By Gary Schwartz, VP Product Marketing, Confirmit
Purchases, repeat visits, length of call time….? Many companies track Key Performance Indicators (KPIs) to monitor the successes and failures within the business – including customer satisfaction and churn rates – but the data produced only tells you what has happened and nothing about the underlying drivers of these trends.
The CRM industry is based on examining historical purchase behavior in order to unlock the secrets and predict purchase behavior but more often than not, however, repeat purchases are simply a function of lack of other choices.
Recent debates about measuring loyalty have been based on the identifying the number of NetPromoters a company has.
The Net Promoter Score was invented by Fred Reichheld of Bain & Company as 'the one number you need' in order to predict business growth. He solidified this premise in his book 'The Ultimate Question', with the theory that willingness to put one's reputation on the line is the most meaningful defininition of customer loyalty. That may or may not be the case.
Reichfeld points to data correlating the NPS to revenue growth of a set of companies. The growth data was for the years 1999 – 2002, while the responses to the recommendation question were collected at the tail end of that period.
Is the score actually predictive or the result of good growth? Is there a confusion between causality and the predictive nature of the metric? Why are so many business leaders willing to deploy this metric across their businesses?
Reichfeld argues that it is the single number that senior managers need to track in order to understand the direction their business is moving. The idea of a 'silver bullet' is no doubt seductive – it simplifies customer research (if no other questions are truly required) and therefore the costs.
It creates fantastic focus for senior management and also line management. It's also seen as something of a change management tool: businesses that adopt it are generally more customer focused that those who don't or may be they are more customer focused than they were prior to adopting it.
It's obvious good to be customer focused but that does that not necessarily mean that the metric is predictive of company performance. Taken as a periodic pulse check, the score – an estimate of referral activity on behalf of a product or service – is at best a temperature check.
For businesses to benefit from asking the question, they must ask it continuously. Rather than an annual or even quarterly examination, the question must be posed as a part of a continuous business improvement program. The reason for that is that in order to understand how to improve the score, the answer must be placed into proper context. And you don't know the customer if you ask a customer out of the blue.
The posing of the question should be triggered as closely to a customer's experience with the business to understand how that experience colours the temperature reading. This means that businesses must consider the most important points of the customer experience, the key 'moments of truth' and create a means to automatically ask the question as closely as possible to each customer's experience at those moments of truth.
Businesses must also monitor it continuously. A change in the attitude of the customer base will foretell a change in the company's foretunes, unless the company catches it in time to intervene. And in the cases where customers express such dissatisfaction that there's no way they'd advocate the product, shouldn't that be alerted to customer care in order to turn that customer around?
Is there really such a thing as the Ultimate Question that needs to be asked to improve company performance? I think it’s more properly called the Penultimate Question.
Businesses need to ask a few more questions – specific to the experience that triggers the questioning – in order to understand the rationale behind the answer to the question, and in order to make the measurement actionable within the business.
Why are people advocates? Why would they refuse? Are there any external events that correlate to the response? Are your most profitable customers advocates? Are your most loyal customers advocates?
Are there any trends or correlations of the answer to these questions among specific customer segments that allow the business to act on the score rather than simply measure it?
Well-designed Enterprise Feedback Management technology gives businesses the means to capture customer feedback in the course of automated business processes. As a part of that process, the technology must deliver alerts to those within the business who have the power to fix things, as well as dashboard reports to those who require the bigger picture.
This turns the Net Promoter Score into actionable insight that keeps business performance right on course. Isn’t that the ultimate answer?
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