Promoter System differentiates Elwood from its competitors, says Alan, who is vice president of workforce solutions at the firm. “From our perspective, it’s very important to retain [clients] and demonstrate to our existing client base that we are committed to you,” he says, and investing in Net Promoter “is a small cost in order to retain the clients that we have and keep them feeling happy.”

So there it is: A metric originally developed to help earn enduring loyalty is being used in a situation that everybody knows is temporary. Yet it’s completely logical. And it’s good for everyone—Elwood, its clients and its associates alike.

You can listen to my discussion with Alan and Fernando on iTunes or through the player below. Click here to browse more Net Promoter System podcasts.

Warby Parker: Seeing the eyeglass business through a new set of lenses

Dave Gilboa - Warby ParkerRoughly half the adult population of the US wears eyeglasses. Until recently, I never did. But now that I’m getting a little older, I need corrective lenses to read anything closer than about a football field away from my face.

I’ve noticed several things about eyeglasses. First, the shape and design of a pair of glasses really impacts how you look. For me, there’s a big difference in how I look wearing round, oval or rectangular lenses. And the frames matter. They can be nearly invisible or quite prominent, metal or tortoiseshell, light or dark. Second, they cost a lot! Sure, you can pick up some cheap reading glasses at the drugstore for well under $20. But if you need prescription lenses and want them to look nice, get ready to spend a few hundred dollars. Finally, the custom ones can take a really long time to arrive from the eye doctor. Mine seem to take around a month every time I need a new pair.

Dave Gilboa and his cofounders at Warby Parker are trying to change all that. Five years ago, they started selling glasses over the Internet at $95 a pair, undercutting most opticians. Their goal is simple: They want to make glasses so affordable and easy to buy that you’ll want to own several pairs, even coordinating them with your mood, your clothing or the occasion. After all, you wear them on your face, and they’re one of the first things people notice about you.

Net Promoter System podcastIt wasn’t an easy proposition. “People tend to be very deliberate and picky when they’re selecting glasses,” says Dave, who recently shared his experience on the Net Promoter System podcast. And, of course, every pair of prescription glasses must be custom-made after someone places an order.

Dave also realized that the fledgling company had little that was proprietary—no intellectual property, no new cutting-edge technology. “It’s not rocket science to figure out how to source affordable products globally these days,” he says. “So we realized other people could copy that.”

Therefore, he and his partners concluded, fanatical attention to customer experience would be essential to Warby Parker’s success. They would have to build a brand and a reputation that created positive word of mouth. Before launch, the founders “camped out for hours in optical shops just to observe how people are shopping for glasses,” Dave says. They saw how important it was for consumers to try on different frames, get advice and make sure everything was just right before they ordered.

In response, the company initiated a unique “home try-on” service that allows customers to choose up to five frames on Warby Parker’s website to try on at home. The company pays all the shipping costs, so it’s not the cheapest service, but the conversion rate is high enough that the economics work out. And it’s a great marketing tool—the buyer’s friends and family members often learn about Warby Parker.

Warby Parker’s approach is working. Its online sales have boomed. It has opened 12 physical stores in cities around the US, and they’re doing well. Recent speculation among investors gives the company a potential valuation of more than $1 billion. Fashion has also played a role in the company’s success, of course—Warby Parker’s elegant designs are wildly popular among young, hip shoppers.

The company has relied on Net Promoter feedback to maintain and continue to improve its outstanding customer experience amid this growth. Dave says the Net Promoter Score is “the leading indicator for the health of our brand and the best indicator of how good a job we’re doing serving our customers’ needs.” When the score recently dropped several points, the company looked closely at detractors’ comments. Increased shipping times—a result of rapid growth—were a particular sore point. So the team quickly developed an action plan to get orders out faster.

Dave talks about much more on the podcast, like the thinking behind Warby Parker’s decision to open physical stores and the critical importance of repeat and multiple purchases. You can listen to the discussion on iTunes or through the player below. Click here to browse more Net Promoter System podcasts.

Net Promoter, pay and predictable (but unintended) consequences: How to avoid the most common traps

Net Promoter System podcastHere’s how it usually goes. A CEO or division president decides that it’s time to get serious about customer loyalty and decides to use the Net Promoter System as a lever for change. Executives tell themselves that “anything that is really a priority must be part of our goals and incentives,” and they take the obvious first step of setting NPS goals and linking them to incentive compensation—bonuses. Often the link extends throughout the organization, including everyone from CEO down to the frontline employees who interact with customers every day.

What happens next? Well, because it is actually hard to earn customer loyalty, and because NPS is new to them and not yet well understood, employees and their managers begin by criticizing the new metric. When that doesn’t work, they very predictably move on to analyzing in great detail subtle changes in scores, explaining away every low score as either an outlier or a result of some factor beyond the control of their own functional group. Pricing, for example, is a perennial favorite of sales teams, while policies and product features seem to surface regularly in call centers. Inadequate IT also seems to be an easy target.

Eventually, however, almost every company that leaps to set goals and incentives based on NPS in the early days finds that some significant number of employees begin coaching customers about how to respond to the company’s requests for feedback. They start begging for top scores, as so many auto dealers do. In the worst cases, the idea comes from their bosses, who themselves feel frustration with the team’s inability to quickly move the scores. Often, they sanction crafty ways to game the system, such as figuring out how to exclude dissatisfied customers from the survey database.

Sure enough, scores begin to rise—only senior executives don’t really understand why. And the improvement, of course, is wholly illusory. Even more dangerous are the side effects. Customers feel used. Employees feel the company lacks integrity.
Fred ReichheldSo that’s the trap. To learn how to avoid it—or how to escape it if it has already ensnared your company—you’ll want to tune into my latest podcast. Net Promoter creator Fred Reichheld and I discuss the specific conditions that must be met before you link scores to compensation. We also talk about how to fix things if you have done so prematurely. (Hint: The first step is to break the link—but you have to do so carefully, so that people don’t misinterpret the move.)

I’ll leave the details to the podcast. But there’s a fundamental principle here that Fred emphasizes, and that underlies our practical recommendations. People don’t work for money alone. Sure, they have to be paid fairly. But the real satisfactions of a job come from accomplishing something, from serving someone, from feeling like a valued member of a winning team.

“Part of the solution here has to be refocusing the energy on intrinsic motivation,” Fred said to me. “The truth of the matter is that our bonus is not what’s going to make our lives worth living.”

I think that’s why so many successful Net Promoter companies go out of their way to recognize people’s contributions in nonmonetary ways. They don’t just give out the usual pats on the back—they create stories about people and teams who did remarkable things for customers, and they spread those stories throughout the organization. (For a great example, watch this video about TD Bank.) The most powerful form of recognition, moreover, comes from a person’s peers. If an employee regularly wins recognition from peers for living a company’s values, says Fred, that should be part of the permanent record and should figure in performance reviews.

Everyone knows that incentive compensation can be a powerful motivator. But unless companies are careful, they can wind up incentivizing the wrong things and sending the wrong messages about what’s important. That’s why both Fred and I always urge companies to use great care in linking pay to NPS performance.

You can listen to my discussion with Fred on iTunes or through the player below. Click here to browse more Net Promoter System podcasts.

Would you recommend your town to a friend? How a ski town uses Net Promoter to grow the tourist trade

Net Promoter System podcastSteamboat Springs, Colorado—the entire town, not just the ski resort—is using the Net Promoter Score to help make itself more customer-friendly.

Yeah. You read that right. A town. We at Bain have a lot of experience helping big companies adopt the Net Promoter System. But a town? That was a new one. So I asked Jim Clark (pictured below right), CEO of the Steamboat Springs Chamber Resort Association, to tell me all about it on a Net Promoter System podcast. Jim was joined by Rob Perlman (pictured below left), head of sales and marketing for Steamboat Ski & Resort Corporation—a good thing, as it turned out, since the ski company has been using Net Promoter for years and was one of the inspirations for the town’s pathbreaking move.

Jim Clark of Steamboat Springs Resort Chamber Association

The ski company decided to employ Net Promoter for the same reason a lot of companies do: to set the resort apart from competitors. “I’m constantly saying … we all have green trees, blue skies, white snow,” says Rob. “What differentiates our resort from the others? It’s the service we provide, the experiences [our guests] have, the lasting impressions we provide. … That’s what’s going to make people select Steamboat over our competitors, who all have the same stuff.” Feedback from Net Promoter has helped the company create a customer-centric culture, maintaining high levels of service and friendliness among its extensive staff.

But there was a problem. Visitors “don’t differentiate between where the resort stops and the town begins,” as Rob puts it. A customer’s overall experience at Steamboat depends as much on airport personnel, bus drivers, restaurant waitstaff and other service providers as on ski-company employees. Moreover, Steamboat as a community attracts summer visitors as well as winter ones, and the ski company is far less active in the summertime.

So that’s when Jim Clark and his colleagues got the idea. What if the whole town—or at least the Chamber Resort Association’s 832 members—adopted Net Promoter?

Rob Perlman of Steamboat Ski & Resort Corporation

That’s the effort that is under way now. The association began training local businesses. It also began gathering systematic feedback from visitors, primarily in the summer. Jim would be the first to acknowledge that the system is still in development—for example, many of the responses are anonymous, which makes it impossible for anyone to close the loop when a visitor offers a complaint or a suggestion. But the feedback has already underscored the importance of certain key events in the overall customer experience, such as how a customer is treated at the airport and what happens if there’s a mistake with a reservation.

Most important so far is a sense among local businesses that the culture is changing. According to Jim and Rob, the community has begun to feel that Steamboat Springs is improving on the Western friendliness and great service it has been known for. “There’s a real sense of pride” about Net Promoter, says Jim. “It’s been very much embraced.”

To hear more about how a town can use Net Promoter, listen to my discussion with Jim and Rob on iTunes or through the player below. Click here to browse more Net Promoter System podcasts.

You can also find an article in the New York Times about Steamboat’s great experiment.

Harry’s: Taking on the razor blade giants by building personal relationships with customers

Andy Katz-Mayfield of Harry'sWhen my former colleagues Andy Katz-Mayfield and Jeff Raider told me they planned to start a business selling razors and blades, I thought they had lost their marbles. While there are few certainties in business, one of them is that competing against entrenched market leaders rarely works out for the new entrant. This is especially true for products sold in grocery stores and drugstores. And in the razor and blades market, two companies are dominant: together Gillette and Schick account for about 80% of the global market.

So how could a brand-new competitor ever hope to achieve a toehold in this business? It wouldn’t be just the usual David vs. Goliath affair. It would be tiny little David going up against mighty Goliath and his slightly smaller brother.

Andy and Jeff started a company called Harry’s, which sells razors, blades and other shaving supplies online. Andy is my guest on the latest Net Promoter System podcast, and he explains how Harry’s is taking on this monumental challenge.

The idea for Harry’s came after an experience with which many men are familiar: Andy had gone to the drugstore to buy blades. There they were, locked away in a display case. When he finally found someone to open the case, he was—once again—appalled by how much the blades cost, roughly $4 apiece. While less expensive, the alternative of disposable razors brought unacceptable quality trade-offs.

Net Promoter System podcastMaybe, Andy thought, there was room for a high-quality, lower-cost alternative—particularly if the new company could create a deep bond between the brand and its customers, turning them into promoters.

That launched the start-up saga he recounts on the podcast. Turns out it isn’t easy to make razor blades: the giants mostly do it in-house, using a lot of proprietary technology. But Andy and his colleagues tracked down a factory in Germany that could produce blades with the necessary quality. They liked the plant and its people so much that they bought the whole thing.

But then came the task of creating a bond of loyalty between company and consumer. The website had to be attractive and easy to navigate. The packaging had to make the customer feel “almost as if you were opening a present.” Subscriptions would be available but not required; although investors like the subscription-based model, Andy doesn’t. “It’s our philosophy of just being very consumer-centric,” he says. “Why should we force you to have a subscription?”

The team also decided that first-time buyers would get personal emails, sent by real people, asking them about their experience. That approach has generated great feedback, as have the company’s regular Net Promoter requests. One customer—an engineer—decided that the handle on the company’s razor wasn’t quite right; then he actually sent the company working drawings for fixing the problem, which it did.

“The key,” says Andy, “is getting people to engage with the product, engage with the brand, and come back and buy more.” In the podcast he talks about how Harry’s does that day after day—the metrics it watches, how it hires and deploys its people, how it keeps everyone focused on the customer experience so that their little David really can take on those two giants.

You can listen to my discussion with Andy on iTunes or through the player below. Click here to browse more Net Promoter System podcasts.

The inner loop of the Net Promoter System: Connecting employees and customers every day

Fred ReichheldOne of the great ironies of modern business practices stems from the way traditional “voice of the customer” programs alienate employees from their customers. These programs generally deliver customer feedback to employees in the form of statistics and reports several weeks, and sometimes several months, after the customer interactions that spurred the feedback. If you have ever been subjected to this process, you know how frustrating it can feel. The scores come to you devoid of context. They are disconnected from any particular customer. Comments, when they are included, come in a list, not attributed to any individual customer you can remember. How are you supposed to use this as a way to get better at your job?

Yet if you’ve read The Ultimate Question 2.0, you know that the Net Promoter System was inspired by the way Enterprise Rent-A-Car used a simplified form of feedback to connect its car rental agents and managers to the customers they serve.

When we first introduced the concept back in 2003, we focused on the scores. At the time, there was no tool in business that offered comparable simplicity and speed when it came to collecting customer feedback. More important, we had never seen anything as powerful for motivating frontline teams to learn and act on customer feedback.

Net Promoter System podcastSince then, we’ve come to appreciate that some of the other things Enterprise was doing were just as responsible as their system’s radical simplicity for making those scores more effective. One of the tactics that most impressed us was a process we now call the inner loop. It’s when companies ask a customer for feedback about their experience, share the input directly with the employees involved and then follow up with those customers to learn more, address any unresolved issues and connect with them in a more personal and human way.

With the benefit of hindsight, this might now seem obvious. Of course we should share feedback from individual customers directly and immediately with employees. Obviously, we should follow up with customers whose feedback merits further exploration or action. Yet today, too many companies still let their employees toil in the dark, giving them feedback so infrequently that it’s impossible to learn and make rapid changes that lead to happy customers and an empowered staff. Employees in these situations often feel helpless and disengaged, and the customers feel they’re not heard. In contrast, employees at a company with a strong inner loop feel a sense of mastery and ownership. They know that they have the power to delight customers and develop their skills. They feel connected.

The key to an effective inner loop is granularity and timeliness. The feedback must be detailed enough that employees can learn from what they did in a particular interaction that they remember. They have to be able to link the outcome to the actions and behaviors that created it. Aggregate data just won’t do. Companies must also relay the feedback while the experience is fresh in the minds of the employee and customer.

I recently talked to my colleague Fred Reichheld, creator of the Net Promoter Score, about the origins of the inner loop and its role in inspiring employees to do a better job for their customers. We also discussed how the inner loop can go beyond call centers and sales groups to support back-office teams and other support organizations—people who have less contact with customers but still impact those relationships.

A new installment of our Loyalty Insights series will take an even closer look at what makes an inner loop effective.

You can listen to my discussion with Fred on iTunes or through the player below. Click here to browse more Net Promoter System podcasts.

When employees say goodbye, don’t let a bruised ego cloud your judgment

four-reasons-not-to-be-a-jerk-220x207It’s often hard for executives to see young, talented people leave their company, but people often have to change jobs, employers or careers to broaden their skills and explore new challenges.

While these shifts can be rewarding to people, more companies are realizing that they also have a lot to gain when employees come and go. In fact, some smart companies, including Procter & Gamble and IBM, learned long ago that fostering positive relationships with outgoing employees—treating them as esteemed alumni rather than traitors—can help the bottom line. In my latest post on LinkedIn Pulse, I explain why.

Read the post: Four Reasons Not to Be a Jerk When Employees Say Goodbye 

Sophisticated simplicity: How Delighted makes Net Promoter feedback easy and appealing to customers

Net Promoter System podcastI’m often surprised to find that some executives will accept single-digit response rates in their customer-feedback programs.

One recent conversation centered on a company’s 4% response rate. My concern about the low response rate met resistance. The executives responded that their market research partners had assured them this was typical. Anyway, they said, the statisticians had told them their sample was adequate.

But this sort of logic fails to account for the human part of the equation. With a 4% response rate, 96 out of every 100 customers are ignoring the company’s call for help. Ninety-six percent of the customers won’t bother to tell the company what they liked, what they hated or how they thought it could do better.

Of course, single-digit response rates probably shouldn’t surprise us. The way many companies ask for feedback fails the simple test of The Golden Rule. These companies ask for “just a few minutes of your time,” but then present customers with a seemingly endless list of multiple-choice questions. The survey questions and answer options often feel irrelevant or relate to features or experiences the customer never had. The survey might even ask for customer information the company already has.

At Bain & Company, we’ve long advocated a much simpler, customer-friendly approach to gathering customer feedback. We focus on two simple questions: How likely would you be to recommend the company or its products? Why?—letting you answer in your own words.

Now a company called Delighted has taken this customer-friendly approach and embodied it in a beautiful, simple package. Under the hood, there’s a ton of sophistication enabling that beautiful simplicity and creating the support for a more comprehensive Net Promoter System, complete with follow-up call support and rigorous analytics.

caleb-elston-120x113I had a chance to talk with CEO and cofounder Caleb Elston. You can listen in on the conversation in my latest Net Promoter System podcast. Caleb is quite thoughtful about how to solicit feedback in an engaging and relationship-enhancing way.

Companies using Delighted’s software send a short email to customers, often right after a transaction. The likelihood-to-recommend question is included right in the email, complete with a zero-to-10 response scale. It’s mobile-friendly, so all you have to do is touch or click on a number. The software then takes you to a Web page where you can give the reason for your rating or offer any other kind of feedback you want. The whole thing can take less than a minute. Really.

Delighted’s software platform makes it easy for a company to get started on the system, and then to scale up its use over time. So a small business can get up and running on the light version for a very low fee and with just a list of email addresses to get going. For a larger company, the software can plug into an existing CRM system so that the feedback is linked to the customer’s buying history or other variables.

The retailer Bonobos, an early user of Delighted, used the software’s fast-feedback capabilities to test some modifications to its shipping procedures—and quickly learned that the change was making customers unhappy.

And what about that 4%? Delighted’s results with Bonobos and a handful of other early customers show response rates reaching 40%. It’s an exciting development. A platform so simple it takes just minutes to get up and running, but sophisticated enough to integrate with a larger company’s internal technology and support a Net Promoter System.

You can listen to my discussion with Caleb on iTunes or through the player below. Click here to browse more Net Promoter System podcasts.

Net Promoter at the heart of a cultural transformation: How Safelite turns hassles into smiles

Net Promoter System podcastWhen I was in college, I had the unfortunate experience of living in a high-crime city. I got a lot of experience getting my broken car windows replaced. It was not a fun process. You’d call your insurance company, try to persuade them that the breakage wasn’t your fault (again), get an estimate or two, call again for approval and finally take your car to some out-of-the-way shop for the repair.

Today the hassle is almost entirely gone from auto glass repair: Auto glass companies come to your car wherever it is and replace your broken glass on the spot. When a rock on the highway cracked my windshield recently, I was surprised at how easy the process was.

It turns out that making the process easy for car owners can prove challenging for the companies doing the repair and replacement. Insurance companies pay for most repairs, and they drive hard bargains on pricing. In fact, these days the auto glass companies handle many of the insurance companies’ tasks. For example, when you call your insurer about a glass-only claim, chances are quite good you’ll speak to someone at an auto glass company acting on behalf of your insurance provider. And getting the field technicians out to your car—no matter what the weather—and making sure they have the right parts and the right training and that they do a great job can pose significant operational issues.

Safelite AutoGlass is a leader in this difficult business—in fact, it’s the only national glass repair and replacement company in the US. It deals with hundreds of different insurers. Its 8,000 field technicians work largely on their own, far from any supervisor. And the field techs must be able to repair or replace the glass on countless car makes and models—often a difficult and demanding technical job. So Safelite’s story is pretty interesting.

TomFeeney-120x113A few years ago, Safelite set itself a goal of becoming “people powered” and “customer driven.” It’s in the midst of an ambitious transformation aimed at inspiring and engaging employees and giving customers an experience far better than what they expect. “The saying that we’ve been playing with around here is that we turn a hassle into a smile,” says CEO Tom Feeney, one of three Safelite leaders who are the guests on my latest Net Promoter System podcast.

Safelite uses an impressive variety of tools and techniques to achieve its aims. Customers who call for service talk to a person, not a recording. The company sends the customer a short bio of the technician who’s just been scheduled to do the work. Training for the technicians focuses on the “soft” skills for relating to customers, not just the fine points of auto glass installation. In fact, technicians are hired as much for a service-oriented attitude as for technical abilities.

“We introduced a total new performance management system that weighs those competencies,” says Natalie Crede, senior vice president of human resources, and another guest on the podcast. “Fifty percent of your review [is] on those skills and behaviors.”

To reinforce its values, Safelite makes a point of circulating stories that illustrate the sorts of behaviors that make customers smile. One recent story involved a field tech confronted with a hearing-impaired customer. He asked a friend conversant with sign language to help him communicate in a way that would make the customer more comfortable. Today, Safelite provides its technicians with videos in both sign language and Spanish to help them assist customers who rely on those languages.

To further reinforce the culture, Safelite has developed an exemplary application of the Net Promoter System: “It’s front and center for our technicians every single day,” says Renee Cacchillo, vice president for customer and brand strategy and my third guest on the podcast. Net Promoter feedback from customers helped Safelite understand some of the subtleties about why Saturday morning service was so often problematic for customers. Typically, the company learned, customers try to pack a lot into their Saturdays. To help support its customers, the company bolstered its support systems and extended its Saturday hours.

You can listen to my discussion with Tom, Natalie and Renee on iTunes or through the player below. Click here to browse more Net Promoter System podcasts.