NPS Blog

New on the Podcast: The Gift of Brutally Honest Feedback

Kim Scott - Radical CandorHave you ever found it hard to tell an employee that his work simply wasn’t cutting it? Maybe you were afraid of hurting the employee’s feelings or creating tension, so you decided not to say anything.

Kim Scott, an executive coach and former Google executive, considers these situations missed opportunities for growth. She argues that honest criticism that’s shared with sincere concern can empower employees at every level of a company.

In the latest episode of the Net Promoter System Podcast, Kim discusses her Radical Candor framework and the power of saying what you think. You can listen to the episode on iTunes or through the player below. Click here to view more episodes.

The Financial Fact Founders Can’t Forget

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Unlike professional business managers at many incumbent companies, company founders can never forget this simple fact: Revenue doesn’t come from thin air; it comes from customers.

This way of thinking, it turns out, is essential to sustainable, profitable growth. In their upcoming book, The Founder’s Mentality, my Bain colleagues Chris Zook and James Allen found that, since 1990, returns to shareholders at public companies where the founder is still involved are three times higher than at other companies. Moreover, among the elite companies that Bain identifies as sustained value creators—that is, those that have achieved a decade or more of sustained profitable growth—two-thirds clearly exhibited the traits of Founder’s Mentality, whether or not the founder was still at the company.

In my latest post on LinkedIn, I look at how the customer focus that comes with a Founder’s Mentality can help a company succeed.

Read the blog post here: The Financial Fact Founders Can’t Forget

Set Perfection as the Goal: Leadership Lessons from Former Vanguard CEO Jack Brennan

It’s common wisdom that your goals should be achievable. In fact, a popular goal-setting acronym, SMART, holds that goals should be specific, achievable, realistic and time-bound. (In some permutations, “relevant” is substituted for realistic.)

jack-brennan-210x250Jack Brennan, though, suggests almost the opposite. Rather, the former CEO of mutual fund giant Vanguard and current board member of several large, public companies including GE, claims that only by setting unattainable goals do organizations realize greatness. “I found with time that setting perfection as the goal is motivational. And there are people who don’t agree with that, by the way. But to set perfection as the goal and then creep your way towards it … to have perfect client retention—what a great objective,” he says.

Jack has always believed in a loyalty-based strategy because he has seen firsthand how it can power a company’s growth and profitability. Under his leadership from 1996 to 2008, Vanguard continued its meteoric rise to the top of the mutual fund industry. Jack followed a very deliberate client and asset retention strategy. In fact, under his leadership, Vanguard was an early adopter of the Net Promoter System. He used it to reinforce the mutual fund’s core loyalty-based operating principles. He pushed employees to ask, “Is it in the best interest of the client?” until the question became second nature to them. The goal was always to keep clients for life and to never acquire a client they couldn’t keep very long.

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Through years of leading Vanguard’s loyalty-driven culture, Jack has dozens and dozens of practical lessons to share. During a recent Net Promoter System Podcast episode, we reviewed just a few of them:

Measure the right things the right way. Financial statements don’t recognize the value of customer loyalty, but smart investors do. And corporate leaders must, if they want to build sustainable businesses. At Vanguard, the Net Promoter Score is one of the key competitive benchmark metrics executives report to employees. Using it right means asking the right people for feedback and measuring it regularly, not just when the timing is right to get a good score. “Great leaders of organizations have their own metrics beyond GAAP [accounting],” Jack says.

Make loyalty relevant to every employee. In a big company, not everybody is going to understand the business model. A leader’s job is to communicate in clear, simple terms why a particular metric matters. For example, Jack translated the percentage of assets that left Vanguard every year into dollar terms, so employees could see how much they had to sell just to stay even. He then encouraged them to reduce the churn, so the sales could produce growth. “We might have to sell $7 billion of mutual funds to stay even, but what if we got that down to $5 billion? Then if we sell 7, we grow,” he would say. Going one step further, Jack advocates tying some compensation for every employee to how well the firm performs on customer loyalty.

Get more of (only) the right customers. Vanguard is steadfast about turning away clients it can’t keep for a lifetime. Somewhat shockingly, that means the firm never advertises based on fund performance, and often closes funds to new investors when they become too “hot.” The promises of performance-based ads “are the fastest way to attract new customers and also the fastest way to get them out the door,” Jack says.

Don’t confuse customer service and customer loyalty. It used to be that Vanguard employees didn’t ask questions when customers wanted to withdraw money; in the spirit of great service, they would process the request as quickly as possible. That meant customers would sometimes move money to competitors’ products without even realizing that Vanguard offered a similar product, and often at a much better value to the client. “It was a big aha! for us” when leaders realized that employees were missing opportunities to educate customers and potentially earn more of their business, Jack says. As a result, “we took a great service mindset and made it a loyalty mindset, and that changed the nature of the business model.”

Leverage the power of the CEO to focus the organization. “There’s no question there’s a special role for the CEO,” Jack says. “People look to that person and they will emulate what that person does, good or bad.” To that end, he made it a point every month to work the phones in Vanguard’s call centers, asking for help from the employees who worked them every day. “The message was, there’s nothing more important today than that phone call coming in, where we can help that person secure their financial future better,” says Jack.

Few leaders have lived the principles of customer and employee loyalty as completely—or inspired an organization as effectively—as Jack Brennan. He has plenty of other inspiring ideas for those who are leading modern loyalty revolutions. You can listen to our conversation on iTunes or through the player below. Click here to browse more Net Promoter System Podcasts.

Assessing Your Net Promoter System: How VimpelCom Set a Roadmap for Improvement

VimpelCom is one of the largest telecom companies in the world, serving 217 million customers globally. It started in Moscow in the 1990s and has grown to cover 14 countries ranging from Italy to Kazakhstan.

Yet until a few years ago, it was missing feedback from an important group of customers: its employees. Thanks to a legacy rewards program, people who worked for VimpelCom could have their services switched on and bills paid almost automatically, with no need to navigate the circuitous system that non-employees faced. Their view of the customer experience was skewed.

That changed when VimpelCom became more serious about its mission to focus on customers, forced in part by an influx of Internet-based rivals who were squeezing revenues. The company realized it needed to reconnect with its employees and get a handle on its loyalty economics.  I recently talked to VimpelCom executives Anton Telegin and Natalia Macpherson about how they used the Net Promoter System to support this critical cultural shift.

“The competition is very tough, and resources are scarce,” says Anton, who is group director for commercial transformation. Improving customer experience “was a way to not compete on price.”

A few years into their journey, VimpelCom launched an assessment of its Net Promoter System, with Bain’s help, to identify ways they could accelerate their progress. Company leaders used Bain’s assessment tool to evaluate how executives were gathering data on customers and making decisions about service.

While they had been using the Net Promoter Score to gauge their progress, the assessment revealed that VimpelCom still had little consistent insight into its customers’ experiences. Most employees were in the dark about customer travails. Moreover, its IT systems did a poor job of capturing and retaining the objective data executives needed to make things better. As a result, customer-focused programs lacked momentum and focus.

“People didn’t realize that, yes, you can implement a Net Promoter Score, but that’s not going to get you that far,” says Natalia, who is group director of customer service. “Without the leadership knowledge and engagement driving the program, it’s not going to be that effective.”

The assessment tool helped VimpelCom leaders develop a shared point of view about what they needed to prioritize to make the Net Promoter System work for them. The company invested in technology that collected customer feedback more effectively. They also used it to gather feedback from employees, who were charged with accessing the company’s services just like everyone else.

The assessment results also helped customer service leaders illustrate the connection between customer experience and growth (or in the case of detractors, loss), which helped them rally support for their Net Promoter efforts. In the first full year of using the Net Promoter System following the assessment, VimpelCom reduced customer churn by 10%, which equated to $350 million in revenue. Leaders have good reason to be optimistic that those strong returns will continue.

To track their progress, VimpelCom managers took the Net Promoter System assessment once again last year, two years after the initial launch. “It was a bit of a health check,” Anton says. “We found that yes, we are moving in the right direction.”

VimpelCom is just one of 130 Net Promoter companies we recently studied to understand which ones are using the system to its fullest potential. Only a few of these companies have implemented all the system’s best practices. Most companies are somewhere along the journey, and many have a long way to go. But it is clear from the analysis that as companies apply more Net Promoter best practices, they grow increasingly happier with the results they have achieved. The closer to the complete system companies come, the greater their management team’s likelihood to recommend Net Promoter to their colleagues.

Want to see how your company’s Net Promoter System stacks up? Try our online assessment tool.

To hear more about VimpelCom’s Net Promoter experience, listen to our conversation on iTunes or through the player below. Click here to browse more Net Promoter System podcasts.

How Bonobos designed a tailored shopping experience

I used to think Internet stores were just about the last place I’d go if I wanted to buy a pair of pants. It’s hard enough to find a pair of jeans or other casual pants that flatter my slightly-less-than-perfect bottom. And it’s just plain impossible to gauge how a pair will fit from an online photo of a handsome young model that is probably Photoshopped or at least styled to an extreme. If you want a pair of pants to fit right, you need to try them on, touch the fabric and maybe get a little help from a tailor.

That’s why it’s so shocking that Bonobos has been successful. When Bain alums Andy Dunn and Brian Spaly started the e-commerce company, they wanted pants that fit better. They found American-cut pants too boxy and European cuts too tight. They also found the men’s shopping experience to be lacking. So, they did exactly the opposite of what I would have expected: they founded Bonobos with the explicit promise that their pants would fit better—a claim that seems almost impossible to verify over the Internet, and very unlikely to be compelling. Yet, somehow, they succeeded.

Andy Dunn of Bonobos

“We saw what Zappos had done, delivering a great service experience selling other brands, and we said, ‘Wouldn’t this be even more powerful if we could do it building our own?’” Andy says. Bonobos launched its website in 2007, offering pants with its signature curved waistband.

While I thought they were crazy at the time, they’ve proved me wrong. Bonobos is a fast-growing online menswear retailer with 320 employees and 20 physical stores. When Andy joined me recently on the Net Promoter System Podcast, we spoke about the company’s approach to customer service and what makes it different.

Bonobos has done everything it can to keep service at the core of its mission. Its customer service “ninjas,” the online team members who interact directly with customers, are based at the company’s headquarters in New York. The company looks for positive, empathetic people for these critical roles, and many ninjas go on to more senior positions.

Andy says Bonobos is “obsessed” with the Net Promoter Score. The company uses Net Promoter to measure its online customer experience as well as each store’s performance every week. Bonobos categorizes feedback whenever a customer mentions a specific product, allowing it to improve its T-shirt line, for example.

The company combines customers’ Net Promoter feedback with their order history to create a powerful system that helps salespeople provide a more tailored experience, both online and at its offline “Guideshops.”

“What we’re spiritually trying to do is have a guy feel like we know him and we care about him more than any clothing brand has ever done so in the history of humankind,” Andy says.

It might sound grandiose, but this maniacal focus on service has allowed Bonobos to diversify beyond pants. Andy says that tops and other products now account for the majority of the company’s online sales. Moreover, they’ve developed such a great reputation for good products and service, they were able to team up with department store chain Nordstrom for additional distribution. Finally, their Guideshops seem to be a real hit, offering an even more personal shopping experience to Bonobos brand loyalists.

Andy’s story about the Bonobos journey offers dozens of great ideas for Net Promoter practitioners. You can listen to our conversation on iTunes or through the player below. Click here to browse more Net Promoter System podcasts.

Think like a customer, not like a CEO

stop-thinking-like-a-ceo-npsFor every service superstar I know in business, I can think of another formerly promising company that lost sight of the customer. These once-innovative firms typically start out as rebels in their industries, bucking the status quo with a new idea or disruptive technology. They grow by running their companies on behalf of the customers, realizing that employees and investors could prosper only once customers are delighted.

Then something truly dangerous happens: The customer obsession wanes. Whether intentionally or not, most CEOs distance themselves from frontline employees as their companies add layers of management and bureaucracy. The customer becomes an abstract concept on a spreadsheet — a statistical average.

But some CEOs manage to turn things around. In my latest post on LinkedIn, I look at these radical transformations.

Read the post here: Stop Thinking Like a CEO (and Think Like a Customer Instead)

How text messages helped a phone retailer turn up his Net Promoter feedback

Mobile phone stores have become almost as ubiquitous as Starbucks—there seems to be one (or more) on every corner. In fact, while the signs on these stores often have the name of the major wireless carrier they represent (Verizon, T-Mobile, Sprint and the like), only a few of them are actually owned by the carriers themselves. Many are franchised.

These stores face stiff competition for customers and face narrower and narrower operating margins. To stay alive, they need to make the experience of buying and setting up a new phone so great that the customers come back for all their ancillary needs—and bring their friends. And stores need returning guests to buy additional high-ticket items like tablets or home security gear. Mobile phone stores increasingly depend on loyalty economics to drive their businesses.

As a result, every customer interaction in one of these stores is vital. It’s a chance to wow a customer with a great experience, or to frustrate them with long waiting times, pushy salespeople or poorly trained technicians. Yet store owners generally struggle to get enough customer feedback to know how their customers’ purchasing experience feels to them, or what needs to be improved. Of course, local store employees inevitably give their best when they know they’re being observed. But how do store managers and owners give them the coaching they need if they simply don’t have the facts about what impact these employees are having on their customers?

Jimmy Salamanca of U.S. CellularJimmy Salamanca understands this challenge. He owns and runs a six-store chain that is licensed under the U.S. Cellular brand. When he wanted to improve service across all six locations, he began using the Net Promoter System. “I want to hear what every single guest who walks through our door has to say,” Jimmy says. “I don’t want 1 out of 10 to have a great experience; I want 10 out of 10.”

Jimmy recently shared his journey on the Net Promoter System Podcast. When he started out, he was receiving Net Promoter reports from a third-party provider every 90 days. Only 5% of his customers were responding to the feedback requests. He found it difficult to make any real use of this aggregated, anonymous and delayed feedback.

Misa Chien of FosuboTo get better real-time insight into employee interactions with customers, he began using Fosubo, a tool that elicits NPS feedback from customers via text messages. This is how it works: The day after customers make a purchase at one of Jimmy’s stores, they receive a text message that includes a picture of the associate who helped them and a brief survey about their experience. The survey can ask targeted questions—such as “Were you offered a tablet?”—and find out how likely a customer would be to recommend the store.

About 60% to 70% of Jimmy’s customers reply to Fosubo’s text messages. And since customers provide feedback about specific employees and stores, he can address training gaps and add staff where needed. Jimmy often personally follows up with guests who report bad experiences.

The higher volume of personalized feedback has a powerful secondary effect, too: It’s changing the culture. Employees can see their own results almost as soon as they come in, as well as where they rank next to their peers. That’s created a healthy sense of competition among associates and increased compliance with corporate directives. “It’s a very straightforward way to keep employees accountable,” notes Fosubo founder and CEO Misa Chien, who also joined us on the podcast.

This approach to gathering real-time Net Promoter feedback is even more powerful because it can double as an employee recognition program. “Over 95% of the feedback for our clients is positive,” Misa says. “So for the most part, companies really use the tool as a positive reinforcement tool for the front line to let them see what an awesome job they’re doing.”

To hear how Jimmy uses the Net Promoter System and Fosubu to improve his company’s service, listen to our conversation on iTunes or through the player below. Click here to browse more Net Promoter System podcasts.

Adopting the “insurgent mission”—lessons from great founder-led firms

Founder-led companies show up disproportionately in the ranks of loyalty leaders around the world. It’s an anomaly that has fascinated me for over a decade. Amazon, Apple, Google, Enterprise, Charles Schwab and Starbucks have all become loyalty leaders under the stewardship of their founder. Some of them have done it twice, bringing back the founder when a later generation of management led the company away from its customer-centric roots.

Why are so many of the global loyalty leaders run by their founders or their founders’ family members? What do they do that increases their ability to achieve and sustain customer loyalty? What’s the secret?

Bain's James AllenJames Allen, head of Bain & Company’s Strategy practice, has studied successful founder-led companies in great detail. He’s the coauthor of several seminal books on corporate strategy, including Profit From the Core: A Return to Growth in Turbulent Times and Repeatability: Build Enduring Businesses for a World of Constant Change. His latest work has been focused on discerning how companies can preserve what he calls the Founder’s Mentality while they grow into some of the largest firms in the world.

The Founder’s Mentality starts with what Jimmy calls an “insurgent mission,” a commitment to upend the status quo. “When a great company starts, it is at war against the industry in which it competes on behalf of either underserved customers or new customers that nobody is serving correctly,” he says. Founders who are passionate about customers typically lead these insurgencies and focus their companies’ resources on creating memorable and differentiated experiences for them.

According to Jimmy, companies with a Founder’s Mentality are obsessed not only with the customer experience but also with the frontline employee experience. Founders constantly translate the strategic and organizational discussions they have in the boardroom into action items for the front line—cashiers, call center reps, branch managers and so on. They empathize deeply with those employees, and they spend real time with them, learning about their experiences and about how customers are responding to the company’s offerings.

Leadership teams at founder-led companies also have a relentless curiosity about the customer experience and go beyond the typical “average customer” analysis. Instead, they move as close as possible to single customers, gathering up anecdotes like prizes. For example, a number of CEOs with whom Jimmy works use digital tools to listen to and record call center conversations with customers. Those recordings, which capture the customers’ thoughts and reactions in their own words, then become the starting points for meetings. Rather than PowerPoint slides full of averages and percentages, these teams bring customers to life with real stories and examples. Sure, they back up the stories with analysis, but they develop a deep and visceral feel for how customers experience the company.

Is your leadership team obsessed with the customer experience? Are you obsessed with the customer experience?

To hear more about Jimmy’s work and how the Founder’s Mentality pervades successful companies—even very large public companies—you can listen to the latest NPS podcast on iTunes or through the player below. To browse more NPS podcasts, click here.

A rising Net Promoter tide can lift all boats (or sink some)

riding-boats-nps-blog-220x207Fred Reichheld believes that companies are getting better at listening to customers. In a recent LinkedIn blog post, he describes how customer feedback is a guiding force at Uber, Harry’s and Airbnb.

I’m sure many read the blog post and thought, “Sure, these are niche start-ups that offer services customers want to use, for example, when they’re on vacation.” But what about the big multinationals with millions of customers, thousands of employees and complex operations spread across the world? What about companies whose services are less fun and more practical utilitarian? Are they listening to customers?

It’s a fair question. And so far, the research has been promising. We’re noticing the same upward trend in industries you might not expect—banking and wireless telecom. Bain has been working with market research firm Research Now to collect and analyze Net Promoter Score data for major retail banks, wireless service providers and handset makers for years. And in general, scores have been rising across many major companies in these industries.

Among US banks, the average Net Promoter Score doubled from 14 in 2009 to 28 in 2015. The gains reflect the major steps banks have taken to rebuild trust with customers since the most recent financial crisis that started in 2007. They’ve been using mobile apps and other digital tools to make rote tasks, such as deposits and bill payments, convenient for customers. At the same time, they’ve been upgrading their bank branches to make complicated services, such as loan applications and investment guidance, less painful.

It’s a similar story in wireless telecom, where the average Net Promoter Score for the top four US carriers climbed from 10 in 2013 to 17 in 2015. And among US handset makers, the average Net Promoter Score rose from negative 10 in 2012 to 17 in 2015.

Wireless companies face many hurdles as they try to provide consistent service and offer the hottest new phones and tablets to customers. There’s the massive infrastructure required to ensure reliable service. And there’s the ultra-competitive handset market, where constant investment and innovation are required to keep up with consumer tastes—and survive.

To be sure, external factors also contribute to across-the-board gains in Net Promoter Scores in these sectors. A strong stock market makes for happier banking customers as rising returns lift their portfolios. In telecom, it’s hard to argue that developments in smartphones aren’t making everyone’s lives a little easier.

But these companies are also doing the hard work of fostering regular dialogues with customers. My colleague Rob Markey  talked to John Dwyer, AT&T’s senior vice president for customer experience, earlier this year about the great strides AT&T has made in improving its service. Our recently released Customer Behavior and Loyalty in Retail Banking report highlights all the creative ways that banks are fusing digital tools with physical resources to create a better experience for customers.

Before anyone declares victory in customer service, it’s important to remember that the bar is always rising. Today’s product upgrade will be tomorrow’s standard-issue feature as competitors adopt and one-up each other’s innovations. Also, not all sectors are seeing the same gains seen in banking and telecom—and there are still laggards in these industries.

That’s why loyalty leaders should never satisfied when they see their Net Promoter Scores rise. To fully evaluate their progress, they should compare their scores with those of peers, using a competitive benchmark Net Promoter Score. Doing so would require them to seek feedback not only from their customers but also from potential buyers of their products and services. While the process may sound complicated, it’s a powerful way to spot weaknesses that a high relationship Net Promoter Score might mask.

When a company consistently does it right, a competitive benchmark can provide the basis for goal setting and prioritization. This exercise also fights the complacency that sets in when companies start comparing their scores with Apple’s high scores and overlooking major service problems that can sink them later.

Learn more about the steps banks are taking to improve loyalty in our new report: Customer Behavior and Loyalty in Retail Banking.

How Qualtrics stumbled on the Net Promoter System—and then turned it on itself

Finding out how your customers feel about you used to mean calling in a team of experts. It was costly and often time-consuming, so the results were inherently stale. With the advent of online survey providers, it became possible for companies to collect their own customer feedback. A few keyboard clicks, and anyone from an intern to a CEO could instantly tap into the wisdom of the crowd.

Giving people access to statistical tools doesn’t necessarily transform them into statisticians, however. That’s what Ryan Smith, cofounder and CEO of the online survey platform Qualtrics, discovered a few years ago when he investigated how his customers were using the Net Promoter Score. He recently joined me on the Net Promoter System Podcast to discuss the company’s history and strategy, and how Net Promoter practitioners use its tools.

Ryan Smith of QualtricsA few years ago, Ryan realized that there were 130,000 different versions of Net Promoter surveys in the Qualtrics system, all using the “likelihood to recommend” question. The Net Promoter Score had become wildly popular, yet there was little consistency in its application. Naturally, that was creating a lot of angst for Qualtrics customers.

“It didn’t seem like they really felt comfortable implementing a huge program [like the Net Promoter System] without some serious guidance and help,” Ryan says.

Last year, Qualtrics partnered with Bain & Company to create a standard Net Promoter survey template that conforms to Bain’s standards for best practice. Qualtrics also developed a suite of services to support customers using the program. Now, both start-ups and large multinationals use the platform to build customized surveys with expert help.

Qualtrics has been a customer-centric company since its inception. The platform started out as a tool for academic researchers and was cofounded by Ryan and his father, a professor of marketing at Brigham Young University who was looking for better tools to support his own research. Over time, the online survey platform has expanded and adapted to serve businesses as well as universities. It now has more than 5,000 customers who send out over 1 billion surveys a year.

As it grows, the company risks becoming more distant from its own customers, so Ryan uses the Net Promoter System to get real-time feedback from the company’s customers and stay close to their needs and desires. Qualtrics asks the “likelihood to recommend” question after every deal closing and every customer support experience. It uses that data to guide how it reshapes its products and help customers use the platform more independently and connect their Qualtrics data to their other operating systems and data.

Being a statistics company, of course, Qualtrics is always scrutinizing its own Net Promoter process. “We’re constantly running experiments on our NPS, on our open rates, making sure that our sample size is right. Because we’re making big decisions based on this feedback,” Ryan says.

You can hear more about Qualtrics and the way it looks at NPS by listening to my conversation with Ryan on iTunes or through the player below. Click here to browse more Net Promoter System podcast episodes.

Teaching the values of transparency and integrity: How DonorsChoose became a world-class charity

In 2000, Charles Best, a young history teacher in the Bronx, came up with the idea for a fund-raising website as he photocopied pages from the classic children’s novel Little House on the Prairie for his class. He and his fellow teachers faced a common problem: The school system would not or could not fund the materials they needed to create a great education for their students. In some cases, teachers lacked funding for specific books. In other cases, they lacked art or other classroom supplies. To fill the gap, they paid for things from their own pockets or held little fund-raisers among the parents in their schools. But in some schools—like the one Charles was teaching in—the vast majority of families lived in such deep poverty that scraping together money for classroom supplies often meant giving up other essential items the family needed.

Charles-Best-headshotSo Charles set out to find a new way to raise money for his classroom. He found a freelance Web designer to build a very basic site for $2,000. The site enabled teachers to post a description of supplies they needed, and it gave parents and friends a way to donate toward the purchase of those supplies. He recruited his teacher friends to list their needs, and he recruited his friends and family to donate money. He developed this nonprofit organization during the scant free time he had from his full-time teaching job.

A few years later, Oprah was hailing his website, DonorsChoose.org, as a “revolutionary charity” on her show. And within just a day or so, she had inspired over $250,000 in contributions to the organization.  There was so much traffic on the website that it crashed under the crush of new visitors. Since those early days, the group has dramatically expanded. DonorsChoose aims to raise $90 million this school year, funding tens of thousands of classroom projects throughout the US. Long term, it hopes to serve 100% of the nation’s highest-poverty schools.

Katie-Bisbee-headshotRecently, Charles joined Katie Bisbee, the chief marketing officer of DonorsChoose, as guests on the Net Promoter System Podcast. Charles and Katie shared the story of the organization’s early days, its cultural ethos and the many ways it seeks and uses feedback from its constituents.

One of the organization’s key operating principles, a commitment to transparency, permeates every aspect of the donor and teacher experience. Donors not only get to select specific school projects to fund, but they can also explicitly choose whether their contributions will support the nonprofit. As it turns out, so many people have chosen to support the group’s operations that it hasn’t needed to raise additional operating funds—a rarity in philanthropy.

school-suppliesThe nonprofit also has strong systems for reinforcing one of its other operating principles: integrity. For example, it has a careful system to vet and monitor every funding request, to ensure quality. When a teacher proposes a project, not only does staff review the proposal, but another teacher must also review it. DonorsChoose also informs the teacher’s principal about the request. Moreover, when a project reaches full funding, DonorsChoose directly buys the art supplies, books or equipment for the classroom rather than sending the money. This method reduces fraud and helps reassure donors that their money is actually being used to meet students’ needs.

The success of DonorsChoose depends on creating a truly enjoyable experience for all involved. This means that it must focus not only on its website and technology, but also on the processes and operational interfaces it has in the real world with teachers, donors, school principals and even vendors. As a result, the nonprofit has put real focus on learning and improving. It has been using a variety of techniques to get feedback from its various constituents, and it is using the Net Promoter System to gauge sentiment across these groups to ensure that their needs are being served.

With an inspiring mission, a compelling solution to a pervasive problem and a maniacal focus on creating great experiences for all involved, it isn’t surprising that Oprah has championed the cause. I first found out about DonorsChoose through my kids, and I’ve donated money to several projects over the last few years. It is rewarding to know that I’m helping out great teachers who are dedicated to the success of their students. And it always makes my day when I receive a big package of handwritten thank-you notes the students send after receiving the project materials.

Transparency and integrity. I suspect there are very few organizations that say they don’t aspire to those values. But few have brought them to life as effectively as DonorsChoose has. On the podcast, Charles and Katie tell their inspiring story and also share some practical tips and tricks they’ve learned for running a world-class charity.

You can listen to my discussion with Charles and Katie on iTunes or through the player below. Click here to browse more episodes of the Net Promoter System Podcast.

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Helping leaders hit the gas on culture change at Safelite

Safelite AutoGlass repairs and replaces car windows and windshields. To offer more convenience, the company’s technicians often make repairs at the accident spot or in customers’ parking lots. Around 2008, under the leadership of CEO Tom Feeney, the company clarified its view of the road ahead and made a decision to focus less on financial measures and more on earning customers’ loyalty. It used the Net Promoter System to help support this change and gauge progress.

In a previous episode of the Net Promoter System Podcast, we heard how Safelite applied the Net Promoter System and became a “people-powered” and “customer-driven” organization. It began hiring technicians as much for their service orientation as for their technical skills, encouraging them to, say, vacuum a customer’s car at no extra charge after replacing the windshield. Hearing from customers that Saturdays were their busiest days, Safelite added staff and extended hours to better fit customers’ schedules.

Safelite

Helping frontline workers change the game is crucial to winning customer loyalty. And in our latest discussion, Tom told me it had been equally important for Safelite to reset the priorities of its leaders and their views of their own roles.

“We’ve spent a lot of our time in the past seven or eight years teaching that there’s a difference between managing things and leading people,” Tom says. Managing things has meant telling people what to do, whereas leading has meant engaging with employees, hearing their views and bringing them into the decision-making process.

TomFeeney-120x113Leaders need to get close to their employees. Tom advocates frequent town hall meetings, regular store visits and riding in trucks alongside technicians. Also, the company doesn’t begin its meetings with financial results; instead, it starts with “What’s going on with our people?” “What’s going on with our customers?” And based on that, “How did the month or quarter or year turn out?”

Tom exemplifies that commitment to customers and employees. He meets regularly with employees and uses their suggestions to change policy. One way he keeps in touch with them is by using a tool called asktom.com—employees can ask any question and receive an answer within 72 hours. The company then publishes the exchange in an online resource center for other employees.

To keep executives accountable, Safelite changed performance reviews to incorporate metrics such as employee turnover and engagement, and results of the 360-degree feedback that managers undergo annually. The company also conducts monthly and yearly employee engagement surveys that ask staff how satisfied they are with their jobs, their managers and Safelite. Using these surveys, the company looks at “trends across the business to see the type of climate our leaders are creating collectively and individually,” says Natalie Crede, Safelite’s senior vice president of people and leadership development. For problem leaders, the message is clear: Shape up or ship out.

The outcome of this people-first approach has been enormous growth. Safelite served nearly 5 million customers last year—a record it expects to break in the coming year—and has recently hired 1,000 new technicians, expanding its technician count by 33%.

To successfully implement the Net Promoter System, the entire organization has to be a part of it. According to Renee Cacchillo, who is senior vice president of customer, brand and technology: “It’s not about gathering surveys in a customer function and reporting the results.”

You can listen to my discussion with Tom, Natalie and Renee on iTunes or through the player below. Click here to browse more episodes of the Net Promoter System Podcast. For more on leadership within the Net Promoter System, check out the Loyalty Insights brief “Leading a Net Promoter System company.”

Restaurant chains discover the special sauce of Net Promoter feedback

Net Promoter System podcastIf you want to find an industry where word of mouth can make or break a business, take a look at restaurants. Positive word of mouth builds buzz: Great food and great service at great prices can create a stream of happy diners who tell their friends about the latest hot (or just plain good) place to eat and generate a ton of new business.

But negative word of mouth can break a restaurant. Unhappy customers tell their friends, complain on Facebook and write about their experiences on online sites like Yelp, OpenTable or Zagat. Too many unhappy diners, and it shows up directly on the bottom line. “If guests are unhappy, your sales drop,” says Jim Howard, head of marketing for Patxi’s Pizza, a 16-unit chain based in San Francisco. “It’s pretty basic.”

Even though diners almost always have an opinion about how well or how poorly their meal went, restaurant managers have struggled to know for certain what guests are thinking and feeling about their experience. Most restaurateurs would love a chance to intervene on the spot if things are going wrong, or to thank and reward their happiest, most loyal customers.

Historically, restaurant managers have tended to rely on broad-brush indicators—sales trends, tip percentages and the like. Sometimes they use register receipts to solicit more specific feedback through online surveys. Others put satisfaction feedback cards in with the check.

But the results are usually unsatisfactory. The broad-brush indicators are unreliable lagging indicators that don’t provide much insight about the causes of an issue, if one is indicated. Surveys, whether through register receipts or other methods, tend to be plagued by minuscule response rates (even with incentives, such as sweepstakes or free items on your next visit). Moreover, none of these methods provides a means of addressing issues on the spot.

To solve these problems, innovative restaurant companies such as Patxi and Tomatina—an eight-unit chain of casual Italian restaurants in Northern California—are putting a range of technologies to work. Based on well-established Net Promoter System methods to gather feedback and take action, many of these companies are now using mobile-based rewards program technologies to ensure that they hear from a wide range of guests. One tool they use called Thanx offers restaurants a prepackaged rewards system tied to a guest’s credit card.

I recently talked to Jim and Mark Nicandri of Tomatina, along with Thanx CEO Zach Goldstein (pictured below), on the Net Promoter System Podcast. We discussed the challenges restaurants face in collecting customer feedback and how they’re putting it to use to improve the dining experience. Thanx has been central to their approach.

Thanx CEO Zach Goldstein

Restaurants that use Thanx don’t need any sort of complex point of sale integration. The customer, after registering for the restaurant’s program, simply uses the registered card to pay for a meal, earning points in the restaurant’s program, with the value and redemption options determined locally. As soon as the transaction goes through the system, customers receive a notification from Thanx’s app with a link to a Net Promoter–style request for feedback. Tomatina, the California Italian chain, gets feedback from about 75 guests every week. Between 20% and 25% take the time to add written comments.

Feedback in this system flows directly to the restaurant manager, who sees a dashboard summarizing the data. “I can see in real time what’s going on with our guests,” says Patxi’s Howard. “Every time somebody uses the app, every time somebody redeems a reward or earns a reward, anytime somebody gives me feedback. I can see it not just for Patxi’s as a whole but it also gives me a glimpse into what’s going on at the restaurant level.”

Data provided by Thanx confirms the importance of delivering a great customer experience. Promoters—those who give a restaurant a 9 or a 10 on the Net Promoter System 11-point scale—outspend all other customers by 17% each month. This group of customers will forgive one bad experience, but a series of bad experiences will lead them to visit much less often over time (as much as 45% less over the next five months). So it’s essential for restaurant managers to re-engage promoters after a slip-up.

Not only is there a strong correlation between higher Net Promoter ratings and customer lifetime value, but just the process of asking customers for feedback builds deeper relationships. Thanx research has shown that consumers are 7% more likely to return in the next two months after being asked for feedback—regardless of their response. And a small reward, such as a free salad or $5 off an appetizer, increases a promoter’s likelihood to return even more.

Growing restaurant chains like Patxi’s and Tomatina need ways to create consistently great experiences for guests as they grow. The Net Promoter System—powered by mobile technologies like that offered by Thanx—can give them many of the tools they need to measure, monitor and coach employees in their remote locations. And by handing that feedback directly to the local employees in real time, they give them the power to manage that crucial word of mouth that can make or break a restaurant.

Mark and Jim’s experiences offer many lessons for companies outside of dining. To hear our conversation, you can listen to the latest episode of the Net Promoter System Podcast on iTunes or through the player below. Click here to browse more Net Promoter System Podcast episodes.

Finding employees who don’t always do what they’re told

how-i-hire-220x207When you hire frontline employees, you are entrusting them with the critical task of generating loyalty and enthusiasm among customers.

That means you don’t want employees who only do what they’re told. You want employees who bring their own energy, enthusiasm, and creativity to serving your customers.

In my latest post on LinkedIn, I look at what makes an engaged employee. The fact is, you can’t impose a customer-centric organization from the top down by using conventional management techniques. The management team can help build an environment that provides customer feedback and the freedom (within a framework) to respond to it, but it’s up to employees to really make it work.

Read the post here: Why you should hire employees who won’t do what they’re told

Brick by brick: Rebuilding the LEGO Group by rediscovering customer centricity

Every time I see a LEGO Store or even just a single brick, it brings back warm memories of digging into the big tub of LEGO pieces that my brother and I had in our playroom. We’d spend hours creating imaginary worlds and testing our engineering skills. The LEGO brand is iconic in that way.

Lego

That’s why it’s hard for many people to imagine that the LEGO Group nearly went bankrupt a decade ago. How could such a beloved company nearly go out of business? It’s a simple and unfortunately common story: The company expanded too far beyond its core brick products to theme parks, clothing, television shows and many other projects, and most of these expansions proved to be costly distractions.

Lego's Conny KalcherThe company’s return to profitability came from refocusing on its core: the bricks and the people who love to build with them. Conny Kalcher, vice president of marketing and consumer experiences at the LEGO Group, played a central role in helping it reconnect with its biggest fans: children. When Conny and I met up for our most recent episode of the Net Promoter System Podcast, she reflected on that experience and others from her 29 years at the LEGO Group.

“There was solid evidence that we weren’t hitting it with kids,” Conny says about those dark years. “We had to get back to innovation based on what kids wanted.”

First, the company had to find out what children actually wanted. Before it introduced the Net Promoter System, the intuition of engineers and designers drove LEGO’s innovation process. The company also relied on annual surveys about its brand appeal, which were deceptively positive. If people loved the company so much, why weren’t they buying new sets?

The LEGO Group started collecting a consistent stream of Net Promoter feedback to find out why certain LEGO sets failed to wow young consumers. The high-velocity feedback allowed the company to adjust its approach and make critical improvements earlier in the process—for example, tweaking a model that customers noted was stubbornly askew.

Conny says that Net Promoter gave the company a shared language that it could use to evaluate its products and that the system helped the company bring about broader culture change. Teams became more collaborative in working toward the ultimate goal of delighting customers. Members of LEGO’s insights team were not only responsible for collecting customer feedback, they were expected to advise departments as they turned input into action.

The LEGO Group now uses Net Promoter throughout the company, even in its retail stores, where customers can provide immediate feedback about their shopping experiences.

To hear Conny tell more of LEGO’s story, you can listen to the latest episode of the Net Promoter System Podcast on iTunes or through the player below. Click here to browse more Net Promoter System Podcast episodes.

Photo credit: iStockphoto