Net Promoter

In a series of meetings and conversations this week, there was much discussion about discomfort, and the notion that uncomfortable situations are often a signal of opportunity.  The topic reminded me of a past blog post, Can you feel your underwear?, in which I talked about the need to push out of our comfort zones from an account management perspective. 

The same thinking applies much more broadly – really to all aspects of our lives.  Situations that make us uncomfortable are typically situations that we are unfamiliar with – they require us to stretch, to learn, to try something new and risk failing. And let’s face it, as much as we can learn from failure, it’s not something anybody enjoys.

And yet we all know that there are levels of discomfort that need to be accepted and even welcomed in order to grow.  This is particularly true in business situations where we are looking to innovate, an activity that is not only necessary for long-term sustainability, but also one that companies are increasingly being pushed into by customers who are clamoring to introduce their voice to innovation processes.  In these cases, the discomfort extends beyond the personal, to a more organizational level of discomfort, but one that, if accepted, can lead to breakthrough developments in products, services, and processes, and ultimately to happier customers and growth.

To capture this upside, it helps to get proactive in identifying opportunities that, while they may be uncomfortable, come with the promise of significant and mutually beneficial rewards.  After all, if we all just keep doing exactly what we’re doing now, things will get pretty boring.

Image Source Page (and nice blog on extending the comfort zone to the eek zone:
http://vladdolezal.com/blog/2011/build-confidence-gradually/

I am sure you all remember my blog from a couple of weeks ago where I wrote about the results of a recent study we conducted that found companies plan to increase hiring.  This study was conducted in Indiana only.  I just happened to read another company has confirmed what we found across the nation.

This study is an ongoing study by Manpower and they have been tracking the employee outlook for a number of years.  They calculate what is called the Net Employment Outlook, which is the percent that say they are going to increase hiring minus the percent that are going to decrease hiring.  The Net Employment Outlook is at 10% which is the first time it has been in the double digits since Q1 of 2008.  This also marks a considerable jump from the low of -2% in 2009. 

A few other interesting findings:

-All industries had a positive Net Employment Outlook

-18% of companies said they were going to increase hiring 

-For those of you in North Dakota, the future is especially bright with an outlook of 26%, the highest of all states and a jump of 14%

-The states with the most positive Net Employment Outlook after North Dakota are Alaska, Vermont, Delaware, and Oklahoma

As I mentioned in my previous blog, not everyone they are hiring are people who are unemployed.  There will be some pirating of talent from other companies.  This is why having employee loyalty is so critical right now.  Employees are more likely to resist offers from other companies when they have high degrees of employee engagement.  How do you improve employee engagement?  The answer is simple, ask the employees.  I have found when employees feel responses will be kept confidential, they will be pretty open and honest about what could be improved.  However, I only recommend that you take the time to ask employees if you are willing to take action on the results, otherwise you could do more harm than good. 

I was recently with a business strategist from a Fortune 500 company who stated there were ultimately three reasons corporate strategies fail. Even though he was speaking of overarching corporate strategies, the three reasons align with what I have seen related to customer strategies:

1. You measure the wrong things – Good strategy is the result of careful, intelligent analysis; however, the old maxim “garbage in, garbage out” applies here. In customer strategy consulting, this can be the result of jumping on the bandwagon of the latest killer metric without a full analysis of whether or not the metric actually applies to your industry. One way to avoid this shortcoming would be to conduct a pre-program strategic assessment – this step will allow you to learn not only the key customer touchpoints, but also identify the critical needs of key stakeholders in the process. It will also help you make certain you are profiling the customers the right way and focusing on the most critical.
    
2. You make the wrong decisions – Even if you measure the right data, there is no guarantee you will make the right decisions. Some of this is related to the data itself – in customer strategy consulting, using statistical methods that allow us to determine which areas of focus will have the greatest impact on customer loyalty will provide some insulation against focusing on the wrong areas. There is, however, another source of potential error – and that is the direction of where the market in total is heading. Every decision is framed not only by the data you observe, but also by your outlook on the competitive environment in general. To ensure you get it right, there are three recommendations I would make:

• Include competitive assessments in your loyalty measurement program – Having an idea on your position relative to the competition can help fine-tune your analysis. You can read more about benchmarking options in this series.


• Commit to ongoing measurement – This does not necessarily mean an ongoing data collection effort; rather, it is about knowing when to re-assess the customer landscape to ensure you are accounting for all the relevant issues. Most clients do this every 18 to 24 months at a minimum.


• Build macro and micro-level strategic plans – The overall strategy that emerges from the statistical analysis is best used in the context of focal areas that have the greatest impact on the greatest number of customers; however, building more micro-level, customer-based action plans will ensure you are accounting for the individual differences that exist among customers.

3. You do not take action – This is the one we tend to see the most. I once worked with a person who was prone to saying “strategy is cheap; execution is hard.” When I first heard him say this, I thought he was saying that strategy was simple; I now realize what he meant was that even though strategy can be hard, it is infinitely more difficult to execute on a plan of attack you know is correct. The phenomenon of acting in ways that are not in your best interest is less about intelligence and more about discipline. I tend to use diet and exercise as an example – I know I should exercise more and eat less, but it is far easier to do the opposite. We at Walker have designed a framework to help navigate the key disciplinary elements needed to take action – namely, organization, process, communication, and motivation.

Certainly there are many reasons strategies can fail; however, I suspect that most of the reasons would fit into this framework. Being mindful of the potential pitfalls that may exist can help you be more proactive in building a plan that will maximize your probability of success.

Mark A. Ratekin
Sr. Vice President, Consulting Services

Customer strategists continue to look for creative ways to share their message and to inform others. They are looking for ways to demonstrate why customer focus is important to the business strategy and how customers feel about the organization.

The communication gets complex because the audience is varied, ranging from external groups like customers and shareholders, to internal teams like sales managers, account managers, product developers, product marketing, service reps, executives...the list goes on and on.

When this infographic came through my twitter feed, I couldn't help but think of different ways customer strategists can use this type of an approach to reach their audience. Here are some of the things that came to mind:

Communications to customers: Customers want to know that their feedback is being put to use. An infographic can be used to share some of the insights you learned from their feedback.

Reach an entire sales organization: Sales teams are geographically dispersed, requiring the use of technology to reach them and let's face it, sales teams want simple. They are busy serving customers and want to spend their time that way. Let's give them something that is easy and enjoyable to digest.

The broad organization: I can visualize an infographic that is focused on communicating how customer feedback is being used for customer retention strategies. It would include statistics like the financial benefit of Loyal customers and demonstrate how customer feedback can be used to predict future customer behaviors.   

"I'm not coming back and I don't really like you anyway!" In the framework of the Loyalty Matrix, that is essentially what a "high risk" customer is saying.

Based on their feedback to a short battery of questions, high risk customers are negative on the two key aspects of loyalty – behavior (what a customer plans to do) and attitude (how they feel about working with your company). So, how do you handle high risk customers? While the first reaction may be to scramble to salvage every relationship, that may not always be the best direction. Below are three very different scenarios with suggested action:

SCENARIO 1 - THE B-to-C COMPANY

In this scenario, you won't likely know at an individual level which customers are high risk. Instead, you'll know what percentage of your customers are high risk and you need to dig deeper to understand why. You may need to filter the information to find out if high risk customers are concentrated in a particular region or if they are users of a particular product. Essentially, you have to get to the root of the issues and take action to decrease your overall rate of customer churn.

SCENARIO 2 - INDIVIDUAL CUSTOMER CONTACTS

In most B-to-B situations and some B-to-C situations you will be able to identify specific high risk customers and contacts. In this situation you should layer on more information. For instance, if you know how much revenue the customer generates or you know the customer's level of profitability you can prioritize which customers deserve immediate action to salvage the relationship and which customers may actually be better off with one of your competitors.

SCENARIO 3 - COMPLEX STRATEGIC ACCOUNTS

Lets say you have a single account with 25 contacts -- 10 are loyal, 10 are trapped, and five are high risk. Now things are a little more complicated. In this scenario you must look more closely. If the five high risk contacts aren't that involved or just influence purchasing decisions, the situation may not be dire. However, if a senior executive or your primary contact happen to be high risk, immediate follow up is necessary. A closer look will provide the direction.

High risk customers should prompt action. What action to take will depend on the steps you follow to better understand each scenario.
 

Patrick Gibbons
Principal, SVP
Walker
 

How does your company operate? Are you “winging it” or do you have a plan and a process to get things done?  

According to urbandictionary.com “winging it” means to improvise with little preparation.

There may be successful companies that don’t plan much. But in my experience, without a plan and process to improve the customer experience - nothing happens. 

Companies are much more likely to achieve their goals when their systems and processes work together. This was recently reinforced when a business colleague shared a successful example of using customer feedback in a very tangible way. 

• The VOC program identified issue resolution as a priority area for the support organization. Open case age was over 50 days. A customer could easily get lost in the shuffle. Eventually many had to call in again and start all over. (How frustrating would that be?) 

• The team put a big focus on managing and reducing open case age in their action plan. They created global visibility around the issue and built accountability into the process. (No winging it here!)

• As a result, open case age has dramatically declined. The customer experience is better and customers are more satisfied with the time it takes to resolve issues. 

Case age has been reduced by 67%, but they’re not done yet. The team is working to reduce it even more - and they will. They have the discipline to stick with the process and make a difference.

“Winging it” usually isn’t enough to execute a customer focused strategy. Aligning the customer results effort with process improvement is critical to your success. 

Kitty Radcliff
Vice President, Consulting Services

Acting on the voice of the customer doesn’t (or shouldn’t) happen in just one department or one area of the company. I like to think of it in levels. For simplicity sake, here are three common levels where VoC action should be taking place:

CORPORATE – At the corporate level, action should be very strategic. Based on customer insights, action plans should address issues such as overall retention, forecasting future revenues, projecting attrition, and considering customer perceptions on topics such as brand reputation, ethics, market position, and how you stack up against the competition.

FUNCTIONAL – Action at the functional level action becomes more tactical and involves specific areas such as business units and key departments. This middle level is the most diverse of the three. It refers to all groups throughout your enterprise that can benefit from the voice of the customer. These include departments such as service, account management, sales, and product development, R & D, marketing, and many others. In each case customer strategists should provide each group the customer information they need to improve their specific operation. What’s more, they should implement a prioritization process to ensure the most important issues are escalated to require action.

CUSTOMER-FACING – This is when action takes place one customer at a time. This is most common in business-to-business organizations where action is critical at the account level. To effectively manage at the account level customers advocates must work closely with strategic account managers and sales managers so highly customized information is provided to their people and they are trained on how to use it to drive business with specific accounts. Action at this level should be focused on improving account relationships to boost retention and grow revenue.

Too often voice-of-the-customer strategies are focused on one area or one department. Or, companies may do a good job of acting on customer insights at one level, but they don’t fully leverage insights across the organization. Customer strategists are wise to occasionally take inventory to determine the areas where customer insights could provide a well needed boost.

Patrick Gibbons
Principal/SVP
Walker

I get a kick out of the AT&T ads (examples here and here) showing how the pace of things is so fast that the savvy user of the HTC Vivid with 4G is always informed and ahead of the game.

While the commercials are informative and entertaining, the application makes sense for how customer strategists build better customer relationships.

The most common example that has gotten attention is the way some companies have monitored social media sites to identify customer complaints and quickly address them. In doing so, they salvage a customer relationship and impress consumers with their attention to customer issues.

I prefer to consider uncommon examples, like complex customer relationships in a B-to-B environment. We've seen terrific examples of companies that have closely monitored feedback from surveys that trigger alerts notifying account managers of customers issues that need to be addressed and opportunities to pursue. In one example a company identified more than 5,000 issues that were logged and prioritized for action. What's more, they prompted sales opportunities that delivered more than $200 million in new sales.

This was all done by setting up a system that included the following:

• Good lists - insights are gathered from the right customers
• Good design - to incorporate triggers to identify issues, opportunities
• Good training - account managers understand their role
• Good buy-in - everybody sees the benefit for them and for the company
• Good tools - an online documentation system ensures follow up
• Good measurement - the ROI is measured to validate the payoff

I have a sign that sits in front of me on my desk in a place that I can’t help but see it many times each day. It is number 17 of the Creed of the Sociopathic Obsessive Compulsive and it says:

Patience is a virtue, but persistence to the point of success is a blessing.

I can’t get this off my mind today. I met this morning with a friend who is an account manager for a large technology company and he told me about a little trouble he has been having with one of his larger accounts. “Yeah, we dropped the ball on a couple things and they are upset. I’ll give it some time and they will come around.”

Come around? Customers don’t come around. They respond to the value that we offer them through the experience they receive (including our products and services and the way we take care of them). When they have a good experience with us, they increase their share of wallet with us. When the experience is bad, they increase their share of wallet with our competitors that offer a better experience.

So while my friend is practicing Zen-like patience waiting for his customer to come around, his competitors are about to discover that their persistence in providing value is about to pay off.

If patience includes taking customers for granted, settling for the status quo and finding reasons not to take actions to improve the experience your customers receive, it is no virtue. It is a curse.

Customers require constant attention; actually, they deserve constant attention. Those who provide it will prosper. Those who wait for their customers to come around will suffer.

Everyone agrees when customers share their insights, employees should put them to use. So why is it so hard? Without a doubt, taking action on customer insights is the number one challenge of customer listening programs.

Here are three reasons why employees fail to take action:

First, they aren’t aware. In most companies there is so much happening and so many initiatives taking place that customer programs hardly get noticed.

Second, they don’t understand. It’s not clear how customer insights are to be put to use and people don’t understand what they are supposed to do with the feedback they receive.

Third, they don’t believe.  Either they don’t think the feedback is accurate or they don’t think any action will make much difference.

The Hierarchy of Engagement is a framework that helps make sense of how customer strategists can prompt more action from customer listening programs. Good customer strategists do much more than gather insights and crank out reports. They promote customer initiatives, train users of customer insights, and show employees how it all makes a bottom-line difference. In other words, they prompt action.


Patrick Gibbons
Principal/SVP
Walker

This is the fourth part of our ongoing series designed to understand some of the dynamics that help explain how companies in the Walker Index outperform the market by over six-to-one. So far, we have explored the dynamics of Relevance and Alignment, Team and Resources, and Information Gathering. In this entry, we will focus on the role that Communication plays in supporting and reinforcing the customer listening process.

Mary Young and James E. Post published an article in 1993[1] that outlined the approaches that world-class companies use in communicating with employees. Even though the article is a bit dated and focuses on employee communication, the content is still quite relevant. Moreover, I would make the argument that the principles work equally well when considering how to communicate with customers.

The eight approaches outlined by Young and Post were as follows:

1)      The CEO’s role as communicator – Young and Post make the case that the CEO has to not only be the chief communicator, but also must be a believer in communication. Those who excel in this tend to have frequent communication, reinforce their vision, are good listeners, are willing to answer tough questions, and are more disposed to quickly responding to sensitive topics.

2)      Walk the talk – If you talk about being committed to customers, make certain your actions reinforce that – for example, make certain your infrastructure is designed to serve customers effectively, and make certain you view your processes from the customers’ perspective.

3)      Be Open to Two-Way Dialogue – Surveys and other listening methods are a good way to start gathering the perspective of customers, but customers want (and expect) more. In an age of Twitter, Facebook, and other social media outlets, customers expect a two-way dialogue. At a minimum, be certain you are communicating back what you learned, what your action steps are, and when customers can expect to see improvements.

From an internal employee perspective, be certain that employees have an outlet to share their thoughts and ideas on how to improve. This personalizes the experiences for the employee and helps them to see how they can contribute to the bigger picture – plus, from an execution perspective, employees will often be able to identify with the issues the customers articulated and will often have thought of possible countermeasures to address those issues.

4)      Face-to-Face Communication – Customers want you to close the loop and to do it in a way that is personal; when possible, a face-to-face session can help to not only address issues that you have learned about that particular customer’s experience, but can also have an ancillary benefit of providing a framework for strategic account planning.

Employees, too, want to engage in a face-to-face conversation. Given geographic dispersion of companies, it may not be feasible (or cost-effective) to have the CEO (or Chief Customer Officer) visit every single location; however, the management of each location can and should endeavor to engage in a face-to-face communication process to ensure the core messages are being sent and to engage in the two-way dialogue that Young and Post recommend.

5)      Having a Shared Plan of Communication – While the CEO can be the chief communicator, it is incumbent that all employees be aware (and committed to) the key messages you wish to send to customers. This means that a rigorous, detailed plan of communication should be developed to ensure messages are reinforced in a consistent manner at the level that makes the most sense. One method in a B2B context divides the core messaging between two groups:

Senior Management – Addresses the “why,” “what,” and “when” of changes customers can expect related to strategic initiatives that emerged from a customer listening program

Account Managers – Address the “who,” “how,” and “what” of the changes – in other words, those that are generally more focused at a customer vs. systemic level.

6)      The Bad News/Good News Ratio – It is tempting to focus only what is working well; however, if you focus on only the positive, it can suggest that you did not hear the pain points that customers are experiencing, which can further imply that you are not really customer-focused. So, you should plan to share some of the less-than-stellar feedback – it will not only illustrate that you are listening and that you are intent on improving, but it will also make the good news more believable.

7)      Tailor the content to the audience – When communicating, it is important to consider who your intended audience is, what their needs and expectations are, and what methods work best in communicating with them. Even within an account, there are often different strategies for communicating – for example, the way you communicate with your client’s CEO will no doubt be different from how you communicate with your front-line contacts.

Also realize that your employees are a target audience as well. This means making certain you are communicating a consistent set of core messages both internally and externally in ways that best resonate with the unique stakeholder groups.

8)      Communication is a process, not an event – Young and Post suggest that companies migrate from communication being a transactional event that is focused on tactics to building a focus on process and strategy. They further recommend that firms focus on some specific aspects in this process:

a.       Communicate the what, why, and how – Tell a comprehensive story in order to set the expectation of what will occur from this point forward.

b.      Be timely in communicating – This is more important in our fast-paced, highly connected environment of today than it was when this article was published in 1993. It is better to communicate in a timely fashion, even if that means you do not have all the answers. Not doing so risks a loss of engagement and trust from your customers.

c.       Continuously communicate – This is particularly important if you are being timely in your communication – new information and details will emerge, which means you should communicate that not only as soon as possible, but also in an iterative fashion to reinforce the message.

d.      Make the connections – When describing what you learned, be sure to connect how your actions at a macro level will impact the experience the customers has at a micro level – in other words, make certain the message is relevant. For employees, tying how their work will lead to greater levels of customer loyalty (and the financial impact this has on the firm) is extremely important in securing commitment and buy-in.

Having a disciplined approach to communicating both internally and externally will help to ensure that what you learned in your customer listening process is internalized by both customers and employees. However, this internalization by itself is not enough – the communication must represent the initial action that the company takes on the results. This initial action must be followed up by action in both a macro (company) level as well as a micro (account) level. We will tackle the topic of Action in the next entry of this series.

Mark A. Ratekin
Senior Vice President, Consulting Services

If you go to a horse track and intend to place bets on certain horses, you will likely end up looking at a racing form that looks something like this. My first reaction? Wow, there is a lot of data here and I’ll bet most of it is important. But, what I really need to know is which horse is going to win and how much should I bet on that horse.

Same thing happens with customer listening initiatives. There is a lot of data … answers to several questions provided by many customers. And, it is likely all important in some way. But where the rubber hits the road (or in this case, where the hooves hit the dirt) is in the analysis that is predictive (what is going to happen?) and prescriptive (what should I do about it?).

These initiatives should tell you:

1.      Which customers are likely to defect and what can we do to stop them (assuming they are good customers and we want to stop them!)?

2.      Which customers are likely to refer us, buy new offerings, give us additional share of wallet, etc., and what can we do to leverage and accelerate these behaviors?

3.      Given our current customer experience, what is likely to happen to our market share, customer profitability, top line growth, etc., and how can we optimize those success measures?

4.      Which customers are not likely to help us grow and what are the irritants causing them to refrain from helpful behaviors?

Whether you are betting on the ponies or betting resources that you can improve your growth and profitability, having the right data, analyzing it correctly and focusing on the important insights will increase your odds of success. A focus on your ultimate objective—increased shareholder value through profitable growth, rather than an artificial score like satisfaction or NPS—will point your analyses in the right direction.

• Technical Skill (for support and design)
• Capacity/Scalability The buyer company is not only growing and changing, but may also try out a new vendor with a small piece of business before ramping up the purchase.
• Competitive Pricing - the sum of vendor costs help keep the buyers competitive in their own markets
• Reputation/Brand counts, but often more as table stakes in B2B --  such as assuring financial stability, that the vendor stands by its work, etc.

Customer strategists must anticipate all the twists and turns and ups and downs that can derail their customer strategy. This was the topic of my last blog, which encouraged customer strategists not only to create effective plans, but to anticipate the things that can derail them. Following up on that, here are three tools that can help keep you on track:

1. Have a good ROI statement. Nothing is more powerful than being able to show the value of your program with a succinct description of the return on investment. If a new executive arrives,  there is a reorganization, or budget cuts are looming, justifying your program in financial terms will be the most effective way to ensure you sustain momentum.

2. Show that customer information is being used. One of the sharpest arguments for inadequate customer strategies is that nobody takes action on customer insights. Smart customer strategists will make sure they track the way people in their company use customer insights. They build an infrastructure to show that people not only receive reports, but there is accountability and action that pays off.

3. Have great stories. The first two items appeal to the rational side of the brain. But there is an emotional side of the brain as well that can be much more powerful. People love to hear a good story about how an employee used customer insights to make an important decision that paid off. It could be an account manager who turned a strategic account around. It could be an engineer who implemented a cost-saving process change. Or, it could be an executive who shifted strategy to provide a competitive edge. Great stories stick with people.

As a customer strategist, if you experience these common items that frequently derail programs, be armed – have a good ROI story, show that people put customer insights to use, and have compelling stories that will showcase how the use of customer insights makes a difference in your company.

Patrick Gibbons
Principal, SVP