Mellon Investor Services Becomes Addicted to Good Profits
Monday, June 04, 2007
Today, I posted a comment to Fred Reichheld's Ultimate Question blog, in response to his call for examples of companies who are kicking the bad profits habit. See his post on "HBR Highlights the Bad Profit Problem."
In response to Fred’s request, we would like to highlight how one of our clients, Mellon Investor Services, has deployed a Voice of Customer practice, built upon the Net Promoter discipline, to become addicted to good profit by transforming their client base into advocates who drive growth.
In a nutshell, Mellon needed to win new customers and grow revenue in a highly commoditized market place that was shrinking 3-5% each year. Mellon recognized that they needed insights on how they could differentiate within their market. Mellon already had systems in place which allowed them to track customer satisfaction, but their data gave them no actionable insight to be able to predict the willingness of their customers to recommend/refer or likelihood to purchase additional services. Mellon was looking for causal linkages of what drove customer behaviors beyond just the measure of satisfaction. Mellon launched an NPS initiative to help uncover the key drivers behind a customer’s willingness to recommend and its impact on profitability and growth.
To Fred’s point, Mellon could have easily explored contractual vehicles that created bad profits. Instead Mellon looked for the levers and dials they could control to create advocates to drive customer retention, repurchase and referrability. The company realigned around the Net Promoter methodology and put customer insight at the center of their decision making process and have successfully defined the actionable levers they could control to increase loyalty and drive growth. This led to many process changes within the company and like Intuit, has created an environment that enables Mellon to have more action-oriented, open conversations with their clients and thereby improving the quality of their relationships.
One of the key aspects of Mellon’s Net Promoter program was the quality of the verbatim comments that they have been gathering via NPS. They found that there was something magical about the nature of the "recommend" question that got their customers willing to offer meaningful verbatim responses to the "why did you vote that way" follow up question. With these verbatim comments in hand, Mellon formed an executive council who reviews the data from their customer listening posts on a monthly basis. This council works to identify key trends, create actions around what their customers had to say, and more importantly, closed the loop with their customers as to the actions they planned to take. As a result of this process, Mellon discovered that in a commoditized market, where "product innovation" is difficult, you can create meaningful differentiation by creating an environment where you bring your clients into the decision making process. By asking, listening and then acting they found themselves actually changing their product and services to best meet their customer’s needs—which in the mind of the customer created a customized and differentiated offering. Pure satisfaction research never created the opportunity to create the dialogue that facilitated this degree of impact. Further details of the Mellon Investor Services case study can be found at http://phelongroup.com/clients/success.htm.
David Ambler, Vice President of Client Services David.Ambler@phelongroup.com