Jim Kerr of WAXQ radio (FM 104.3 in New York) had a hard time with the Apple Store's survey a few days ago.

Apple uses the Net Promoter Score in their store-level customer feedback system.  In order to build a better understanding of the value of Promoters, they are apparently asking Promoters how many people they have recommended shop there.  As a radio announcer, Jim has sung the praises of the Apple Store to his listeners many times.

Listen to the clip to hear an amusing experience answering this question.

Isabelle Conner, ING's global head of marketing, will be one of the panelists I will interview at the 2010 Net Promoter conference in New York.

Here is an excerpt from her speech at last summer's Net Promoter conference.  In it, she articulates a few of the lessons she learned as she helped lead ING through the NPS journey.

In this video, Harry Eastman, Operations Director of Easynet Connect and Julian Harriott, Communications Management Association Business Manager at the BCS (The Chartered Institute for IT), make the case that all business ISPs should adopt the Net Promoter Score as a common benchmark for comparing customer service.



It's an interesting argument, and one that we would support.  But for this to be practical, we believe that common methodologies -- auditable and verifiable -- need to be adopted across the industry.  We are working with one of the big 4 accounting firms to develop just such an auditable process, and to create a system for attestation and assurance that third parties can rely on for comparison of Net Promoter Scores across companies within an industry.



While I don't know a lot about the BCS, it appears to be just the sort of standards-setting body that could help create such standards.


What do you think?  Is this a good idea?  How would you suggest we go about helping organizations like this?

Our latest article -- authored jointly by Rob Markey, Fred Reichheld and Andreas Dullweber -- about the impact and importance of closed-loop customer feedback was published in the December 2009 issue of the Harvard Business Review.  You can find a summary of it here:  HBR Closing the Customer Feedback Loop.


HBR also published a video we made describing one of the examples highlighted in the article.  In it, Charles Schwab managers and financial consultants describe how the company has used the Net Promoter approach to creating real closed-loop feedback.  [Link to the video]  The results have been phenomenal, and there is nothing quite like hearing how it works from the people most impacted by it.

The Daniel Group helps its clients improve the loyalty of their customers in a B2B setting using a variety of techniques for closing the feedback loop.  At the heart of them is the Net Promoter approach, but they have found ways to surround it with additional feedback and learning processes that help their clients -- generally Caterpillar dealers -- improve the customer experience, retain their customers and grow their businesses.

See below for a document from their web site that describes how they do it.

The fact that I happened to load up the Logitech and Dunkin Donuts surveys on the same day is pure random chance.  They are in wildly different categories, so it would make sense that their approaches to gathering customer feedback would be wildly different.

That won't stop me, however, from making a few observations about each one.

The Logitech survey is really a classic implementation of a Net Promoter approach to gathering customer feedback.  I couldn't really say that if I didn't know how extensively and carefully Logitech's teams use the feedback to inform product development and customer service improvements.  They have talked about their approach in several public forums (plus, they were a member of the NPS Loyalty Forum and hosted one of our meetings).

Logitech is interesting, in part, because they are a product company with challenging product innovation cycles.  They use NPS as a key tool to inform their innovation and product development processes, cutting cycle times from product introduction to product enhancement.  They also have worked hard to figure out how to get a really good sample of feedback on every product, and continue to improve this over time.  They ask for feedback at just the right time -- a couple of weeks after you have installed the product, which gives you the opportunity to get past the initial excitement of the purchase and into the early usage experience.  In my case, I was giving feedback on a webcam.  My feedback was far more valuable and well-informed because I had been using it for long enough to have observed some of its unexpected good features, as well as some of the unexpected annoyances.  So my feedback was far richer and more detailed than it could have been immediately after installation.

A few things to notice, some of which you couldn't glean just from the document here:

• They trigger the survey off of product registration and time the request to coincide with the first couple of weeks of usage, rather than just purchase or installation
• Very short, simple survey - it all fits on a single web page
• Simple, context sensitive drop downs to help you let them know which product you're telling them about
• Plenty of open-ended, verbatim space.  In their product categories, there are an infinite number of observations a customer could make.  Rather than box us in, they let the end customer decide what to mention and what matters
• If a customer happens to let them know they are really unhappy with a product, someone from Logitech will typically get in touch with them to follow up - they try to learn more about the situation and even engage in some customer recovery, if possible
• This Net Promoter survey process is only one part of an overall customer feedback and research approach that also incorporates other forms of customer research, observation and feedback

Here is an interesting Promoter story I just ran across on Facebook.  It is real, and the person is really one of my friends.  

(I've protected the identity of the person who posted it, the salesperson involved, and of those who commented on it, since the whole point of Facebook is being able to protect your information from being shared all over the place.)

Some questions to ask yourself:

• If you were part of the Sears management team, would you applaud the actions of this salesperson?  Or be angry about the lost revenue?
• What motivated the salesperson to take this initiative?
• Is this a powerful way to create Promoters?  What was it worth to Sears to have done this?  How would you know?

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Ron Hollis is the CEO of Quickparts, a company that makes custom-designed parts.  I first learned about them in this Fortune Small Business article last year, highlighting their use of NPS. (The full article is here.)  In addition to founding Quickparts, Ron also wrote a book on design called "Better be Running."

I recently ran across Ron's blog.  In it, he describes the company's use of the Net Promoter approach to closed loop feedback.  He introduces the topic in a blog post (which you can read in full here). I suspect it is from about a year ago and describes mostly how they calculate the score.  In itself, this isn't all that interesting.  In fact, it appears they use a 1-10 scale rather than a 0-10 scale, and he doesn't make any reference to how they collect the data, from which people in the customer organization they collect the feedback, or what else they ask beyond the simple likelihood to recommend.  So it comes across, if you read only that blog post, as if they just calculate a score and that's all.

A Common Mistake (and how to address it)

He also makes the common mistake of crowing about what I am almost certain is what we would describe as a "Bottom-up" Net Promoter Score -- collected only from Quickparts customers with a sample and methodology that can't be verified.  Such scores are notoriously unreliable as indicators of a company's overall performance because the sampling methodology relies on existing customers, introducing a bias because it excludes customers who chose not to do business with Quickparts -- or who did business once or twice but were dissatisfied and switched to a competitor.

Far more reliable for comparing scores is what we call a Relative NPS, collected through a "Top-down" process.  You survey a representative sample of all the customers in the market -- whether they do business with you or with one of your direct competitors -- and compare Net Promoter Scores of each relevant competitor.  The "rNPS" for your company is your own absolute NPS minus the NPS of your best competitor.  If your competitor has a higher NPS than you, then your rNPS will be negative.

It is crucial not to stop there.  You MUST also ask why.  You must understand the drivers of difference for your company's performance versus the competition.  The rNPS approach allows you to understand which factors contribute to differences versus competitors and how much.

Calculating Relative Net Promoter Scores requires a little more cost and time, but it's important.  You need an unbiased sample.  You need to survey customers "blind" (without identifying your company as the source of the survey, which can introduce additional response bias), and you need to use a common methodology to compare your company to the competition.

Unlocking Action Using Closed-loop Feedback

Ron wrote a more recent post, however, demonstrating that they do more than just calculate a score.  This one's a lot more interesting -- you can read it in full here -- because he shares the verbatim feedback from the customer and then describes his company's response.  While this single anecdote doesn't illustrate the full power of a closed-loop feedback like NPS, it at least gives a hint that Quickparts is doing far more with it than just calculating a number and keeping score.  An excerpt from his blog post:

True closed-loop feedback unlocks opportunities to improve individual customer relationships in addition to measuring versus the competition. 

Paul Davis Restoration is an interesting company.  Among other things, they perform restoration services for homeowners or businesses that have suffered some sort of calamity like a fire or flood.  Interestingly, they are a franchise business, making it a challenge to drive change throughout their system.

They joined us at a recent meeting of the NPS Loyalty Forum and shared a little bit about their values, the challenges they face, and how they use closed loop feedback in their business to help keep a far-flung field organization close to customers.

Here's a little video snippet referring to their use of Net Promoter.

The more I collect these post-event surveys, the more fascinating I find them.

Here's a real study in contrasts.  California Pizza Kitchen has a really extensive survey.  The initial feedback survey takes up the first 21 pages of the attached document.  That's the survey you fill out if you go to the website pointed to by the register receipt after you dine at one of their restaurants. (You can see the survey in the document here.)

Some of my favorite questions from the long, long survey:

Six questions about time:

• The accuracy of the time quoted to be seated
• The overall speed of service
• The time it took to place your order once you were seated
• The time between placing your order and receiving your order
• Did your server bring your check in a timely manner?
• Did your server process your payment in a timely manner?

• The attentiveness of the staff
• The courtesy of the staff
• Your server's menu knowledge
• Did a staff member thank you for visiting and invite you to return?
• Did your server mention a dessert by name?
• Did your server mention appetizers and/or entrees by name?
• Did your server check back with you to make sure you were pleased with your order?
• Was a manager visible during your dining experience?

• Do you really need to ask such detailed questions in order to find out what really matters to a customer?
• Are there other, better ways to get the answers to some of these questions?
• Should be burden of figuring out whether the server was doing an adequate job of up-selling (mentioning menu items by name) be put on the customer?  Or a supervisor?
• What's the best way to provide coaching feedback to a front line employee like a server or the cooks regarding things like service time or knowledge of menu items?  Is it a score on multiple choice questions?  Or verbatims from customers?
• Are simple "thumbs-up" and "thumbs-down" graphics the best way to rate a few important items?  Or would a scale provide better quality feedback?

I was waiting for some clients to join a conference call this afternoon and decided to check out a couple of options for replacing my home PC.  It's nearly six years old now, and its fan is about as noisy as I can imagine tolerating.  It takes forever to render videos, and it can't even really show full screen video while running anything else.  So I made my way to the Dell web site, looking to learn a little about the newest hardware.

Now, I wasn't planning to purchase today.  Just learn about which Dell models might be good for video and photo editing.  What base model would be best for this sort of thing and roughly how much might it cost?  I know that Apple has great options for this -- I've seen lots of professionals using Apple hardware to do pretty sophisticated video editing and rendering.  I just wanted to know if there were any PC-based options from Dell, which supplied all my prior home PCs.  I don't really want to make the switch to Apple's proprietary and closed system (even though I know some of you will tell me I'm crazy).

I won't bore you with the details.  If you're really interested, try going to Dell.com and finding out about which machines would be best for video editing and rendering.  If you figure it out, tell me the trick.

For the first time, I filled out one of the site surveys that is generated from a web pop-up ad.  Very interesting.  The first page promised it would take no more than five minutes to complete.  The survey is attached here.  See if you think you could run through it in under five minutes and provide thoughtful feedback.  It would be close.

I can count about a dozen completely silly questions here.  One more example of a request for me to invest lots of time helping a company I don't have faith will listen or follow up.  Really too bad.

I stayed at a Residence Inn recently.  The more post-stay hotel surveys I complete (and share here), the more ridiculous they seem to me.  I'm not saying that the Residence Inn survey is especially bad.  Rather, it's pretty much like all the other surveys I've taken after hotel stays.  It is just long and detailed in ways that I can't imagine make it any more actionable.  Here is a link to it.

The worst part of surveys like this:  they train us, as customers, that our "reward" for opening up an email like the one you'll see in the attached file is a really, really long survey covering a series of topics that may or may not feel very relevant, with a very low likelihood that any of the feedback will result in changes to our experience the next time (or any other time).

It seems Hyatt has discovered a way to surprise guests.  Apparently, they have empowered front line employees to give guests a free meal, drink, or other item of value as a random or surprise act of "generosity."

You can read about it here.

I think this is brilliant.  A few things to consider, if you want to try this yourself:

• These gifts to customers must feel special and surprising.  This implies that they must happen infrequently and unpredictably.  Otherwise you will train your customers to expect them, reducing the impact of the action.
• The delivery of these gifts must be genuine and personal.  In the research behind this approach (described in the article text), it is clear that the good feelings of the gift recipient are conditioned on feeling this was a genuine act of kindness or altruism.  If it comes across as scripted or stilted, it is unlikely to have the desired impact

Tom Merritt of CNET pointed me to this video from Sons of Maxwell, a country group who apparently had a pretty unfortunate incident with United Airlines' baggage handlers.


I just love the creativity unleashed by anger, frustration and a loss of trust.



A few thoughts:

• In some ways, this is more about the relationship United has with its baggage handlers than it is about its attitude toward customers.  Sure, they mishandled the complaint.  But how did the baggage handlers get the idea that flinging guitars around made any sense?
• Huge lost opportunity in complaint handling here.  Probably don't need to say anything more.  But the customer seems genuinely frustrated by all the time and energy expended, only to be rejected.  In fact, the lyrics and video show real compassion toward the front line employees and supervisors who tried to help.

While best known as one of the best cardiac care facilities in the world, the Cleveland Clinic has developed a reputation for outstanding medical care in a variety of fields.

Until recently, Dr. M. Bridget Duffy headed the Clinic's patient experience transformation efforts.  Under her leadership, the organization made a wide variety of improvements.  It was announced this week that she (and her spouse, also an administrator at the Cleveland Clinic) would be leaving.  I hope she built a strong organization and team that will continue the good work she started.

Here's a link to a video of her talking about the role of her group.
 

Downturns present outstanding opportunities to gain market share versus the competition.  Of course, they are also the time that many companies enter a doom loop of slower growth, depressed profits, declining reinvestment in the business, and ultimately erosion of their market position.

The question of how great companies take advantage of downturns to gain market share is one that we at Bain have studied in detail.  I recently published a short article on the topic as one chapter of a forthcoming book on how to manage through turbulent economic times.

A few tips:

• Start by identifying your Design Target -- the few customers who represent the vast majority of the economic and strategic value in your business
• To find them, you might try rank-ordering your customers on profitability, then looking for the subset who are most emotionally and rationally attached to your business -- not just behaviorally loyal, but emotionally loyal.  Typically, in Net Promoter terms, these would be your most profitable Promoters.  Find the subsegment who have similar needs, behaviors and purchase patterns.
• Characteristics of a good Design Target:  Profitable, distinct, influential over other customers, highly loyal to your company and its products, significant remaining economic and strategic opportunity
• You probably know more about how to serve their needs than do your competitors -- generally you have more opportunity there than in any other segment, even if you already have relatively high penetration in that segment
• When you cut costs, make sure to protect those customers.  Most companies think in terms of number of customers, while the economics in most businesses are concentrated in the small group of customers in the target segment
• When you design new products, don't think only in terms of volume, but also in terms of value.  Design rigorously around the needs of the customers in that Design Target segment

On my way to and from the Net Promoter conference a couple of weeks ago (you can see a blog post about my speech here), I had the opportunity to pass through the new Terminal 5 at Heathrow.  I had heard about this fantastic new wonderland for years and years, and was bummed out when it was temporarily closed soon after its big debut.  While I had forgotten all about it until I landed and realized where I was, all the years of hype had set my expectations fairly high.


My reaction?  "Meh."  (That means I was unimpressed, uninspired, unmoved.)  On the other hand, I felt it was a perfectly branded experience -- maybe not what BA intended, but exactly what BAA (the agency that owns the airports) seems so good at creating.

Frankly, its shops, layout and interior decorations looked and felt just like any other fairly new terminal in any other major international airport.  The biggest differences I noted?

• Still had that unmistakably Heathrow experience of taking a bus from the plane to the arrivals hall
• Perfectly fitting my image of Heathrow, the walking distances are monstrous, enormous, gargantuan, neverending, interminable, sweat-inducing, arm-tiring, and at an order of magnitude unmatched by any experience I have ever had at another airport (well, okay, you can get that at CDG, if you are unlucky, too)

At last week's Net Promoter conference in Europe, Virgin Media CEO Neil Berkett described the NPS journey taken by his company.  It is an impressive story, and one worth paying attention to for anyone considering heading off on such an odyssey.

Starting life as 42 different cable franchises, Virgin Media was formed through a series of mergers and acquisitions over many years.  The company’s NPS journey actually began back in 2005-2006, when Berkett was COO of the latest combination – what was then called ntl:Telewest.  Working with a team from Bain & Company on a series of issues related to the mergers and cost reduction, Berkett was introduced to the Net Promoter concept and approach by the Bain team and became fascinated.  As COO, he determined that he wanted to start measuring Net Promoter Scores in all the company’s businesses.  Moreover, he wanted to implement the Net Promoter approach to closed loop feedback to make it more than a metric and introduce it as an operating discipline.

The core problem he was attacking:  In a business that had been growing largely through consolidation, organic growth was becoming harder and harder to achieve.  While the company had an outstanding network and cable infrastructure with significant potential cost and quality advantages, net growth of subscribers was becoming more and more difficult to achieve in a profitable way.  The economics of the business were under extreme pressure.  “Our number one problem was that we didn’t keep our customers long enough.  We used to lose 1.8% of our customers each month.  At that rate it is incredibly hard to grow,” he said at the Net Promoter conference.



Unfortunately, Berkett didn’t have the full support of the CEO and the rest of the management team for addressing the churn and customer advocacy issues he had identified.  While metrics and measurements were successfully put in place with help from Satmetrix, operational changes, policy changes and the other actions required to make a dent in customer churn rates simply were not prioritized.  Berkett was frustrated.  The lesson he learned was simple.  “If the drive to improve advocacy is not from the very top, you will fail.  I was COO, and my boss didn’t buy in.  We only made progress once I became CEO.”



CEO Neil Berkett

The capstone in NTL’s growing cable empire was put in place in 2006, when NTL completed the acquisition Virgin Mobile and the Virgin brand.  In early 2007, the company rebranded all its services under the much more recognizable and aspirational Virgin brand.  On the day after the rebranding, with no changes in the operations of the business beyond new signage and advertising, the company’s customer feedback scores dropped precipitously.  Customers, it seemed, had much higher expectations for anything branded Virgin than for the old conglomeration of cable brands.

Once appointed CEO in 2008, Berkett re-dedicated the organization to pursuing customer advocacy after the acquisition had been consolidated.  “We decided NPS was the appropriate tool at the heart of our balanced scorecard.  There is a direct relationship between NPS and revenue growth and lower costs.  But you can’t just measure.  You have to fix,” he said.  "Just implementing NPS doesn't change the way you are running the business."

The results have been impressive.  Churn has been almost cut in half, to an industry leading 1.1% per month.  And the company is on firm financial footing.