September 23, 2009
I’ve been writing in various forums about using Net Promoter as a cost-effective growth engine. Doesn’t every company want to optimize its business to increase growth? To me this makes sense and is easy:
Can growth projections alone define priorities?
- Segment your customers into 3 groups: those that are with you (“promoters”), those that are against you (“detractors”), and those that have no opinion (“passives” – but who are those people…? more on that in a future post).
- Slice up your actual customer revenue into those 3 categories.
- Find out what creates promoters and detractors in your business (your customers will tell you). This is the investment (cost) side of the equation.
- Model what will happen when you address those drivers (i.e. what revenue will result when you create more promoters by addressing that key driver). This is the benefit side of the ROI.
OK, so this requires a little math and statistics, but it’s not rocket science and we can do this quickly. We have done this and PROVEN that it works. So why aren’t more companies doing this? Wouldn’t every company want to know which initiatives will produce the best results at the lowest cost??
The answer, I believe, lies in that fact that too often there’s a personal agenda involved. If the “company” had its own mind and thought entirely logically then the process would work on its own. But personality and politics play a role. “Prioritization” is often a game of politics. And if you don’t have a plan to change that mind-set, then all the statistics in the world won’t help you.
- Get buy-in and know who’s with you. And understand that there are ‘best practices’ in managing this change. Use them to build your team.
Prioritization of the right initiatives to drive growth requires teamwork
- Then get the stats and create the model.
What do you think?
August 2, 2009
Nice article in Slate on why Wholefoods is not extinct. The perception of many consumers is that the upscale organic chain’s is too high priced. To combat this, Wholefoods has been promoting “the value” of its items through various promotions and newsletters. It has also commissioned “value tour guides” in it’s stores to point out the bargains to be had. Revenues have remained flat, which in this economy has lead to a surging stock in recent months.
This is another aspect of customer experience design that does not get much press. It’s the idea of understanding your key gap areas, and finding creative ways to change perceptions at all touchpoints. Healthcare companies have the same need to show the value they provide to consumers who have a choice of plans. Similarly, certain automotive brands need to build awareness of their selling attributes, such as the “greenness” of their technology (e.g., hybrid vs. diesel) or safety or performance.
July 21, 2009
Continuing the discussion of ROI on customer loyalty programs (see ROI for Customer Research), I’d like to discuss the cost-side of the equation. I keep hearing stories of companies paying $100,000+ to implement a software-based program to capture and act on the voice of their own customers. IT DOESN’T NEED TO COST THAT MUCH.
A program to capture and act on the voice-of-the-customer has 3 basic parts:
– Create the model to link your financials (revenue gains) with customer feedback
– Determine who (names and roles) you need feedback from and how you’ll get it
– Establish your follow-up process and who will do it.
2. Begin. Implement a software tool that allows lets you easily (inexpensively) collect and understand customer feedback on an ongoing basis.
3. Act. Prioritize the right actions and investments to drive positive word-of-mouth.
It’s not rocket science. A good partner will help you do this in 30-60 days, which often translates to $40,000, including software. And for this investment you should expect
1. Expertise to implement the program the right way the first time. You only get one chance to make a first impression.
2. Transfer of experience and lessons-learned so you get results (growth) faster. Don’t reinvent the wheel.
3. Tools and templates so you are self-sufficient. Invest in the customer experience, not ongoing consultants.
Whether you call it Enterprise Feedback Management, Customer Experience Management, Net Promoter Score (NPS), Customer Research and Loyalty, or any other three-letter acronym:
- DO take advantage of lessons learned in the field
- DON’T pay too much for consultants.
After all, it’s YOUR customer experience.
July 17, 2009
I continue to talk with people that are working to hold on to their customer research programs. It seems that (in this economy) if you’re running market or customer research and can’t demonstrate a real, tangible ROI your program is in jeopardy of being cut.
There are 2 parts to demonstrating the return your program brings:
1. Structural: Link overall customer loyalty to growth. Whether you use Net Promoter or some other vehicle, show how much money is tied up in Detractor, Passive, and Promoter customer segments. Show how much growth ($) can be had by implementing treatment strategies that move each segment of customers “up the loyalty ladder” to ultimately drive word-of-mouth. Once you have the benefit side of the equation, you can then prove it out by either looking historically and back-casting the ROI, or by implementing a small, low-risk pilot.
2. One-to-one: When you change the nature of the conversation with individual customers you also create cross-sell and up-sell opportunities. Your survey instrument can generate real up-sell and cross-sell just by asking the right questions. This process also comes naturally with more complex buying decisions in B2B environments, where account managers can move from a salesperson to that of active listening and customer advocacy. Either way, growth comes when you serve your individual customers by demonstrating that you are listing to their problems and providing real solutions and not just pushing product.
Regardless of what you are spending on your program, it better show real results. What do you think? I look forward to discussing this in more detail over the coming weeks.
July 12, 2009
I have heard of “exclusive content” before, but not an exclusive car! Subaru rewards loyal customers with the chance to purchase a new model before the general public.
May 27, 2009
Hi All, it has been a while since I last posted – working with a client on a customer experience design project. I just stumbled onto this tool from Lego – that helps a company to diagnose the current state experience and hint at places for improvement. I like the presentation (simple is always better), but the devil can be in the details.
It shows the various steps a customer goes through during the lifecycle or transaction (in this case a flight) – and labels the areas that could be made a positive experience, require data, and moments of truth. This is a good workshop exercise, but will leave some key questions unanswered. For example, many large companies simply don’t have a handle on all the interactions they have layered onto the experience over the years. They may not know which experiences are “make or break” – and would require some additional data to make that determination. They may be collecting all kinds of customer data, but not using it to personalize products / services or interactions. Also, they probably do not know how their customers are different from one another, making the prospect of personalization difficult.
All that said, this serves as a nice exercise to begin with. Similar to a customer corridor where you are charting the touchpoints, and an old Peppers & Rogers favorite “the race for the best customer” where you are working with execs to figure out where they stand on overal ability to learn from customers, personalize interactions and further engage them. I use both in my workshops, then follow up with a more detailed “touchmap” that shows the current interactions, data flows, gaps and opportunities for change.
May 7, 2009
This article in Harvard Business online nails it. The gist: focusing your loyalty efforts on retaining ALL customers can be counterproductive, since only 20% of your base are truly valueable / profitable.
Profitable loyal customers on the other hand are almost always driven by differentiating aspects of our product or service offering. The key to a successful loyalty strategy is to become crystal clear as to what these are, and to focus on tangibly improving these elements. It is also imperative that we actively let customers and prospective customers know that these are the things the company stands for and that the firm is committed to being best at. By doing this, our best customers will have the necessary information to clearly articulate why our organizations deserve their loyalty in good times and in bad.
If you have a loyalty program, don’t always assume that price is driving behavior in your best customers. It’s fine to use NPS as the basic framework for your loyalty program, but dont forget to segment using the customer value metrics you have on hand… be they as sophisticated as NPS, or simpler data such as profitability or revenue growth.