Customer Experience

Stop placating me and make a decision!

Don't you just get so furious when you have an issue, contact customer service, and the front line staff is wonderfully sympathetic and apologetic but cannot make a decision to resolve your issue?

I am tired of the placating and no decision making to fix my issue. I am tired of escalating to a Supervisor, then a Manager and having to wait for call backs to resolve my issue!

I was reading a thought provoking article by Graham Kingma, in April's edition of the Contact Management Magazine entitled, Empower Your Frontline Staff to Boost Profits. In it Graham talks about allowing your frontline staff to make decisions to resolve a customer's issue. What really resonated for me was that empowering your frontline staff should be viewed as allowing them the confidence to effectively resolve a customer's issue (once trained and given the tools). Empowering your frontline staff will boost profits as acquiring new customer's costs more than retaining them.

I had a recent experience at a well known telecommunications retail outlet that made me think that frontline customer service people need to be more empowered to make decisions to retain customers, enhance the customer experience and stop giving customers the run around! Customer Service people are smart, resourceful and care about helping people, so why don't companies give them the tools they need to truly be of help?

I went to this well known retail establishment (of which I am a loyal customer) to upgrade a piece of my equipment (my internet, long distance, Blackberry and digital TV are bundled into this "great deal" to save me money). Low and behold, they had a special promotion for new customers, and I, a loyal customer, had to pay almost double for the same thing! I expressed my concern and the Associate and the Manager were wonderful; they apologized, empathized and tried to explain the rationale of the new customer promotion. At this point I was livid; I proceeded to give them the following analogy:

"Imagine you are going to a wedding of a long time best friend and that best friend made a recent friendship with a cool, well connected person. You arrive at the wedding and you are sitting in the back close to the kitchen and the newly acquired friend (the cool and well-connected person) is at the head table. How would you feel?"

I felt used and taken for granted. They both got the analogy but still no decision could be made; they continued to apologize and offer kind words; lots of placating, but no authority to fix the issue.

I told them I will call head office and sort it out (one would have thought one of them would have made that recommendation and not make me do work). Inany event I called head office and got what I wanted with one phone call.

If frontline staff are empowered to make decisions it is great for the customer, employee and shareholder. As Graham said in his article; "they (frontline staff) won't give away the farm." In most cases they will make great decisions that meet the need of the customer and the business.

I sometimes think the reason most customer services jobs are not highly regarded is that most people in this role are not allowed to problem solve and provide a resolution to customers issues. I'm sure it's as frustrating for many of them as it is for the customer. If you cannot solve the customer's issue then you cannot effectively service them.

In this day and age of instant information, gratification, and busy lives, there are few organizations that ensure their frontline people are well equipped to make a decision and truly provide service, not platitudes!

The House that Toronto FC Fans Built

If you live in the Toronto area you may have heard the roar coming from BMO field. That would be the roar from 15,000+ brand advocates and influencers. Recently I attended the ‘Live Case Study: How Marketing Made the Toronto Football Club the Talk of the Town’ hosted by the CMA’s Integrated Marketing & Customer Experience Council. Full disclosure-- I am the vice-chair of the council and I was NOT a big soccer fan, sorry I mean football… until now!! The event was held at BMO field (hence the concept of a ‘Live Case Study’) and the presenter was Paul Beirne, Director of Business Operations for the Toronto FC. His presentation focused on how the club engages their fans to sell out season tickets. After this event, I am looking for seasons tickets … anyone have a pair?

Paul, in his relaxed ‘story telling’ approach, outlined their brand attributes, positioning, strategy, objectives, communication planning and yes … their marketing tactics. This was very informative. However, one of the most interesting points Paul made during his presentation was around the importance of timing and the role it played in their success so far. Paul even stated that he does not think they would have had the same level of success 10 or 15 years ago. Why? Paul touched briefly on the research they conducted before the launch and pointed out that market demand was high. People yearned for a professional soccer team in Toronto and Canada. Toss in Toronto’s cultural diversity, an increase in youth participating in local soccer programs and finally my personal favourite, online and digital communications coming of age. From my perspective it was like the perfect storm for any marketer.

Paul pointed out in his presentation that aside from timing, there were a number of other ‘keys to successes’ at work here:
- Transparency (our club and our fans are one and the same)
- Happy mistakes (things you could not plan for)
- Connect with die-hard fans (grassroots tactics like pub crawls)
- Listen (engage the fans in the process)

Mixed into these ‘keys to successes’ was a growing movement of fans online. Even before BMO field was finished construction fans were becoming self organized via online communities like Flickr, Facebook and personal blogs. Meeting with each other online and spreading the brand long before the team ever hit the field. The club embraced and supported these brand advocates by making them part of the process and by linking to their community sites. Which by doing this, connected these communities together. Paul said the club also made a strategic decision early on to only communicate to ticket holders via electronic communications (e.g.: email, website, etc…). Not just for the cost savings … but, for the speed in which the club could ask for feedback and quickly adapt or turn around changes to their program.

And the results from the 2007 season? 15 sold out games, 95% season seat renewal, 16,000 season seat holders, and a waiting list of 7,000+. Not to mention other Major League Soccer clubs are meeting with the Toronto FC to possibly adapt some of their strategies. Also, 2008 appears to be off to a great start. Their season opening game in Columbus saw 2,400+ Toronto FC fans make their way to Columbus via bus. And most recently they defeated the Los Angeles Galaxy 3-2 and Real Salt Lake 1-0.

Although Toronto FC had timing and market demand on their side, the club is a shining example of embracing their customers (fans) from day one in a dialogue. They followed up by building brand loyalty through listening, quickly reacting and supporting them. Yankee stadium’s nick name is ‘The House that Ruth Built’ … would argue that BMO field is ‘The House that FC Fans Built’.

Starbucks makes some moves

The founder and CEO of Starbucks (Howard Schultz) realized that the organization was headed in the wrong direction. He recognized that the experience that made Starbucks the most popular coffee house in the U.S. was dwindling away.

About a year ago, I wrote about how Mr. Schultz had admitted that the original reasons why customers were coming into their coffee shops were now being ignored The company was slowly commercializing the coffee experience for their customers. Consumer Reports even indicated that McDonald's coffee was better than Starbucks.

In the last few months Mr. Schultz has taken some drastic steps to improve the experience for their loyal customers.

In a bold move on Tuesday February 26th 2008, Starbucks closed all 7,100 stores in the U.S. for a 3 hour training session on what each of the 135,000 associates must do to ensure a great experience for their customers. This is really unheard of in the retail and food services sectors. Mr. Schultz showed some real commitment by telling his Customers we need some time to make things better for you. Dunkin' Donuts took action by offering 99 cent coffees on the day Starbucks was closed.

Starbucks has also launched a quasi-social network website to garner feedback and ideas from their loyal Customer base. They estimated that they would get a few hundred responses in the few days after the launch of the new website. Within the first week they had over 100,000 votes and ideas on what Starbucks should do to improve the experience for their customers.

There are very few companies that have a leader that is comfortable to stand up and admit their failings. It is rare to see a company react with moves that are fairly unprecedented.

We'll have to wait and see whether Mr. Schultz can get his massive organization back on the track he feels they need to be.

Kudos to him and the entire organization for committing to a bold plan and staying the course.

Comparing Apples to Apples.

Recently, I have had the same conversation with two separate people. We were talking about the Dove Revolution campaign. The people with whom I was speaking both said they couldn't believe how well that spot had done at Cannes. It did well in the interactive category. They were aghast that what was basically a television spot would do so well in an integrated category of an award show. After all, there was no real interactive component. How dare they. There was no "online experience" to be had. Nothing to do but watch the spot. I've heard this lament time and again about various campaigns. In fact, the same argument has been waged in the pages of Marketing Magazine recently where, in the letters to the editor section, one Creative Director took another Creative Director to task for arguing that a television spot or outdoor billboard posted on YouTube does not make it "online creative". Perhaps not. But here's where I have to play devils advocate.

To my mind, the internet is obviously a place where you can interact with creative. But it's also much more than that. It's also, like television, a place where you can build a brand and create awareness. Like a direct marketing campaign, it can generate a lead, collect customer information, be extremely personalized, and provide an offer. Like a retail promotion, it can get you to enter a contest and win something spectacular.

Of course, the online space is a discipline. There's a way to produce online creative that is obviously different from how you develop other creative, and you have people who specialize in the space. But it's also a channel with the power to build awareness, generate a response, and engage a consumer.

And that brings me back to the campaign that started the conversation in the first place, the Dove Revolution spot, and the reason I'm writing this post. This was my role as the devil's advocate in my conversation with my friends.

The Dove campaign won at Cannes because it was brilliant creative. Plain and simple. It didn't matter where it appeared. It ran online, but why can't the online space be used to build a brand and generate PR? People who work in the online space know its potential. But do they harbour, dare I say it, some bias that online advertising can only be immersive and clickable? Only "interactive"?

Then, after having had both conversations, I had a revelation. Perhaps the award shows themselves (like Cannes) are creating this controversy and encouraging this argument. Perhaps the problem isn't the creative. Perhaps it's the way the work is submitted and judged. Maybe it's the categories in which the creative must be entered. Was the Dove campaign competing with work that was more experiential? Were apples being compared to apples? And if not, why not? Why don't interactive award shows create categories that break the work down into the objectives of the campaign. Mass/Awareness online ads should compete with online ads that were created to do the same job. Promotional campaigns should compete with campaigns against those objectives. And so on. Perhaps they'd have to rethink how the whole award show is built. Perish the thought!

In the mean time, don't blame the Dove campaign for being beautiful. Just let it compete with its own kind.

Service/Delivery Analytics: A Renewed Frontier?

There has been quite a lot of attention again put on marketing ROI (Return on Investment), ROMI (Return on Marketing Investment) over the past year as companies and practitioners continue to look for ways to demonstrate the impact of their marketing efforts.

The entire space of marketing analytics has seen phenomenal growth over the past decade as more and more companies have sought to refine their marketing activities, especially direct marketing. Thanks to its nature, it is a relatively straightforward thing to apply rigorous testing and analysis to direct marketing efforts to demonstrate the lift and ROI on a particular marketing campaign. As a practitioner myself for the better part of 15 years now, I know that with even a little bit of data I can design and deploy a successful direct marketing initiative and clearly demonstrate an ROI (usually positive!) for a client and repeat that success over time to generate piles of money on their behalf.

However, I’ve recently begun to wonder whether we’ve pushed too far into a cycle of ever-refining our marketing efforts without thinking of the bigger picture in which we are doing it. This has been informed by a recent personal experience that I’ll share quickly to set the stage for the remaining comments:

My roof is missing shingles and part of the fascia on the front gable of our house. It has been for the better part of a month now. I’ve called 5-6 different suppliers to get quotes to fix the situation. Out of the 6, three have actually provided me a quote. One never called back, two (2) told me it would cost me money for them to receive the privilege of a quote.

Of the ones that provided a quote, one said they wouldn’t warranty their work. When I asked “why?” they said it was industry practice on repair work because they don’t want to be responsible in case the rest of the roof has a problem. I tried to explain that I wasn’t expecting them to warranty my whole roof, only the part they fixed in case it has trouble. No deal, so I eliminated them from the search.

I finally settled on the one company that provided a prompt quote and seems to have the experience to do what I needed. They have a great website you can visit to see the type of work they do, how long they’ve been in business, etc. The trouble is, I’ve been waiting for the better part of 3 weeks now for them to actually come and do the work. When I call them to find out why they haven’t come, I get a lot of excuses (the guy is sick; they tried but it was too cold or windy) but here I still don’t have a solution to my problem. The best part is, when I call and am put on hold, they have a lovely-voiced woman who soothes me with talk of how much this company values my business, and how their business is built on referrals and happy customers.

By now I hope you are getting some of the point to come. As a direct marketer and marketing consultant, I am quite confident I could go into this business and help them better target their efforts and make more money doing so, but if they can’t deliver on that business, am I really delivering them a benefit or am I just letting more people experience their terrible service, thereby destroying their long-term referral and growth potential? They have no doubt spent quite a bit of money on building their business and branding it via their website, however their service experience is in direct contradiction to what they promise.

This brings me back to my original point. Perhaps instead of focusing ever more finely on our marketing ROI, we need to step back and think harder about our abilities to deliver our products or services. I still see a lot of companies that are excellent at direct marketing put barriers between themselves and their customers, making what should be simple experiences complex because of “industry standards” or “policies”.

I’m not saying abandon ROI, because it is and should remain the benchmark of evaluation for marketing efforts. However, have you given any thought in the last little while to some of the following questions related to service delivery and fulfilling your promise to customers?

1. Do you know how many times an average customer has to call you to get their problem resolved?
2. Do you know how many of your calls are resolved in one shot vs. the service situations that require repeated call backs on your and the customer’s part?
3. Do you know how much money it costs you in dollars and cents to have to keep going back and forth with a customer to resolve a complaint or improperly fixed problem?
4. Do you have any measures of your service delivery success or failure in terms of how the customer experiences the situation?
5. What are your policies and procedures with respect to customer facing situations? Are they designed to make it easier for you or do they actually make it easier for your customer to deal with you?

When you look long and hard, some of the numbers can be staggering. With one of my previous employers, we went through the exercise of trying to calculate how much money we could save by refining the account opening process. By our estimate, it would have been about $180,000 -$250,000 per year and it would have shaved two days of customer time out of the process.

This type of effort garnered a lot of effort back in the heyday of CRM as companies were looking at automating various capabilities within their organization, but it seems to have waned in recent years, at least in my experience.

In closing, I still believe we do need to keep our focus on ROI and the benefits of our marketing efforts, but perhaps the time has come to target the guns at our service and fulfillment areas as well. It will benefit both companies and customers.

P.S. If you want a list of bad roofers, give me a call.

IQPC Customer Feedback Summit

I recently attended the 4th Annual Executive Customer Feedback Summit put on by IQPC in Las Vegas.

The summit was attended by those that are responsible for collecting and analyzing customer feedback as well as how to use that feedback to improve the overall quality of the customer experience. The quality of topics and speakers were exceptional.

We heard from representatives of companies such as JetBlu, Coca-Cola, Ebay, CitiGroup, Harrahs, Zappos, Microsoft and even the NBA’s Seattle SuperSonics among many others.

The common themes from some of the more advanced customer experience companies was to determine the Net Promoter Score of your customers. In its simplest form, taking the results of a 1-10 scale question to their customers of "would you recommend this company to others". Then determining your NPS by doing the following calculation:

Those who scored 9&10's
divided by
Those who scored 0-6's

We also learned how JetBlu used some new data mining technology to search through the 16,000+ e-mails they received in one day in January 2007 when their planes were grounded. The data mining helped them quickly determine what their customers were really saying and ultimately helped them design their Customer Bill of Rights.

Zappos talked about their leading edge customer policies such as free shipping both ways (returns included) and a 365 day return policy. There is a reason they are one of the fastest growing retailers in North America (projected to do over $1 billion in 2008)

A great quote out of the conference was said by David Norton (Senior Vice President, Relationship Marketing at Harrah’s Entertainment).

"The number one driver of dissatisfaction is a lack of respect for your customer's time".

What Diamond Shreddies says about us.

Every so often a campaign comes along that is truly smart, fun and memorable. The new Diamond Shreddies campaign is all three.

You've probably seen the billboards. Of course there are commercials too.

http://www.youtube.com/watch?v=PZeAwpPqnJU

So, what's so great about this campaign? Basically, it deconstructs everything we do as marketers, advertising professionals, clients, and customers. For example, I use a certain brand of razor. It has a blue strip across the top. Apparently, when the blue stripe turns white, it's time to start a new blade. If you've ever seen a picture of me, or met me, you know I go through a lot of blades. The marketers of those razors are brilliant. I know it's smart marketing. And I know why they added the blue stripe. I’m onto them. But I admit that before they added that little blue stripe, I used those blades at least a week or two longer than I do now and amazingly they worked just fine. Go figure.

So when the truly brilliant makers of Shreddies came out with new and improved Diamond Shreddies (urban legend has it that an intern at their agency actually came up with the idea) they not only turned the fractured mirror back on us as marketers, they also stuck a finger in the ribs of today's gullible consumer. Take a look a this...

http://www.youtube.com/watch?v=BOuC5jjTZOI&feature=related

Having sat in countless focus groups, I can’t believe how spot on this little viral video is. Poor consumer. They didn't stand a chance.

I’ve never been much of a breakfast cereal eater. But now that Shreddies come in diamond shapes, I’m seriously considering them as a snack.

5 Ideas that Pack a Punch

I attended the 2nd Annual Business of Ideas Forum on Tuesday, February 12th. I may be biased, but I felt the day was packed with inspiration and incredible examples of successful innovation at work. Just goes to prove that you are never through with learning and accepting the status quo just isn’t acceptable.

Here are the 5 morsels of wisdom that I’ve etched in my psyche courtesy of great Canadian leaders and the brands they manage:

1) Giving back to your community not only helps others thrive and feeds your soul but can also contribute to the economic prosperity of a city. Tony Gagliano (Executive Chairman and CEO, St. Joseph Communications), shared his vision of a world-class Toronto and in the process put this great city on the global map as a leader in arts and creativity.

2) Maybe strategy isn’t king. Jim Little of RBC encouraged us to think less, do more, be brave, challenge convention and sometimes, listen to the those crazy voices that tell you something is ‘right’. His own testament to this belief is Frank and Gordon – Canada’s favourite beavers. Love ‘em or hate ‘em….they are proof that Jim is a man following his own vision.

3) Leaders create the smell of the place. Brilliant. Nothing else needs to be said. I personally thank Tim Penner, president of Procter & Gamble Inc, for encouraging a room full of senior executives to act upon what they expect of their own staff.

4) Listen to your consumers. Nothing new here except a channel that makes this an immediate reality and the technology to bring it forward. Kudos to power brands such as Home Depot and Walmart for being brave enough to do what not enough of their peers are doing. They are the evangelists for consumer generated content.

5) The time is always right for great storytelling. Proof positive: Galen G. Weston In his charming, articulate and motivating way, he shared how getting back to the roots of Loblaws by telling the stories behind the products they sell – is what will position this chain as a future leader. And I’d bet that there isn’t a Canadian among us who couldn’t recite a personal memory about the Dave Nichol’s days, introduction of Green Environmental Bags or even the Decadent Chocolate Chip Cookie.

Great day - thoughtful conversation, an opportunity to network and even some amusing banter about brands we thought we knew. I, for one, will be taking advantage of the early bird offer for the 3rd Annual Business of Ideas Forum. Where do I sign up?

The high price of mail-in rebates

If you have ever gone through the process of sending in a "mail-in rebate" form, you know what level of frustration this can cause.

There is fine print to read, and deadlines to meet. You must remember to include everything that is required, or you will not receive the money. You invest your own time and energy, not to mention the postage stamp. However when you've finally completed all the work, you mail off your forms and expect a cheque back. In most cases you wait 8 weeks at a minimum. 8 weeks in a time when anyone can order almost anything from anywhere and receive it within a week.

I went through this process with a mail-in rebate offer from a major home improvement company. I had to purchase some paint one weekend and decided to go with a particular brand because the nice lady behind the counter suggested that there was a mail-in rebate offer of $20 if I bought 2 cans. Frustrations started when I received a letter back from the mail-in rebate company suggesting I was past the due date. I sent a letter back reminding them that I had sent it in on time and that even the date of their letter was, in fact, within the rebate due date. I received another letter stating that I had not included the correct information. I sent them a letter back reminding them that they had kept my original letter with all the correct information and proof of purchases. I received nothing in response.

I know that retailers "farm out" the mail-in rebate business to third-party fulfillment companies. According to this website the agreements between the two companies have a lot to do with guaranteeing the retailer that no more than a certain percentage of rebates will be mailed in. If there are more actual Customer rebate requests than the guaranteed percentage, the third party company will absorb the refund themselves. This doesn't convince me that these mail-in rebate companies are working in the best interest of the retailer or the Customer.

Retailers rely on the fact that the majority of people do not send in the rebate offer. The retailer gets the sales because of the rebate offer incentive, but is not on the hook for the full rebate amount. We are in an age where Customers are losing their patience and are looking for a retailer that can be open, honest and provide the best experience. There are too many retailers to choose from today. Those that still offer mail-in rebates are putting themselves at risk of losing those Customers in the long run for a quick one-time sale.

Is it worth it? Best Buy has decided it is not. They announced about a year ago that they will phase out all mail-in rebates. They are one of the first major retailers to realize what the rest of us have known for a long time. Mail-in rebates are good for sales in the short term, and bad for business in the long term. The long term plan is to implement the following: when you buy something at Best Buy, the "mail-in rebate" is given to you at the check-out counter. No forms, no proof of purchase requirements, no stamp and no waiting for 3 months to see if an invisible company has deemed your submission to be valid. In the mean time they have made things easier by allowing you to submit a rebate offer online, and track the progress.

If your organization offers mail-in rebates, perhaps it's time to ask your Customers what the cost is to their loyalty?

CBC Rates the Customer Experience

On November 22nd, CBC released a study on their rating of the customer service in 40 of Canada's top companies.

The methodology was interesting, taking into account many of the attributes of what may frustrate a customer on a typical call. I believe they did a reasonably good job at rating the experience from the customer point of view.

The results were also interesting; perhaps mostly because we know most of the companies on the list. Many of us will make assessments based on our own experiences and how they compare the list the CBC released.

There is one area that leads me to want to ignore the findings of this survey. The size of the sample of the survey was too small. They called the businesses once during the day, once during the evening and once during the weekend. They based their entire satisfaction rating on 3 calls. Most of these businesses will receive millions of calls each year. The sample size is simply too small to make an accurate rating on the level of service provided by these organizations.

CBC's rating the ease of navigating the IVR (the touchtone or voice response that answers most calls these days) would be accurate, as this will not change significantly from one call to the next.

The most difficult part of operating a call centre is to provide the same level of service to every customer that calls in every time. It is impossible to achieve when a company reaches a certain size. In a small call centre with 4-10 people, this can be much easier. Everyone talks to each other, training is fast and efficient and most if not all are on the same page with what to say to Customers because they can talk to each other everyday.

When you have a call centre with thousands of people you face real challenges. Just like in any workplace, you have various levels of skill and professionalism. You have new people that have been at the organization for 6 weeks and those that have been at the organization for 10 years.

Your level of satisfaction with a company has everything to do with who you reach when you call. We all hope for a minimum of fast and excellent service and are satisfied when we receive it. Unfortunately this is not realistic in many cases. Even the highest rated call centres achieve satisfaction ratings in the 80% area. That means 20% of Customers are not completely satisfied at any given time.

A secret tip that more and more customers are realizing? If the organization offers a web "chat" function within their customer service offering, try to take advantage of it. In many cases the best and most seasoned representatives are on the other end of that chat window ready to wow you with fast and great service.

Balancing customer aquisition / nurturing retention

Recently I went through a customer experience that struck a cord with me as a consumer and also as a marketer.

As it happened, I recently made the decision to upgrade one of my household services to take advantage of the latest technology. Having earlier consolidated lots of business with my chosen service provider, I went into this purchase with high expectations for receiving my just recognition in the form of the best possible price. First step, I researched the product options on the web and made my selection. I then decided to call rather than visit a retail store in person believing it was the best way to be acknowledged for all my current business with this company – counter intuitive, as it may seem. Shortly after the conversation began the sales person told me the price I would need to pay for the upgrade. To my surprise the quoted price was more than double that advertised on the web and in the paper. When I probed the reason, I learned that “the lower price is for new customers only”. The sales person remained un-phased by my plea for a better price, so I decided to up the ante and threatened to cancel my service. It seemed unfortunate but I knew from experience – the squeaky wheel gets the oil. As I began speaking to a “customer save representative” (I thought to myself, why wasn’t the last person empowered to “save” my business), I launched into my spiel explaining why I deserved a better priced. As a client with considerable business I felt strongly that I should not only get the new customer price, but now I rather politely demanded an even better price or else. The rep left me on hold to see what she could do. After several minutes of silence later I received the good news that I would indeed get a lower price (than a new customer), and some additional savings I was not expecting. Customer saved and happy, soar ear and all.

As a marketer I can appreciate the challenge – develop compelling offers to attract new clients while profitably managing your existing client base. But how do we proactively ensure a positive customer experience for all, especially customers who’ve already put trust in a company. While I was willing to raise the bar with a threat to get what I wanted, how many others would have bailed after the first rejection? How can we empower those on our front lines to assess and reward deserving clients? It seems many companies can sometimes lose sight of nurturing existing customers at the expense of those who we do not yet know. As they say “the grass is not always greener on the other side.”

The Ultimate Decision

The Promise:
It came upon us as a promise, wrapped in the innocence of simplicity. The inner core of a brand captured miraculously in a simple question.

“How likely is it that you would recommend us to a friend or colleague.”

The Net Promoter Score was born. The brainchild of Fred Reichheld, a Bain & Co. Fellow and Dr. Laura Brooks of Satmetrix Systems. The sort of material that Harvard Business Review writes their cases about. In fact HBR did publish an article in Dec 2003 with the eye catching title “The one number you need to grow”. The equivalent of a viral campaign unfolded, supplemented with a book… global speaking engagements.

Just as a black hole, the simplicity drew everyone to it. The promise, incubated by field studies at 400 businesses (turns out to have been 50+ in the end) which held that if we managed our customers properly – our business would grow. To do so only required our focus on customers who are either our promoters (scoring you a 9 or 10), passives (scoring you a 7 or 8) or detractors (scoring you 6 or less). Wait a minute – that’s all our customers. Exactly, but we’ll get to that again at the conclusion.

The Formula: % of Promoters - % of Detractors = Net Promoter Score (NPS)

Therefore if 50% of your respondents were promoters and 20% were detractors – you netted out at a score of 30. The higher the score the better.

NPS we were told would accurately predict a company’s ability to impress customers, turn customers into advocates, and -- in turn -- become an indicator of potential business growth. Scientific proof that this simple metric was ultimately more powerful and meaningful than any other management theory about customer satisfaction, customer retention, passion, loyalty or …well anything. So simple even a CEO could follow it ;-^)

And so the market embraced the theory. From all corners of the world. Heavyweights like GE (Real Estate division) Philips, HSBC, IBM (Enterprise Content Management), LEGO, Enterprise Car Rental, Intuit, Schwabb, American Express, Microsoft and others.

A simple approach, developed by respected accreditted professionals, endorsed by a world class university adopted by companies. What’s so bad about any of this?

The Questions:
Cracks in the foundation started to develop because of the lack of support to the contentions. Namely that the NPS was not a strong predictor, that there was evidense of research bias in the support used to substantiate the NPS and that the ACSI was not uncorrelated with firm growth..

“We find no support for the claim that Net Promoter is the ‘single most reliable indicator of a company’s ability to grow.’ The clear implication is that managers have adopted the Net Promoter metric for tracking growth on the basis of the belief that solid science underpins the findings and that it is superior to other metrics. However, our research suggests that such presumptions are erroneous. The consequences are the potential misallocation of resources as a function of erroneous strategies guided by Net Promoter on firm performance, company value, and shareholder wealth.”

Source: Timothy Keiningham et al. July 2007 A Longitudinal Examination of Net Promoter and Firm Revenue Growth

Other studies, other experts, opinion leaders, bloggers (see below) added their voices to the boisterous cacophony – worthy of the NYSE trading floor on a black bear day.

Undaunted, NPS supporters countered (see below) with their own assertions the NPS being as good as more complex measures and for the most part avoiding any direct discussions surrounding the statistical annomalies brought forward by Keiningham.

In this quote, Dr. Masden acknowledges being part of the team at the London School of Economics that vetted the NPS Score and asserts its ongoing validity as a reliable method of linking customer loyalty to growth.

"As far as the current debate goes, anyone who has read the information being disseminated from the “anti-Net Promoter” camp quickly comes to the realisation that the one Net Promoter question is, at the very least, just as good as more complex proprietary measures, that are tough to translate to the average executive and employee. But that leaves me questioning: why are we hung up on the measurement? The real conversation needs to be about how to get an organisation to be customer-centric and what that can mean for a company’s future”

Source: Clickadvisor.com on Sept 17 Net Promoter: the ultimate debate on customer loyalty

The Stalemate:

There is too much of an industry and ‘cult’ established around the NPS for it to dissapear on the basis of the allegations laid against them. In defence and defiance they point out that we are all ultimately pursuing the same path. True.

One can argue that the NPS may have accelerated the customer centricity movement, the other important benefit is that in its simplicity it has refocussed the dialogue on using metrics which can be widely disseminated and easily understood. Well in the words of Tim Keiningham

“ I too believe that loyalty consultants and researchers have over-complicated the message (and the analyses) with more advanced statistics than it took to get the Apollo space missions to the moon. It makes it impossible for management to understand, communicate, and rally support. This is ridiculous!”

The Ultimate Decision:
Believe it or not up to this point was the easy part. The hard part is deciding for yourself what happens next.

Will there ever be one metric to fit all needs? Highly improbable – and any contenders will not be allowed to make unsubstantiated claims. Instead of waiting for the new simple metric, we must continue to move forward with as simplified a system we can devise, implement and gain compliance with.

There are many competing schools of thought (Customer Experience Management, CRM, Loyalty/Continuity, Value Drivers, Image, WoM) reflecting the different successful business models/brands in the market.

To understand which approach will work best for your brand you must identify three things:

1. who your profitable customers are

2. what kind of relationship your profitable customers wish to have with your brand
a.Share of Wallet: the traditional CRM-centric make me a compelling (price/promotional) offer and I’ll buy it from you (or perhaps your competitors) – a brand relationship centered on the transaction.
b.Share of Mind: the traditional marketing promotions/communications approach – focussing on the key value proposition – a rational based brand relationship.
c.Share of Heart: Customer Experience Management – How people feel about the brand experience. Experience seen as a price mitigator and continuity reinforcer – an emotion based brand relationship.
d.Share of Life: How customers see the brand as a longer term partner for their category requirements, solutions and corporate/sustainability responsibility – an ‘adult/mature’ brand relationship.

3. within the relationship type identify the activities the enterprise must do to instill the longer-term repeat purchase pattern it seeks.

The key in my opinion is instead of defining your brand as an advocate of a particular ‘school of thought’ and then trying to mold your customers to fit within that model, we must instead look and manage this from the customer’s perspective. Therefore come to recognize the ALL of these relationship types exist simultaneously among different groups of your customers. What and how you communicate will be best served by understanding the type of customer they are first and from there make the ultimate decision as to how to relate and evolve with your customers.

Cheers
Miro

Suggested Reading:
NPS Adovcates:
The Ultimate Question. Driving Good Profits and True Growth. Fred Reicheld

www.satmetrix.com

www.netpromoter.com

Dr. Laura Brooks’s – VP Satmetrix latest blog posting

The Satmetrix white paper describing the research

Research conducted by the London School of Economics

Dr. Marsden from Clickadvisor.com on Sept 17 Net Promoter: the ultimate debate on customer loyalty

NPS Contrarians
Loyalty Myths: Hyped Strategies That Will Put You Out of Business and Proven Tactics That Really Work, Tim Keiningham, Terry Varga, Lerzan Aksoy, Henri Wallard

A Longitudinal Examination of Net Promoter and Firm Revenue Growth

The Value of Different Customer Satisfaction and Loyalty Metrics in Predicting Customer Retention, Recommendation, and Share-of-Wallet

January 2007 Maritz Research White Paper

COLLOQUY magazine article

Why del.icio.us Is Becoming My Default Search Engine For Research

That's what occurred to me during my latest presentation on Social Media Marketing for the IAB Canada. For all research, del.icio.us is becoming my default search engine. Before explaining why, let's take a quick look at what del.icio.us is.

Most people simply know del.icio.us as an online social network for bookmarking. I know, it sounds like a lot of Web 2.0 hyperbole. del.icio.us allows you to not just save your favorite Websites, but any single web page, article or piece of content. It allow allows you to tag the content (which makes it easy to find) and it does act as an online social network as you can link your account to other people you know who have del.icio.us accounts, or to others who are tagging content that you find relevant. This last point is the main reason why del.icio.us has become my default search engine for any and all research.

Google is, without a doubt, a powerful Search Engine. However, Google's organic search results are based on a computer algorithm that looks at things like relevancy, links, keywords, etc... It's a system that is constantly being gamed by Search Engine Optimization professionals. Technorati is a social media search engine (one that I use to search and see what people are saying in Blogs about our clients and their products). Technorati provides an amazing landscape of what people are saying right at this moment in time.

del.icio.us is most powerful because the content that is being tagged and stored is stuff that individuals have chosen and flagged. A real human being. So, when I am looking to do market research on something like email open rates in the United States, and I see a report, Website, web page or article that someone has tagged, my feeling is that it must be of value (one of my favorite features of del.icio.us is that for each item you can see how many people have tagged that specific piece of content). That is respect.

Respect is a huge factor in deciding what content lives (or dies) to the individual (are you listening Marketers?). Knowing that a group of people have identified the same piece and tagged it for themselves, is a completely different search spirit.

I think most people who use del.icio.us always saw it as a selfish way to have their bookmarks with them wherever in the world they may be. I see del.icio.us as the ultimate test in deciding whether or not a piece of content has value. It is a live trust barometer of the Web and something Marketers need to be paying attention to.

You can feel free to see what content/information I'm tagging over here: http://del.icio.us/mitchjoel. You can also subscribe to my del.icio.us tag by RSS which means that any time I tag an item, you will be notified in your Reader. Lastly, if you're a Facebook fan you can also add your del.icio.us page to your profile - enabling all of your friends to see what you're tagging too.

Happy Bookmarking!

When the Promise of a Customer Reward fails to Connect.

Before you read my story, here's the lesson in it - sometimes it's better to do nothing – to not make a decision to buy something new or trade in the old. Sometimes doing nothing is a reward in itself.

Such was the case this past week, when I was thinking of upgrading my cell phone to one of the “mobile” varieties. You see I’ve owned the same one for 5 years and it basically does one thing very well – make phone calls. But getting a mobile, on the other hand – opens me up to a new world of digital possibilities.

“I’m ready for this,” I convinced myself – a mobile lets me do everything – download music, take photos, text friends, check my LinkedIn and Facebook accounts, watch podcasts – even be at the ready to shoot video just in case... of escaping circus elephants rampaging down Yonge Street. I imagined taking that esteemed position on YouTube – owner of the most downloaded video in history. I can’t wait any longer, I thought – where do I go to sign up...?!

The timing was perfect too. I just received a friendly letter from my carrier telling me I had been a “valued” customer for more than 5 years – 3 of these without a contract to bind us together. It seemed because I had chosen to be with them, they recognized this and were about to reward my loyalty big time.

The letter went on -“we would like to thank you for your business.... so we’ll give you a credit worth up to $250 as a bonus renewal offer towards the purchase of a new phone or PDA when you renew your service agreement...“thank you for choosing us.”

Sweet, I thought - I can get a really cool mobile for next to nothing and gladly surrender to a three year term until the next generation of mobiles comes along.

Well, here’s what happened.

I went into one of my carrier’s retail stores, letter in hand, and was met by a pleasant sales person named Wanda. I told Wanda I was ready to make my move to mobile, and even had a $250 bonus credit as a renewal offer to work with. I explained I’d been a loyal customer for five years and just got this special letter saying as much. “Wanda, I said - only show me the best and latest of everything you’ve got. I’m ready!”

“Well actually,” Wanda said, “the price you see beside each model is the price you pay – we’ve already factored in the discount – the $250 credit in this letter anyone can get.” Oh I see. So I asked Wanda to check my account. Surely there’s a notation saying how loyal a customer I have been and to give this golden apple whatever he asks for....

She looked up my details and paused...hmmm, she said, slightly puzzled, “it says here DO NOT RENEW.” “What? I asked, what does that mean?”

“Well, she explained, you have a really good mobile rate we don’t offer anymore, so when we get you in here and sell you a new mobile phone, we put you into a “current (read: more expensive) rate plan.”

My hopes of going mobile were quickly fading like a weak transmission signal....

With either of us not ready to give up, Wanda took me through the latest models, asking lots of good questions in order to point me towards a model and monthly plan that we thought would suit my needs.

I thought to myself, well I’m already here, Wanda is helpful, I love this mobile model she showed me, and it’s not that much more a month – I’ll just suck it up and get it.

We made our way back to the register when she dropped another one. “I wanted to mention that you’ll also have to pay a $35 ‘upgrade fee’ because you’re getting a new model.”

Call me crazy, Wanda, but can we summarize here?

1. The $250 bonus renewal offer I received is available to anyone – not just us “valuable clients?”
2. I still have to pay the net cost of the phone ($49.99 for the model I wanted)?
3. If I do get a new mobile, I have to go into a more expensive monthly rate plan?
4. I have to pay an upgrade fee on top of the $49.99 for the phone?
5. I'm a valued client - a loyal customer?

How sad - I did understand all this correctly. Oh sure, I could call an 800 number, wait on hold for 20 minutes and then complain to the customer rep on the other side of the world that I feel totally taken advantage of. But why bother? If they don’t get it... why bother??

I have two points of view here on how I’m feeling after this experience.

As a Marketer
I see the revenue and profitability potential with this program. It probably went something like this: Generate a list of active GTA subscribers with expired contracts. Send them a letter with a $250 phone credit as incentive to drive them in store. Then upgrade their model and monthly plan.

I’m sure the ROI on this program is through the roof – the DM piece was less than $1 and the lifetime value of my business is in the thousands of dollars.

What is the effect on long term customer satisfaction with these types of programs? Did anyone really scrutinize the offer copy and come to the conclusion that it was in fact no offer at all? What's the cost of losing a high value customer (me) to their bottom line?

As a Customer
I feel like I was tricked into coming into the store – duped by a letter implying I was entitled to a reward for my loyalty that didn’t even exist. I feel cynical about what it means to be called a "valued customer" and what a "bonus renewal" offer really means.

That day, my goodwill towards this company dried up quicker than fresh rain on a desert floor. So I did absolutely nothing – I walked out of the store with my old model, trusted and reliable cellular phone, knowing that every month I get a bill for services that I’m paying less than the company wants me to.

I guess I do get a little reward after all.

The Age Of Recommendation

It should not be any surprise that as consumers we believe each other. We are all in the game of consumerism together and trust opinions from people we believe to be just like ourselves. When you think about it, recommendations are likely what commerce was built right from the very start, so this is really nothing new.

However, what has happened on our watch is that the digital space has given rise of the voice of the individual and the ability for everyone to provide "word-of-mouse" testimonials. We have seen a rapid acceleration in terms of the abundance and availability of this kind of material more so than at any other time in history.

As Chris Anderson cites in his book The Long Tail - The New Economics of Culture and Commerce, "the trend watchers at Frog Design, a consultancy, see this as nothing less than an epochal shift":

We are leaving the Information Age and entering the Recommendation age. Today information is ridiculously easy to get; you practically trip over it on the street. Information gathering is no longer the issue - making smart decisions based on the information is now the trick... Recommendations serve as shortcuts through the thicket of information, just as my wine shop owner shortcuts me to obscure French wines to enjoy with pasta."

It makes perfect sense. And, so does the chart below showing that when it comes to CPG consumer product reviews posted on the Internet "virtually all shoppers now find them credible". They are an extremely influential part of the purchase decision - either positively or negatively.

Our opinions, tastes and degrees of satisfaction/dissatisfaction with anything and everything have now become navigation points that rise above any tag line or benefit statement we can muster up. The question marketers need to ask is how they are enabling the recommendation-factor for their brands and generating a collection of positive consumer generated content.

I believe there is no big secret on how to achieve this. It is as simple as creating something, be it a product or experience, that people will want to talk about, recommend and share with others. It all seems to fall into place from there.