Long before social media and online surveys, shopkeepers relied on a simple measure of customer sentiment: whether their customers were smiling.
In this short episode, Fred Reichheld and I share the story behind the Net Promoter System’s signature smiley face icons, and discuss how one number can become a powerful learning tool for inspiring change.
Do you shop online differently if the purchase involves clicking buttons vs. dragging an item into cart? Does a product search feel more fulfilling if it forces you to scroll through a vast trove of options? Do your survey responses change if the scale starts on the left or the right?
These are the questions that Jonathan Levav, associate professor of marketing at the Stanford Graduate School of Business, explores. His research looks at the factors that influence consumers’ choices and judgment, such as biomechanics, context cues and product attributes.
In this episode, Jonathan discusses his latest research projects and how businesses are increasingly turning to experimental psychology and behavioral economics for answers. You can listen to our discussion on iTunes, Stitcher or through the player below.
Good services and a steady stream of new product features used to be enough to hold the top spot in an industry. But that’s not necessarily the case anymore. It’s about the key episodes that define the customer experience.
Product development has well-worn practices. But many firms have not even started to identify their most important experiences, much less manage them. Now, my Bain & Company colleagues are seeing more companies adopt a new key unit of management: the episode, which can encompass a variety of shopping, usage or service activities.
My latest blog post on LinkedIn explores the principles behind strong episode management.
Read the post: Want Loyal Customers? Understand the Episodes That Matter
One of the great philosophers said that a person who sets out to be happy probably won’t achieve his goal. On the other hand, if a person sets out to help others and make the world a better place, he will probably end up happy.
The same logic applies to companies that set the vague goal of maximizing shareholder value, according to Roger Martin, former dean of the Rotman School of Management at the University of Toronto. In reality, successful companies create products their customers want and provide exceptional service—and increase shareholder value in the process.
Roger, who’s the author of 10 books, including Getting Beyond Better and Playing to Win, and a frequent contributor to Harvard Business Review, shares his business philosophies in this podcast episode. You can listen to our conversation on iTunes, Stitcher or through the player below.
Social media has opened up vast new ways for companies to get to know their customers—what they like, what they hate and where they shop. But anyone with a Twitter handle knows that social networks are littered with inane noise.
Customer loyalty programs, such as the Net Promoter System, and social media scraping have advanced along largely separate paths of development. However, there’s a huge opportunity for companies willing to combine them—and cut through the dissonance.
I discuss how companies are bringing together their Net Promoter and social media efforts in my latest blog post on LinkedIn.
Read the post: Here’s a Better Use for Social Media
People like to ask about the significance of the likelihood-to-recommend question—”how likely would you be to recommend a product or service to a friend?”— and why it was chosen over others.
The answer is simple: It offered the best prediction of consumer behavior in early testing. In other words, customers who give a strong ratings are more likely to buy the product again and promote the product to their friends.
By focusing on a single question, the Net Promoter System eliminates unnecessary complexity. In this short episode of the podcast, Fred Reichheld and I discuss the origins of the system’s central question. You can listen to the short on iTunes, Stitcher or through the player below.
Steve Jobs. Charles Schwab. Howard Schultz. They all spotted an unmet customer need and made it their mission to meet it. They also founded iconic companies that started out as disruptors only to struggle as bureaucracy and distraction set in. In each case, it took the founder’s return to get the company back on track.
It’s a story that will be played out again and again in business. But it doesn’t have to.
According to Bain Partner Chris Zook, these companies have battled the predictable crises of growth. In The Founder’s Mentality, a new book Chris cowrote with Bain’s James Allen, Chris talks about how companies can hold on to the spirit of their founders as they grow. No surprise: It requires companies to focus on their customers.
When it comes to surveys and statistics, it’s easy to get mired in models and analysis. Perhaps you have a rich tranche of customer data and you know you’ll find a critical new insight if you could devote a team to crunching the numbers. This kind of thinking rarely leads to long-term change because it’s missing a critical element: immediate action.
Millennium Mat has developed a unique culture in which employees make production decisions for their teams and share in the financial benefits of their success. The leaders of these teams are called CEOs and they steer everything from hiring to process. Their employees, whom Millennium calls partners, are expected to bring forth their performance-improving ideas. Companies of all sizes and in all industries could learn a lot from Millennium’s approach, which has propelled its business to almost 40 countries.
Ian Malpass, founder of Millennium Mat, joined me on the podcast to discuss what it takes to forge a culture that’s truly self-directing and self-correcting. You can listen to our conversation on iTunes, Stitcher or through the player below.
Large companies tend to focus on traditional financial forecasts—earnings estimates, sales targets and so forth. After all, it’s how the market measures their value and whether they’re worthy of investment.
The intense pressures to meet these goals can cause some executives to make short-term cuts that can undermine their long-term strategies. Some would argue that we need new gauges of corporate strength. The Net Promoter Score is a very powerful measure, but so is another: customer lifetime value. This measure helps companies identify their most valuable customers and build those relationships.
Peter Fader, a marketing professor at the Wharton School of the University of Pennsylvania, returns to the Net Promoter System Podcast to discuss the importance of measuring customer lifetime value. He recently founded a company called Zodiac that specializes in estimating customer value.
The Net Promoter System’s “outer loop” mechanism supports improvements that go beyond the individual or team.
Its explicit purpose is to prioritize and support the kind of customer-friendly changes that employees and teams can’t make on their own. But there’s an implicit purpose as well. An effective outer loop makes employees feel supported. It gives them a voice in the firm’s priorities. It creates confidence that the company’s priorities support customer centricity—and that leadership is putting its money where its mouth is.
Read more: The Net Promoter System’s Outer Loop
A lot of companies find themselves a situation in which their competitors are increasingly adding value to their products, while they’re struggling to figure out which features and services might move the needle with customers. The leaders of these companies aren’t sure what level of service will capture more of their market—or if they should even focus on service.
It’s the classic “how to play/where to win” question. Companies can’t invest in everything. To succeed, they must distinguish themselves from competitors. Often this means meeting customers’ deepest needs—aspirations they might not even be aware of.
Bain Partner Eric Almquist has spent much of his career researching these questions. In this episode, he discusses the 30 elements of value that draw customers most to a product or service. Companies that fulfill more of these needs have customers who are more loyal.
Does the Net Promoter Score gauge a customer’s broader relationship with a company or just the customer’s most recent experience? Or both? Who should make follow-up calls to customers? I discuss these questions and more in this short episode of the Net Promoter System Podcast.
The goal of the Net Promoter System is to create a culture that encourages employees to bring energy, enthusiasm and creativity to their jobs.
Developing that kind of culture requires inspiring leaders. We’ve all seen those people who seem born to be leaders. They have an uncanny knack for motivating the people around them. They show gratitude and connect with people in authentic ways.
You might chalk it up to charisma or a rare innate gift. While that might be true, it’s possible that they studied their own behavior and learned how to mobilize the best qualities of their personality.
In this episode, I talk to Bain Partner Mark Horwitch, who has been studying what makes a leader inspiring. He says it comes down to 33 qualities. Most of us have some of them, but none of us have all of them. He says that when we know our strengths, we can develop them into true leadership assets.
Learn more: How Leaders Inspire: Cracking the Code
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