But what makes Cummins really distinctive is that it competes against its own customers. Every other maker of diesel truck engines is owned by a truck company. The truck companies coordinate with their engine manufacturing divisions, with integrated engineering and a business model that consumes all of its engine production. To overcome this structural disadvantage, Cummins must work a lot harder to earn its customers’ business and their loyalty.
Complicating things further, each of its customers consists of multiple decision makers, influencers and other constituents spread across many different functional and business units. The day-to-day management of customer relationships requires all-in devotion from the Cummins team.
These are the complex situations that business-to-business companies routinely face. When you’re selling to consumers, you generally have just one person to satisfy. But when you’re working with a complicated B2B organization, the path to loyalty might cross five international sub-units, four layers of management and sometimes the CEO. Salespeople and service teams must be experts on their own products, their customers’ products and even broader industry trends.
Sure, B2B companies know they have a lot to gain from earning their customers’ loyalty. But it’s a lot more difficult to earn business loyalty these days. In a recent Bain & Company survey, 68% of executives at B2B companies said their customers were less loyal than in the past. Earning loyalty in B2B markets requires truly unique products and service offerings that advance your customer’s business goals and strategy.
Lori Cobb and Dave Crompton, my recent guests on the Net Promoter System podcast, understand these dynamics extremely well. As veteran executives at Cummins, they’ve experienced the complexities of serving business customers in a competitive global market. In their industry, producing efficient, low-cost engines just gets them to the table. Winning and keeping their customers’ business requires Cummins to adapt its business to fit into the supply chain and operations of the truck manufacturers themselves.
Cummins started using the Net Promoter System a few years ago to learn how it can serve customers better. In our discussion, Lori and Dave share some of the big lessons they’ve learned and things they would do differently.
We’ve also devoted the latest Loyalty Insights to exploring how B2B companies can adapt the Net Promoter System for their operations. While the overall philosophy and principles of high-velocity feedback and learning is the same for all Net Promoter System practitioners, applying them to B2B firms requires unique skills and capabilities.
You’ll find the latest Loyalty Insights here: Get real feedback from your B2B customers. You can listen to my discussion with Lori and Dave on iTunes or through the player below. Click here to browse more Net Promoter System podcasts.
Ever wonder how Starbucks dreamed up the Frappuccino—that frothy, creamy coffee beverage that’s now its own billion-dollar business? It has its own website, Twitter feed and a roster of more than two dozen flavors.
The line is so popular that it has moved beyond Starbucks’ coffee shops to supermarkets and convenience stores. Just the word “Frappuccino” has become so deeply embedded in pop culture—a symbol of the high-end coffee craze of the 1990s—that it earned a zinger in the Ben Stiller comedy Zoolander.
This beverage phenomenon started with a daring experiment by a persistent Starbucks store manager in San Diego. She was simply trying to please her customers and meet local demand. At first, Starbucks executives were skeptical of the idea. But her experiment succeeded because the Starbucks culture fosters creative thinking and personal service. It discourages the robotic behaviors, scripts and sales tricks that can make the fast-food industry such a soulless place to work (e.g., “Want fries with that?”).
Howard Behar, who recently joined me on the Net Promoter System podcast, helped shape that culture during almost two decades at Starbucks. When he joined the chain in 1989, it had just a few dozen stores. By the time he left in 2008, there were thousands of locations. Behar spearheaded Starbucks’ international expansion, blending the quality control of a large chain with the personal touch of a local coffee shop.
Starbucks employees consistently develop the sort of individual, human connection with customers that keeps them coming back day after day. Very few multinational chains have maintained that sort of culture through years and years of rapid growth and all that comes with it. Achieving that level of social chemistry requires a deep commitment to careful hiring, followed by rigorous coaching. At Starbucks, they encourage employees to use their emotional “antennas,” as Howard calls them, to build genuine relationships with customers during these very brief daily interactions.
It sounds complicated, but it’s a way of recreating what used to be the norm. When I was in high school, I used to fetch coffee for all the butchers at my grandfather’s meat company as part of my summer job. After just a few days, the local coffee shop owner had learned my name, my usual order and my thoughts on the losing streak of our hometown baseball team. He was a regular local entrepreneur, forming connections with his regular customers. Now, my daughter has a similar experience at her local coffeehouse, except now she visits a Starbucks.
Howard believes that loyalty is earned when companies encourage employees to be themselves and treat customers like members of their community. It doesn’t come from robotic transactions punctuated by rote recitations of canned niceties. Howard even wrote a book about it a few years ago. Now, he travels the world and helps other executives to create more customer-centric cultures.
Probably every sales clerk or customer-service rep has run into customers they never want to see again. They’re rude, obnoxious and make life uncomfortable for employees and for fellow customers. Their shouts are often laced with profanity. They abuse the rules and cut into line.
It’s time to empower employees, and recognize that not all customers are worth engaging. The Net Promoter System is built on customer feedback — but if the feedback comes from the wrong customers, then what is the point? Taking feedback seriously from the wrong customers simply diminishes the credibility of the system and alienates frontline employees.
I explore this notion of “bad customers” in my latest post on LinkedIn.
Read the post here: Big Ideas 2015: Why Companies Should Fire Bad Customers
‘Tis the season to be jolly—unless you’re one of the millions of last-minute shoppers fighting the crowds at the mall. Or you’re one of the employees who has to put up with cranky, demanding shoppers and with the incredible crush of business the holidays bring.
Amid all the stress and strain, we occasionally find individuals who stand out like angels atop a holiday tree—beacons reminding us that, in this season more than ever, it’s good to treat someone you do business with the way you would want to be treated. In my latest blog post on LinkedIn, I look at “holiday heroes,” store employees whose small gestures can brighten a customers’ day.
When the Net Promoter Score debuted in 2003, perhaps its most distinctive feature was its radical simplicity. The score is based on a single, intuitive question. Its clarity appealed to CEOs, general managers and other business leaders. It wiped away the unnecessary complexity and cut through the confusing opacity of proprietary, multi-question customer satisfaction or loyalty indices.
Of course, the Net Promoter approach has always required asking the follow-up question: “Why?” Giving customers an opportunity to describe, in their own words, what they love and hate about a product, an experience or a company strips away the preconceptions of managers and researchers. With no friction or complexity, it engages a customer in sharing his or her own thoughts and feelings about the company.
A decade later, we still see many companies add a lot more questions to their Net Promoter feedback tools. When managers see a chance to communicate with their customers, they just can’t seem to help themselves. We call it “question bloat”—the tendency to add just one more question to any feedback opportunity until the questionnaire puts so much burden on customers that they rebel by either abandoning the process midstream or by not responding to a future request. In the long run, the executives’ lack of restraint is punished with low response rates.
Simplicity is surprisingly difficult to achieve and maintain. Complexity can kill any company. There are thousands of ways to introduce complexity into your customer feedback processes, and dozens of forces pushing the organization toward burdening customers to provide more and more feedback.
That’s why my next guest on the Net Promoter System podcast is trying to help companies keep it simple. With his app Promoter.io, Chad Keck offers firms a quick, easy and elegant way to collect customer feedback with minimal burden on the customer and maximum information for the company. With his radically simple approach to Net Promoter feedback, he helps companies turn it into operational improvements with no friction. Chad became a fan of the Net Promoter System while he was working at Rackspace, a longtime Net Promoter company.
Promoter.io’s self-serve platform helps users query different customer segments, create campaigns and quickly spot score trends. However, the app does not allow users to change the central question from which the Net Promoter score is derived—“How likely are you to recommend my company to a friend or colleague?”—or add other questions. In essence, this forced simplicity keeps data-hungry entrepreneurs from becoming their own worst enemy. The company made the news recently for completing a successful round of financing. It’s one to watch. (Full disclosure: Fred Reichheld, Bain Fellow and my collaborator on all things loyalty, recently became an investor in Chad’s company.)
A couple of weeks ago, I found myself on a marathon shopping trip with my family. We were visiting my son at college. As autumn progressed and temperatures began to drop, he realized that his wardrobe of shorts and t-shirts was not going to keep him warm enough. Off to the mall we went.
I’m an impatient shopper at best, so after four hours I volunteered to get my son’s iPhone fixed at the Apple Store. The small store was full of shoppers playing with the new iPhone 6, getting help with iMacs and waiting for appointments with Apple’s “Geniuses.” More distressing to me was the line of a half-dozen customers just waiting to see the “concierge” for the Genius Bar. There was no way I was going to see a Genius that day. Even so, I decided that I’d rather wait in queue and see when the next appointment might be available than rejoin the quest for the perfect sweater.
After a few minutes, I reached the front of the line, finding myself face-to-face with an iPad-wielding, bearded store employee. I said, “I’m sure you can’t help me today. I can see you’re really busy.” “Right,” he said. “We’re fully booked today. Can I make an appointment for you tomorrow?” “No,” I replied, “we’re leaving town tomorrow.” “What do you need to see a Genius about?” he asked. “My son’s iPhone won’t charge completely.” “Do me a favor,” said the employee, “and stand over there for a minute until I can work down this line. I might be able to help you.”
A couple of minutes later, he called me over and asked to see the phone. He peered deep into the connector on the bottom of the phone, using his own phone as a flashlight. Then he reached into his pocket and pulled out a paper clip, which he unfolded and inserted into the hole. Like a magician pulling scarves out of his sleeve, he drew what seemed like inches and inches of lint from the impossibly small space.
“That should do it, sir,” he said with a grin. “If that doesn’t work, tell your son to bring it back. Have him ask for me.” He handed me a business card with his name and the store’s location.
This guy loves his job. He’s passionate about Apple’s products, and he wants everyone to enjoy them as much as he does. If he didn’t care much about his job, he probably would have sent me on my way, dismissing my complaint as not his problem.
Day by day, little by little, detached employees wear down customers and fellow employees. Sometimes, the proliferation of unenthusiastic employees indicates hiring mistakes. More often, employee detractors indicate a company culture that saps employee energy, enthusiasm and creativity. While management teams generally don’t intend to create such a culture, they too rarely succeed in creating the opposite—a culture that fosters energy, enthusiasm and creativity in serving customers.
It’s a well-established fact that companies that put employees in a position where they can consistently earn the enthusiastic advocacy of customers win in the long run. What’s less apparent to the leaders of many companies is how to earn the enthusiastic, energetic creativity of employees.
In our latest Loyalty Insights, we describe the employee Net Promoter System as well as how companies are using it to inspire their employees and to provide them with a way to shape their own work environment. We look at the best practices of companies with truly engaged employees, along with the tactics they use to involve their teams in problem-solving and ownership for both their own work environment and their customers’ experiences.
We also explore some of these same issues on the latest Net Promoter System podcast. In this episode, Fred Reichheld and I discuss a new employee engagement tool he’s developing called HuddleUp. It’s an app that helps employees provide feedback about their work to teammates and managers, identifying opportunities to work better together and serve customers more effectively. As you know, Fred invented the Net Promoter Score and considers engaged employees crucial to a company’s success.
Here’s the latest Loyalty Insights brief: Energetic, enthusiastic and creative. You can listen to my discussion with Fred on iTunes, through the player below or on our podcast page. Click here to browse more Net Promoter System podcasts.
In my latest blog post on LinkedIn, I look at two stories of customer service—one that made me shake my head in dismay and one that brought a smile to my face.
In the first story, a company creates a customer-unfriendly policy in the hopes of saving a few bucks. In the second story, hotel leaders reveal how, in some cases, they get more when they give to their customers.
In this world of online ratings, word travels fast. No amount of advertising can overcome customers’ stories of poor service. In contrast, who knows how far a happy customer’s account of a truly wonderful experience can travel?
Read the post here: How Nickel-and-Diming Your Customers Can Cost You
“Our average customer is a 38-year-old married woman with 1.4 children who lives in a suburban neighborhood and drives a Japanese-make minivan.” How many times have you heard an executive talk about his or her company’s average customer? How much time and money has been spent researching the habits and demographics of the average customer? How much does this customer spend, and on which products or services? How often? How do they respond to promotions? What is their average number of visits to our website?
But when we ask an executive to define more closely what we call a company’s “design target,” we often get a negative reaction: “We serve everyone. We need to appeal to the whole market so we can sustain our growth.” And then businesses spend a lot of money trying to attract and retain more of these “average” people. By meeting the needs of the broadest possible audience, these companies figure their investments will net them more customers than if they targeted a more sharply defined segment of customers.
But what if your best customers aren’t really “average” at all? What if the average customer is less loyal—and therefore more costly to serve? In our experience, this is almost always the case. Moreover, it often turns out that—somewhat paradoxically—focusing on a set of customers more narrowly can result in growing the business more quickly.
Peter Fader, my next guest on the Net Promoter System podcast, spends a lot of time pondering questions of customer segmentation as co-director of the Wharton Customer Analytics Initiative at the University of Pennsylvania. He makes the case that there is no average customer, and companies that chase the mean set themselves up to miss their potentially most profitable business opportunities.
Peter’s an actuary at heart. As he says, rather than “predicting how long it will be until someone dies, I predict how long it will be until someone buys.” His book Customer Centricity: Focus on the Right Customers for Strategic Advantage (Wharton Digital Press 2012) argues that some customers are worth more than others and that companies should make business decisions with the most valuable customers in mind, even if that means ignoring customers with less payoff potential. Peter is also a fan of using the Net Promoter System as a tool for segmenting customers.
You don’t have to be a quant to enjoy this episode. Even though Peter is a hardcore number cruncher, he has a knack for explaining how data analysis can help companies serve their best customers better.
Last year, almost 40% of American customers bought at least one new product from a bank. Despite bankers’ intense focus on cross-selling, only half made that purchase from their primary bank. This pattern, more or less, was repeated in more than 27 countries, according to Bain & Company research on 190,000 consumers.
Bankers all over the world have become increasingly concerned about earning the loyalty of their customers. While they have long had cross-selling, share of wallet and customer satisfaction on the list of topics they discussed, very few banks historically invested in earning the ardent advocacy of customers required to succeed. In the US, the primary source of growth for most banks came from mergers once the regulations changed to allow interstate banking. Many banks relied on an ever-growing list of fees to grow revenue.
Those sources of revenue, however, have largely run their course. Many banks are precluded from acquiring their competitors by regulators worried about antitrust issues. Others are precluded for reasons of regulatory limits on their capital spending. Fee revenue has come under pressure as regulatory agencies have more and more come to the defense of consumers.
Now, bankers who previously didn’t take loyalty seriously care a lot more. They’re competing for a shrinking pool of new customers, with a shrinking variety of available sources of new revenue growth forcing them either to deepen their relationships with their existing customers or poach customers from their rivals.
What can banks do to restore growth? Is it now time to focus on regaining customers’ loyalty? These are questions my next guest on the Net Promoter System podcast has set out to answer. Gerard du Toit, a partner at Bain & Company, leads the firm’s research on customer loyalty in retail banking, and has been digging deeply into the topic of how and why customers choose to do more or less business with their bank.
Gerard’s research shows that earning bank customers’ loyalty requires bankers to improve the banking experience so that the customer benefits as much as the company. That means using digital tools to make simple transactions—such as depositing a check—easy to do at home. This then frees up the branch to be a resource for more complicated interactions, such as applying for loans and getting investment advice.
Many banks have dramatically improved their customer experience, even turning once-punitive overdraft fees into teachable moments that leave customers feeling that their bank is on their side. The lessons retail banks are learning apply to other industries, especially those that rely on people who subscribe to their services. I think you’ll find our discussion enlightening, even if you’re not a banker.
Ever wonder why Ritz-Carlton hotels serve afternoon tea? You know, that light “meal” with the fussy cucumber sandwiches and miniature eclairs on tiered platters that seem more fitting on Downton Abbey than in a 21st-century hotel restaurant.
After all, a proper tea service is undoubtedly expensive to do well when you factor in the cost of pastry chefs, formal waiters and maybe a classical pianist to set the right ambience. For a fixed price, patrons can linger, talk and sip a pot of tea—not order the finest bottle of pinot noir or some artisanal charcuterie.
Tea service is a relic from a bygone era, but hotel legend Horst Schulze would never think of getting rid of it. As he explains on the latest Net Promoter System podcast, afternoon tea lends an air of opulence that lets people know that his hotels are the best in town. In Net Promoter-speak, it gives people a remarkable experience – the kind of story they’ll want to tell their friends.
Horst would know. He’s one of the masterminds behind the Ritz-Carlton “mystique.” During his 20 years at the hotel chain, he helped cultivate an impeccable level of service that set the gold standard for high-end accommodations. He even coined the often-quoted motto, “We are ladies and gentlemen serving ladies and gentlemen.” Now he’s bringing his philosophies to a new breed of luxury hotels under the Capella brand.
Horst is a straight-talking and compelling advocate of involving front-line employees in running the business. And he believes deeply in trusting employees to do the right thing, as long as you’ve hired the right people in the first place. He even empowers staff members to spend as much as $2,000 to keep a customer happy. If he gains a lifelong customer in the process, he considers it money well spent. He knows how much that customer is likely to spend over a lifetime.
Too many leaders seem to wish that culture change would just happen organically, effortlessly. In their minds, all they need to do is develop a well-worded mission statement and a vision for the future that fits on a nice PowerPoint slide. Get the organization to understand the statement and buy in—maybe even involve some employees in crafting it—and then put it on wallet cards, posters and the company’s intranet. Maybe they’ll buy some Lucite paperweights to place on employee desks to remind everyone of this new perspective each day.
And then these leaders move on to the next issue, the next crisis, the next budget meeting, hoping that the organization will change now that everything is so well articulated and prominently displayed. But, as we all know, that’s not how it works.
Culture change requires hard work and patience. You not only need a clear vision of the future, but you also have to define the new set of behaviors people will have to exhibit. Maybe more important, you need to create mechanisms, processes and policies that reinforce those behaviors. You must find ways to ensure that decisions are aligned with the company’s objectives and values, and craft procedures to make the new behaviors easy to adopt, which often requires technology or process support. There are dozens, even hundreds of details to address.
So who does all that work? Most successful Net Promoter companies create a central team that leads the effort. This team goes by different names in different companies. One NPS Loyalty Forum member calls their company’s team the Advocacy Program Office, while another calls it the Customer Champion Organization. Whatever the name, this group provides the expertise that supports a robust Net Promoter System.
In our latest episode of the Net Promoter System podcast, Herman Miller’s Pam Carpenter returns to talk about the office furniture maker’s NPS implementation. We’ll discuss the roles of a customer advocacy office and the progress that Herman Miller is making in selecting a technology vendor that supports their Net Promoter System. Listen in and hear about their progress.
Banks are working hard to cultivate loyalty just to keep pace in an ultra-competitive market. In the process, they’re doing many things right, as I explain in my latest post on LinkedIn Pulse.
They’re using technology to make easy transactions fast, and beefing up their branch expertise to make difficult transactions less painful. More importantly, they’re gathering regular feedback, listening closely to their customers and making the changes that create a memorable customer experience. For these reasons, I think we can look forward to better and better banking experiences in the future.
Read the post: How banks are bringing back the love
Suppose I’m a customer of yours. You and I have recently interacted. I was a little disappointed in how you served me and my company. I have some feedback about my experience―how it made me feel and what I think you might be able to do better in the future. For example, I might have a particular point of view about how prepared you were for our phone call or how you handled a specific question I asked.
It will be up to your boss to decide whether to pass along my feedback. Maybe she will. Maybe she won’t. Perhaps she’s worried that you are having a bad enough day, already. Or maybe she’s not having such a great day herself and wants to avoid the hassle of delivering even constructive feedback to one of her employees.
Moreover, it’s up to her to decide whether to pass along my feedback exactly as I provided it, or to sugar coat it, softening the blow to you and obscuring some of the details.
How would you feel knowing that your customer had shared feedback with your boss, but being unsure what, exactly, that customer had said?
If you’re like most of us, you’d be frustrated―unless you have the opportunity to hear the customer’s feedback quickly, directly and in the customer’s own words. Even if it hurts a little bit initially, you want to know you can do a better job in the future. The truth is the best employees just want to do a great job for their customers, and honest, direct and immediate feedback helps you do that.
So why do so few companies provide simple ways for frontline employees to hear feedback directly, immediately and in the words of the people they serve? It’s a challenge that our next guest on the Net Promoter System podcast has set out to address.
Amy Pressman, cofounder of the customer experience software maker Medallia, says that companies should always share customer feedback with frontline employees, even if it’s awkward. She has a wonderful perspective on how great companies incorporate customer feedback into their day-to-day operations, and she offers some of the best practices of customer-centric companies.
Medallia and other providers of technology, as well as other support for the Net Promoter System, can be found on the vendor section of the Net Promoter System website.
So many companies today suffer from survey diarrhea, constantly bombarding their customers with long, pointless surveys. These surveys usually ask for 10 or 15 minutes of a customer’s time and rarely lead to any meaningful changes.
My latest post on LinkedIn delves into this pervasive problem. The next time you get a survey, ask yourself whether it’s worth your time to fill out, and whether you expect anything to happen if you do. If either answer is no, do what I do—throw it on the electronic trash heap.
Read the post: Why I deleted your survey
So you’ve run some closed-loop feedback pilots using the Net Promoter System. You’ve learned a few things. Now what do you do?
That’s the question Pam Carpenter and Michael Ramirez face as they bring Net Promoter to Herman Miller. We’ve been following their progress on the Net Promoter System podcast all year, and Pam and Michael are back in the latest episode to discuss some of the challenges they’ve faced and lessons they’ve learned.
Questions we explore in our discussion include: How fast should the office furniture maker move forward after its initial NPS pilot? What should be the process for expanding its efforts? Should the company scale up from the initial prototype within a particular business unit or should it widen its scope by bringing the system to other parts of the business? What kind of IT support will the system need?
Pam and Michael are also grappling with some common issues that companies that sell to other businesses typically face. It all makes for a thoughtful and interesting discussion.
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