NPS Blog

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.

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

Power to the customer: How E.ON became more customer centric

Net Promoter System podcastTrue monopolies don’t worry about customer loyalty. If you don’t have competitors, you don’t need to invest in service, innovation or branding. You can also charge monopoly prices and fees.

Take the energy sector. In most countries, monopolies supplied energy to customers—and generally viewed them as faceless “meters” to be tracked and billed. Of course, the sector was regulated to protect customers from the worst of monopoly behavior, but for the most part, monopolies defined the limits of service, pricing, fees and policies, based on avoiding the wrath of regulators or politicians. The basis of competition certainly was not customer loyalty.

Deregulation changed everything. Utilities suddenly faced competitors for the first time. Customers in deregulated regions had new options, and energy providers had to work harder to keep their business. Surviving required a dramatic shift in culture. That’s the story of my next guests on the Net Promoter System Podcast.

EON's Olivier Mourrieras, Rene Matthies and Guntram WurzbergLike others in the industry, European energy provider E.ON has taken drastic steps to improve service and adapt to a climate of customer choice. I recently talked to three E.ON executives about how they’re using the Net Promoter System to develop new ways of thinking at their company.

As the head of E.ON’s Customer Experience Centre of Competence, Olivier Mourrieras has led the charge. Under his watch, the company adopted the Net Promoter System’s inner-loop mechanism to collect and disseminate customer feedback to teams, which enables them to evaluate their approach to service. The company also uses the system’s outer loop to identify and address broader systemic issues—the root causes of customers’ complaints.

The system has helped E.ON change the way it handles customers’ calls, for example. Before the industry’s deregulation, the company measured the success of its call centers by call duration: The shorter the time on the phone, the better. Now a call is considered successful if it resolves a customer’s complaint so thoroughly that it eliminates future calls. That means calls with customers sometimes are longer; however, this new approach has reduced the company’s costs and improved customers’ satisfaction. It might sound like old hat to some companies, but for E.ON, it took tremendous effort and focus.

E.ON has applied the Net Promoter System so rigorously that it is used not only with customers, but also to gauge the performance of internal departments, such as IT, human resources and auditing—groups that don’t interact directly with external customers. “From an end-to-end process point of view, everybody is actually, in the end, serving our external customers,” Olivier says.

René Matthies, chief financial officer for E.ON UK, and Guntram Wurzberg, E.ON’s director for corporate audit, joined Olivier on the podcast to share their insights and advice. Guntram was a pioneer with internal Net Promoter System. Adopting it for the auditing function, he says, changed staff morale and helped them align with E.ON’s mission.

We also explore E.ON’s Net Promoter journey in our latest Loyalty Insights.

To hear more about E.ON’s culture change, 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.

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“It’s got to pervade every part of your decision making”—How Telstra built a culture of customer advocacy

Last week, on the Net Promoter System Podcast, former Telstra CEO David Thodey shared the story of the Australian telco’s dramatic transformation from the most hated company to the most respected service provider. In the second half of our discussion, David talked about the finer points of Telstra’s Net Promoter journey, including the leadership’s role and the tactics that fundamentally helped change the culture of this large, complex corporation.

Rob Markey and former Telstra CEO David Thodey

Throughout his tenure, David maintained a laser-like focus on the customer advocacy agenda. To do this, he and his team pulled almost every lever imaginable. They changed the company’s metrics for success and made a public commitment to become the most recommended telco in Australia. And they backed it up by tying 40% of senior executives’ incentive compensation to specific goals for raising Telstra’s Net Promoter Score, compared with the competition. That was the obvious, public stuff.

But below the surface, much more was going on. For example, in order to keep customers top of mind for every employee and work group within the company, Telstra leaders instituted regular Net Promoter huddles, which they call T-Times. Even David and his direct reports used these meetings to keep customer advocacy at the top of their agenda. Establishing this rhythm of advocacy was crucial in reinforcing that priority and backing it up with action.

In addition, David and his team instituted customer-friendly improvements, designed not only to improve customer advocacy, but also to send a clear message to staff. These included eliminating certain fees that the team determined fell into the “bad profits” category, such as certain types of late payment fees. The team also prioritized improving network performance, using a new algorithm based on the Net Promoter System’s outer loop, which incorporated customer lifetime value and other factors that multiplied the impact of their capital spending investments. And they tackled barriers to customer centricity, such as rules that prevented employees from telling customers their names or that discouraged call center representatives from returning customers’ calls. These changes were both substantive and symbolic. And, as David points out, most were cost neutral or better.

Keep in mind that Telstra is one of Australia’s biggest companies. It operates in 20 countries and serves millions of customers. Effecting change on that scale required discipline, dedication and perseverance. It required a dedicated and explicit focus on winning over the company’s 36,000 employees. And importantly, it required overcoming the skepticism and resistance of doubters—which often undermine change initiatives at large companies—especially among frontline employees who were targets for disgruntled customers and among middle managers who had watched many change initiatives come and go over the years.

As David says, “You can never have a truly customer-centric company unless your people feel good about working at [your] company.”

David’s experience at Telstra offers many lessons for Net Promoter practitioners. If you missed the first part of our interview, I strongly recommend that you go back and listen to it. You can listen to the second half of the interview on iTunes or through the player below. Click here to browse more Net Promoter System Podcast episodes.

CLICK HERE FOR PART 1 OF INTERVIEW

CLICK HERE FOR PART 2 OF INTERVIEW

And just a reminder that my colleague Chris Harrop and I plan to take a closer look at Telstra’s customer service transformation in a webinar on October 26 at 8:30 p.m. EDT. You can sign up for the webinar here.

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“I will stand for the customer”: Former Telstra CEO David Thodey’s Net Promoter journey

Net Promoter System podcastThink of a company so universally hated that merely saying its name invokes groans and sympathy. That was Telstra just eight years ago.

In 2007, Australian daily The Age published a column titled “Why We All Hate Telstra.” It chronicled all the ways that Australia’s former monopoly telephone company had made life painful for customers. In fact, complaining about the company’s poor service, slow Internet speeds and institutional arrogance became a national pastime.

Working for Telstra was certainly no fun, either. Field technicians’ vans were often targets for vandalism. On weekends, employees found themselves suffering through their friends’ embarrassing customer service horror stories when they attended cocktail parties or barbecues. Telephone service representatives struggled to justify the company’s fees, charges and poor service performance to angry customers. Who would want to represent a company so universally hated?

These days, things have changed dramatically for Telstra, its customers and its employees. I recently sat down with former Telstra CEO David Thodey to talk about how the company transformed itself from national irritant to respected service provider. He’d been a longtime Telstra leader when he took the helm in 2009, and he declared on the first day of his tenure that his time as CEO would be about the customer.

“There was this deep conviction in me that this was something we had to do, but we were struggling with how to do it,” David says.

When David took over, Telstra was losing market share. It was one of the country’s least respected companies. It was on its way to several earnings surprises. Its Net Promoter Score was deeply negative. By the time he retired earlier this year, Telstra had restored revenue and profit growth. It was gaining share in its mobile business. Its stock price had roughly doubled from the early days of his tenure. And Telstra was recently named Australia’s most respected company. Moreover, the company’s Net Promoter scores have improved significantly in all its businesses.

The Net Promoter System has been critical for bringing the voice of the customer back into the organization, David says. Turning naysayers into advocates required a disciplined system of feedback and improvement that would help employees see themselves as change agents rather than victims. Of course, Telstra’s journey was not without struggle and setbacks.

David reflected on his tenure at Telstra with great candor and characteristic depth in a two-part interview for the Net Promoter System Podcast. You can listen to part one of the interview on iTunes or through the player below. Click here to browse more Net Promoter System Podcast episodes.

You can learn more about David’s work in the short video below and in the new Bain Brief “Transforming a company by learning to love customers.”

 

Finally, my colleague Chris Harrop and I plan to take a closer look at Telstra’s customer service transformation in an upcoming webinar. You can sign up for the webinar here.

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Five keys to successful innovation (Hint: Start with customers)

Darrell RigbyThere’s no shortage of advice available on how to innovate more effectively. The reason is simple: Innovation fuels growth.

Net Promoter companies know that if you want to earn your customers’ enthusiastic advocacy, you’d better innovate. It takes an innovative product, feature or sales experience to differentiate your company’s customer experience from the competition’s. Sustaining loyalty leadership requires innovation.

Why, then, do so many companies struggle to create cultures that enable innovative thinking? Why do they have so much trouble bringing their ideas to market? Why do some companies aimlessly chase big, zany ideas that have no hope of making money?

My colleague Darrell Rigby has devoted much of his career to this complex topic. He’s head of Bain’s Global Innovation practice and has written about the topic for more than 20 years. More important, he has helped dozens of companies develop innovation pipelines that power their revenue and profit growth while helping them cultivate their customers’ and their employees’ loyalty.

Net Promoter System PodcastWe recently chatted on the Net Promoter System Podcast about what it takes to create a culture that nurtures innovation or, as he calls it, “the profitable application of creativity.” During our conversation, Darrell debunked some of the common myths of innovation and discussed some of the factors that prevent companies from innovating effectively.

According to Darrell, successful innovators do five key things right:

They develop a strategy geared toward innovation. Employees are more likely to come up with successful ideas if they know the specific opportunity or market the company is seeking. A finely honed strategy allows executives to point employees in the right direction.

They recruit people with the proper creative and commercial capabilities. A company can’t get by on visionaries alone. Successful innovation requires business-savvy leaders to translate big ideas into profitable initiatives.

They generate ideas with customers’ needs in mind. These companies thoroughly understand their customers and often use data and feedback to get a clear picture of their needs. That allows them devise innovations that will enhance their lives.     

They cultivate an innovation portfolio. Every company needs a combination of incremental innovations that make everyday operations work better and some that are radical and stray far from the company’s current approach. Net Promoter System practitioners might use the “outer loop” mechanism to prioritize projects based on their contribution to long-term growth.

They expand thoughtfully. Strong innovators allocate resources based on an opportunity’s potential. When necessary, they use feedback loops and testing to improve or make changes.

Darrell calls this approach BothBrain innovation. The idea is that successful innovation requires companies to use the creative and rational sides of the brain.

During our discussion, we also talked about strategies for creative thinking, such as reducing multitasking and making time for free thought. You can listen to the episode of the Net Promoter System Podcast on iTunes or through the player below. Click here to browse more Net Promoter System Podcast episodes.

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