NPS Blog

Podcast Shorts: Closing the Loop in the Net Promoter System

Rob MarkeyTo close the loop is not only to let customers know that you have heard their feedback but also to bring the customer’s voice right inside the organization. Employees get a direct line to the people they are serving. They see and hear how they are creating or destroying loyalty and what they can do to improve the customer experience.

This short episode explains why this step is a central element of the Net Promoter System. You can listen to the episode on iTunes or through the player below. Click here to view more episodes.

Learn more about closing the loop in this Loyalty Insights brief: Closing the Loop

Podcast Shorts: The Value of Prototypes

Rob Markey

Creating a pilot or prototype is an essential part of designing a robust Net Promoter System. These small-scale efforts allow a company to experiment with the system’s essential elements, helping the company to create an effective program it can expand to other parts of the organization. This Net Promoter System Podcast short shares some best practices for prototypes.

You can listen to the episode on iTunes or through the player below. Click here to view more episodes.

Learn more: The Value of Prototypes

Why Good Surveys Still Matter in a Big Data World

good-surveys-220x207Why bother customers with surveys now that businesses have Big Data analytics to guide their customer strategies? And if we don’t need surveys, don’t loyalty metrics and programs such as the Net Promoter System become far less relevant?

In reality, it’s not so simple. The Net Promoter System is not based on surveys but rather on regular customer feedback in many forms. Big Data analytics, by capturing and integrating those many forms of feedback, can make the Net Promoter System more powerful. Big Data also makes it feasible to define the relevant groups of customers—promoters, passives and detractors—more accurately.

In my latest post on LinkedIn, I explain why surveys still have a valuable role to play—that is, if they are fewer and shorter—as a proven way to find out why customers would recommend a company (or not).

Read the full post here: Why Good Surveys Still Matter in a Big Data World

 

Podcast: When Customers Speak Their Minds

Fred ReichheldA number rarely tells the whole story. That’s why leading Net Promoter companies ask customers to discuss their experiences in their own words.

Bain Fellow Fred Reichheld returns to the podcast to talk about the shortcomings of multiple-choice surveys, the power of verbatim feedback and some common customer service myths.

You can listen to the episode on iTunes or through the player below. Click here to view more episodes.

Podcast: The Art of Human Connection

Jordan Harbinger of Art of Charm

Some people have a knack for forming genuine human connections whether it’s with customers, colleagues or employees. They have a gift for making people feel special. The ability to speak with authenticity and authority might come natural to some people.

Fortunately, it’s a skill that can be learned, says Jordan Harbinger, cofounder of The Art of Charm, a program that teaches people how to improve their social skills. I recently talked to Jordan on the Net Promoter System Podcast.

Why should this matter to Net Promoter companies? These skills are critical to delighting customers and engaging employees as Jordan explains in this episode.

You can listen to the episode on iTunes or through the player below. Click here to view more episodes.

Great Customer Experience Requires More Than Just a Script and a Score

script-score-220x207A version of this blog post originally appeared on CX Cafe.

It was the eighth week in a row checking into the same hotel in downtown Philadelphia. I recognized the attendant behind the preferred status check-in counter—he had checked me in a few times over the last two months and never missed shouting the obligatory “Good morning!” in my direction as I started out for the day. This was clearly the expected behavior of the front-house staff as everyone would address me in the same practiced way. Despite our previous interactions, it was clear the attendant didn’t recognize me now.

He thanked me for my loyalty upon verification of my identity and, when prompted by the check-in system, for my return business. While he confirmed my details (which hadn’t changed since my first stay), I played his script through in my mind, anticipating each question: Points or breakfast? Did I need my loyalty benefits explained?  Help with my bags? Was I familiar with the hotel and amenities?

On this occasion there was one new question: Did I want my room serviced, or would I prefer a new “green” option that meant no housekeeping during my stay? I considered the option, but while I am generally happy hanging my own towels and making my own bed and am in favor of limiting my personal carbon footprint, I appreciated the convenience of housekeeping given we were working fairly long hours. And I wasn’t receiving any discount on my fairly pricey room, so I declined the more environmentally friendly option in favor of a fully serviced room. Continue reading

Podcast: What Makes Customers Buy? It’s Not Always What You Think

Angela Lee of NorthwesternIn the US, we’re used to seeing sale signs that tout 40% discounts. However, consumers in China are more likely to see signs that promote the percentage a customer will have to pay after the price cut. This seemingly subtle shift speaks to the underlying motivations that inform a customer’s buying decisions, says Angela Lee, a consumer psychologist and marketing professor at Northwestern University’s Kellogg School of Management.

In the latest episode of the Net Promoter System Podcast, Angela discusses how culture and emotions influence brand loyalty and buying choices.

You can listen to the episode on iTunes or through the player below. Click here to view more episodes.

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

reichheld-founders-220x207

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.

vanguard-markey-post-blog

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.

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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.