Thursday, February 01, 2007
Satmetix Net Promoter Conference
David Ambler, Kathleen McBride and I just attended the Net Promoter Conference in New York. What an amazing and empowering event! As Andy Sernovitz put it in his blog
post, “200+ executives are sitting in their seats -- focused, taking notes, and absorbing the presentations. What you don't see is people drifting around the halls, chatting, and making phone calls. Amazingly, I can't see anyone on their blackberry either.”
I’d like to share with you the themes that we heard emerge over the last two days:
- Segmentation. In their excitement to adopt the Net Promoter
discipline, many people are forgetting about a basic business concept—customer segmentation. If you measure and react to a Net Promoter Score (NPS) without understanding your customer segments and the value you deliver to each, you will likely fail as you adopt Net Promoter. Why? Because you’ll focus on “detractors” rather than on the right detractors.
The right detractors are those that fall into your most profitable segments or those segments which offer the most growth potential. Of course you must also use the segmentation filter when determining how much you focus on your promoters and passives accounts.
- Executive Sponsorship. This theme was omnipresent and is pretty simple. If you don’t have executive level sponsorship and engagement, you have zero chance of achieving success.
- It’s a Journey. Many presenters reported beginning the Net Promoter journey assuming they’d see results in a quarter or two. But that’s not what happened. It takes time to get your organization to align around the new customer focus and it therefore takes time for the results to manifest. Laura DeSoto, SVP of Innovation and Synergy at Experian reported that they saw virtually no improvement in NPS for 5 quarters. But once things took hold, they saw their NPS more than double over the next six quarters.
- It’s a Discipline, Not a Metric. There’s been a lot of criticism about Net Promoter, with cynics focusing on Net Promoter only as a metric and failing to focus on the broader aspects of what it offers. What became clear through many presentations at the conference is that while Net Promoter is brilliantly simple and easy for everyone in the organization to understand, achieving success requires a broader understanding of the concepts and a commitment to putting the customer first. Zane Safrit in his blog talks more about Fred Reichheld’s comments on this topic.
To learn more about best practices in B2B, visit Deb Eastman: Best Practices in the B2B Space blog post.
Want to learn more about what happened at the conference? Visit the conference blog hosted by Satmetrix.
Steven Nicks, VP Steven.Nicks@phelongroup.com
posted by The Phelon Group at 4:22 PM
Monday, December 11, 2006
Holy Wars – Whose Side are You On?
Last week, the WSJ published an article about the holy wars forming around the Net Promoter business concept (see “One Question, and Plenty of Debate”). In it, author Scott Thurm nicely outlined the debate that is raging between the two camps forming around Net Promoter. He has appropriately dubbed them ‘promoters’ and ‘detractors.’
Eavesdropping on the debate will probably still leave you with questions though:
- How do you, as CXO of a company, dig through all the noise around Net Promoter?
- How do you prioritize?
- How do you know which camp will serve you best?
Scott’s article got me thinking about the two camps, but I think that there are really three camps: academics, vendors and business practitioners.
- Academics are researchers and professors studying the topic or customer loyalty in general
- Vendors are consultants, software providers and others with solutions to sell
- Business practitioners are individuals inside companies who are trying to leverage the business concept to positively affect the bottom line
Here’s my assessment of the three camps:
Academics
- The goal of academics is very different from that of the business community. Academics look at theory. They’re not driven by the need to do something
today to improve the business. (I mean this with all due respect—my
father was an academic and the dean of a business school so I recognize
the valuable role academics play.)
- In general, academics don’t like Net Promoter. I believe this is
because of its simplistic approach and because the data used by Bain and
Satmetrix has never been made publicly available.
Vendors
- Vendors want to sell you wares. If Net Promoter supports their position, a vendor is generally pro-Net Promoter. If Net Promoter threatens their way of doing business, look out—a vendor is most likely a fierce critic.
- The loudest ‘detractor’ voices come from this camp today.
Business Practitioners
- Business practitioners who have been working with Net Promoter tend to be ‘promoters’ of the concept. I’ve not come across a case in which someone said Net Promoter had negative results on their business.
- Critics do exist within companies but they generally sit within the corporate research department, which stands to reason: there’s a misconception that Net Promoter initiatives mean saying good-bye to other internal customer research.
And if you think there’s lots of noise out there today, just wait! 2007 promises to provide more fuel to the fire, as January yields the first conference on Net Promoter, as well as the release of an academic study reviewing Net Promoter: A Longitudinal Examination of 'Net Promoter' on Firm Revenue Growth. Walter Carl’s recent blog posting "One Question, and Plenty of Debate": More Scrutiny of the Net Promoter Score” provides a link to download an executive summary of the study.
So what do you do if, after all this, you’re still not sure which side you’re on? In dealing with such questions, most people believe their own experiences first; those of their friends or colleagues second; of analysts, third; and, finally, what vendors tell them. If you’re working with Net Promoter today and if you can see the results, then you can also ignore the noise. If you’re not working with Net Promoter today, then I recommend that you find a peer who is and see what they have to say.
Disclosure: I was interviewed for the Wall Street Journal article cited in this piece; we also use Net Promoter when relevant in consulting engagements.
Steven Nicks, VP Steven.Nicks@phelongroup.com
posted by The Phelon Group at 12:05 PM
Tuesday, November 28, 2006
Are We There Yet?
At the NACCM in November, one of the presenters from Whirlpool said she’s been getting the question recently: “Are we there yet?” In other words, her internal constituents think the customer loyalty initiative has been going on for long enough, thank you, and when will it be complete? This is an interesting perspective worth examining—and debunking!
To understand this better, all we have to do is look at the corporate environment. Most our colleagues have projects or initiatives that start at the beginning of the year and are complete by year’s end. Some projects go on longer, but not most. Then the cycle repeats the following year.
But loyalty is different for a few reasons. First, it’s not an ‘initiative’; it’s a strategy that drives our other corporate strategies. We need to educate our colleagues and help them understand that earning and retaining loyalty is a core business function—it’s as integral to business operations as sales, billing, and collections!
Second, loyalty programs themselves create the need for ongoing work. Each time we surprise our customers with great products or serves we raise the bar. We set the new norm. Therefore, if we want to do it again, we have to move beyond where we just were. It sort-of a continual improvement process aimed at driving loyalty.
My advice? Head off the question entirely by being proactive. Set expectations. If you have a loyalty ‘initiative’ or ‘project,’ rename it to a ‘program.’ Make is sound like any other program that’s here to stay. And make sure you’ve got a budgeted line item for it. After all, if it looks like an ongoing strategic program and quacks like the same, chances are likely people will treat it as they do any other ongoing strategic program—with expectations of longevity—and respect!
Steven Nicks, VP Steven.Nicks@phelongroup.com
posted by The Phelon Group at 8:29 PM
