Astute Planning, Flawless Execution,
Delighted Customers

Issue #129

Tuesday, August 26, 2008

Net Promoter for the Rest of Us - How to Implement for Small/Medium Sized Business
by Cedric Nash, QuestBack Boston

This is the second, and concluding, article in our series on Net Promoter, a technique developed by Fred Reichheld to measure customer loyalty. The Net Promoter concept was introduced in our previous article. In this article, we discuss how small and medium sized businesses can utilize the Net Promoter approach to manage for loyalty. What does it take for a small or medium sized business to actually implement the Net Promoter approach to managing the business for customer loyalty? And what expectations should be set in terms of seeing results?

Before you get started

First, management should recognize and acknowledge that implementing a Net Promoter loyalty initiative involves a significant long term commitment for your firm think in terms of at least a year or two before seeing measurable benefits. The benefits can be hugely valuable, but they are not quick or easy and will likely involve changes to the way you manage certain aspects of the business..

Like any such initiative, successfully introducing this will require strong leadership and a clear vision from senior management, a real commitment in terms of resources and follow through, and competent program management. And be prepared to learn as you go and make course corrections, so flexibility and humility are valuable mindsets. When you really start asking your customers for honest feedback, you may be in for some initial surprises.

Get Organized - You Need a Plan

After you've decided to make the commitment and provide the leadership, you'll need to get organized with some form of plan. There is no single correct way to implement the Net Promoter approach, but all such initiatives involve common elements. The basic plan needs to include:

  • A team with a clear mandate, including support from, and accountability to, senior management.

  • Defined roles & responsibilities, including project management.

  • A clear description of the Net Promoter or Loyalty initiative program, including the key concepts, objectives, major elements, etc. (It helps to have a good name that works for your organization).

  • Measurement and reporting plan, including tools for surveying customers and taking follow up actions.

  • An internal "roll out" plan for introducing the program internally, and communicating, educating, and training employees on the initiative and their role in implementing it.

This is also the time to decide whether you'll do this by yourselves which is certainly possible or bring in some help from an outside consultant. Both can work, of course, and the choice usually depends on firm-specific circumstances and resources. Considerations include knowledge and comfort with the Net Promoter method, budget and personnel resources, management bandwidth, the need for an outside perspective, etc.

Measure and Benchmark

Once your general plan is in place, the first step is typically to get a read on your current customer satisfaction and loyalty levels by conducting a survey to establish some benchmarks. Besides calculating an initial NPS score, another objective is to gather customer feedback on areas and issues which influence customer satisfaction and loyalty. If customers are less than satisfied, they'll generally tell you why! This way you'll have both insights and empirical data about what is driving satisfaction and loyalty, enabling you to set priorities and focus on high impact areas to improve your customers' experience and perceptions.

Educate, Train, Empower

A critical part of your loyalty initiative is to educate and train all employees in what you are doing and why. The success of the effort will ultimately rest with your employees especially those who interact directly with customers. They need to understand the Net Promoter concept, the benefits to the business, how the program will be implemented, and what's expected of them. Fortunately, one of the advantages of Net Promoter is that conceptually its straight-forward even simple. Everyone will "get" the idea that all customers fall into one of three categories ("Promoters", "Neutrals", "Detractors"), and it also easy to explain the value of a "promoter" and the negative impact of a "detractor". The NPS metric is also simple to explain and understand. In short, the Net Promoter approach is easy to grasp, but does need to be explained in a thoughtful and thorough manner, and reinforced with continuous communication.

Training customer facing-employees on their role in improving customer loyalty is usually situation specific. In other words, the question of what to do to improve NPS scores depends on the specific drivers of satisfaction and loyalty in your business. No one size fits all. The drivers of satisfaction and loyalty in a bank will be different from those in a small manufacturer or software firm. If you're not certain what the drivers are in your business, the initial survey you conduct will provide some answers.. Often, your front line customer service employees will have an instinctive feel for what makes a highly satisfied and loyal customer and they only need to be empowered to "do what it takes."

One sure way to improve loyalty (and loyalty scores) is to focus on known "detractors" and convert them to "promoters". Given the negative value of detractors, this is the low hanging fruit in a loyalty program. To do this, you need to measure loyalty in a way that allows you to easily follow up with customers and close the feedback loop. Enterprise Car Rental a leading proponent of Net Promoter and the leading car rental firm - uses telephone surveys to collect customer loyalty feedback. This allows them to follow up with dissatisfied customers and correct the situation. They have high NPS scores! This can also be accomplished using certain online survey tools (like QuestBack) which have built-in capabilities for following up with survey respondents. The point is that quick follow-up and dialog with a "detractor" will often convert them to a loyal "promoter."

Align the business

The companies that have the most success with the Net Promoter approach align their business processes with the loyalty program. What does this mean? First, they make the reporting and communication of new NPS scores a formal, regular and open process scores are transparently shared with everyone and collectively anticipated. Management makes it clear that they are watching the scores closely and successes are celebrated with employees. Second, incentives are created to reward employees for reaching certain Net Promoter objectives. There are different ways of introducing NPS-based incentive compensation into the program, but the important thing is to connect measured improvements in NPS results to this positive reinforcement. Nothing motivates employee behavior like incentives based on clear and objective measurements. Some companies measure and reward NPS performance at the branch level, generating a sort of NPS competition between branches. Others link promotion opportunities to achieving above average NPS scores. Either way, they align some aspect of compensation or recognition to success in improving customer loyalty as reflected in NPS scores.

Measure Again at Regular Intervals

Remember, a Net Promoter loyalty program is an ongoing process, not an event or short term initiative. Like a student going through school and striving for good grades, an important part of the process is a periodic report card. A given NPS score is just the "grade" for one point in time. A low grade can be improved with the right actions, and the improvement will show up in future marking periods. The grades, or NPS scores, are generated through periodic surveys of the customer base. Many firms find that measuring the score twice a year or roughly every six months provides a good tracking mechanism without overburdening customers with surveys. But this isn't a hard and fast rule. Other firms survey parts of the customer base (like recent customers) more frequently and use this as their tracking metric. The important thing is that the NPS score is measured periodically and carefully monitored to help judge the success of loyalty program efforts and make course corrections. Employees understand this process, and if they are properly trained and empowered to do what it takes to delight customers, NPS scores will go up and your growth rate and profits too!

Conclusion

Fred Reichheld's Net Promoter approach to managing a business for customer loyalty is a powerful framework for aligning a business to produce satisfied and loyal customers and to generate above average growth and profits. And Net Promoter isn't just accessible to large corporations engaging expensive consulting firms. The Net Promoter concept and method has been published and is readily accessible to small and medium sized businesses. With leadership, commitment and a process as outlined in this article, you too can successfully implement a Net Promoter loyalty initiative in your business. Net Promoter is not a short term project or something that stops after a period of time. Firms that have successfully adopted Net Promoter make managing for loyalty an ongoing management priority, and they gradually see themselves rise to ranks of peer-group leaders in terms of growth rates and profitability.

About QuestBack: QuestBack (www.questback.com) is an enterprise feedback management tool for gathering and analyzing feeback from critical constituencies via online suveys. With unique ASK&ACT TM follow-up capabilities, QuestBack transforms the data gathering process into a dialog that enhances customer relationships..The company is based in Europe and represented in the US by QuestBack Boston LLC.

 

Contents

+ Net Promoter for the Rest of Us

+ Recommended Reading


 


If you have received this newsletter from a friend and would like to subscribe: Click here to subscribe


View previous newsletters

Recommended Reading
For a related article about a simple approach to measuring customer loyalty and using the results to grow business, check out Harvard Business Review article The One Number You Need to Grow by Frederick F. Reichheld. Note that to see the full article, you will need to subscribe to HBR.

SPECIAL DEAL: Questback has purchased a limited number of authorized reprints of this HBR article and will send one to the first 10 people who contact Cedric Nash at c.nash@questback.com.

About Customer Centricity, Inc.
We strengthen overall company performance through better service delivery and management.

We boost efficiencies in front-line customer service and technical support teams, order processing, fulfillment, field service, logistics and other key operations functions.

In short, we align the resources of your organization to exceed your customers' expectations in the most effective and efficient manner possible.

See What Our Customers Say

Quick Links

About Us

Contact Us

Testimonials

Previous Newsletters

Copyright 2008 Customer Centricity, Inc. All Rights Reserved

5 Old Coach Road Hudson, NH 03051 (603) 491-7948