Tag Archives: net promoter score

10 Tips For Using Net Promoter Score

For all the attention Net Promoter Score (NPS) has garnered as an instrument for gauging customer experience quality, it’s startling how many organizations implement it incorrectly.

Indeed, many of the criticisms lobbed at Net Promoter have less to do with the measure itself and more with the perverse manner by which companies use it. (Need a Net Promoter primer? Here is a clip from a recent speech.)

Net Promoter, like any performance metric, isn’t perfect. However, it can provide meaningful value to a business, provided it is implemented and administered correctly. Here are 10 tips to accomplish precisely that:

1.  Ask a follow-up question.

One of the strengths of Net Promoter is the simplicity of the measure – a gauge of customer experience quality delivered through a single “likelihood to recommend” question.

But Net Promoter surveys were never meant to be composed of a single query. Indeed, there is a second, equally important question that should be part of any NPS survey strategy, and that’s something along the lines of “What was the primary reason for the score you gave?”

That second query provides the essential information that’s needed to understand customer sentiment (not just measure it numerically) and then develop specific tactics for improving it. Absent that second, critical question — yes, you’ll have a Net Promoter Score, but you’ll have no idea what to do about it.

2.  Don’t mess with the scale.

Years of research went into the development of the Net Promoter question and response scale, yet that hasn’t stopped many NPS users from putting their own creative slant on the metric.

Fred Reichheld, the creator of NPS, spent years researching the right wording and scaling of the question to maximize its predictive capability (the degree to which improvements in the measure correlated with business growth, and declines in the measure correlated with business contraction). He ultimately settled on an 11-point scale, labeled from 0 (“Not at all likely”) to 10 (“Extremely likely”).

That’s the scale, and there’s no reason to alter it, because any changes will introduce bias into the responses. That means no color-coding (some companies display negative scale points in red, positive ones in green). No scale reversal (it’s 0 to 10, not 10 to 0). No additional labeling of scale points (with smiley faces, frown faces or other cues). No change in wording of the scale labels.

If you want to maximize the success of your Net Promoter program, don’t go rogue with the design and formatting of the NPS question itself.

3.  Don’t fixate on Detractors, exclusively.

Detractors (the individuals who say they’re not likely to recommend you) are toxic to any business. They cost more to serve, they spread negative word-of-mouth and they often suck the life out of the employees with whom they interact. For this reason, a business improvement focus on Detractors is well-placed – learning from their feedback, using it to reveal and address common customer pain points.

However, given many business leaders’ penchant for operating in a “find and fix” mode, they obsess over Detractors at the expense of everything else, glossing over the opportunities that exist to shift Passives up the Net Promoter scale, as well as to learn from (and capitalize on) existing Promoters.

For this reason, it’s important to bring a balanced focus to Net Promoter action plans. Yes, do minimize Detractors (especially if they represent a significant percentage of your customer population). But also invest time in understanding the Passive category and making improvements to turn them into Promoters (an exercise that’s typically less about fixing problems and more about finding new ways to add value).

And don’t forget about your Promoters. They can help you pinpoint strengths in your customer experience so those can be amplified and extended to other customer episodes or segments.

See also: True Value of Net Promoter Score  

4.  Use the three-legged-stool approach to NPS measurement.

There are three distinct types of Net Promoter measurements:

  • Relationship measures (a point-in-time survey sent to customers, regardless of whether they had recent contact with your company).
  • Transactional measures (a survey sent to customers immediately following a live or digital interaction with your company).
  • Relative measures (a point-in-time blind survey, where the company collects Net Promoter data from their own customers as well as those of competitors).

Some companies view this as a mutually exclusive list and try to decide, for example, if they should run Relationship NPS Surveys or Transactional ones. The answer is yes.

Each of these NPS survey types serves a purpose. Each provides insights that the others don’t. As such, in an ideal scenario, organizations should work toward implementing Net Promoter across each of these three dimensions.

5.  Don’t overreact to normal variations in NPS.

When Net Promoter scores rise, everyone celebrates. When they fall, everyone scrambles. In truth, both of these reactions are frequently unwarranted.

There is inherent variability in any organization’s Net Promoter score. (It is, after all, based on a sample of customer opinions, collected via a survey.) It’s important to understand that inherent variability to determine if changes observed in your Net Promoter score are likely due to chance, rather than reflecting actual improvement or deterioration in the customer experience.

Should there be celebrating when Net Promoter scores rise, and soul searching when they fall? Yes, provided those swings are statistically significant and reflect true changes in customer sentiment.

6.  Recognize that it’s not about the score, it’s about the narrative.

We as a society are groomed to focus on numerical measures of performance – school grades, race times, profit targets, etc. It should come as no surprise, then, that many organizations obsess over their Net Promoter score. In reality, however, the NPS number itself is arguably the least important part of any Net Promoter program.

That’s because the score is not actionable. No matter if your NPS is 37 or 68 or -25 – the number itself doesn’t explain why, nor what you should do to improve. That critical piece of information comes from the narrative, the comments that respondents provide to explain why they gave you the score they did.

Every attempt to evaluate Net Promoter results, or to communicate them to the broader organization, should be anchored in the NPS narrative, not the NPS number.

7.  Benchmark wisely.

We as a society are also groomed to compare ourselves wih others (hence the popularity of numerical performance measures, because they make benchmarking so simple and clear-cut).

Well, not quite so simple as it relates to Net Promoter. It can actually be difficult to establish an apples-to-apples comparison when benchmarking NPS scores, because the numbers can be influenced by factors ranging from cultural norms to survey methodologies. For this reason, when you try to benchmark your NPS score against some publicly available data source, it could be a meaningless comparison.

The best Net Promoter benchmark is the one conducted against your organization’s own, past results. That’s the ultimate apples-to-apples comparison. Checking how your NPS score stacks up against legendary companies might be a fun exercise, but it definitely shouldn’t serve as your primary indicator of customer experience success.

8.  Use NPS to drive cultural change.

Companies that treat Net Promoter just as a performance metric are bound to be disappointed with their NPS implementation. Net Promoter’s value transcends performance measurement.

When rolled out correctly, Net Promoter becomes a catalyst for cultural change, because it helps create a shared organizational vocabulary (Promoters, Passives and Detractors) around customer experience excellence. It helps management to better articulate the reaction it wants to elicit from customers, and it equips staff with a behavioral shorthand that helps shape their conduct during customer interactions.

Importantly, driving cultural change through Net Promoter means that NPS education, communication and reporting must target a wide audience. If it’s only a firm’s research team that is schooled in Net Promoter, if it’s just the senior executives who see the NPS results, that necessarily limits the cultural influence (and upside) of the program.

See also: Why Isn’t Customer Experience Better?  

9.  Don’t rush to tie NPS scores to compensation.

Many companies think that the ultimate testament to the seriousness of their customer focus, the quintessential proof that executives’ emphasis on customer experience is credible – is to link their compensation to Net Promoter results.

This can be a really bad idea, on many levels. For example, if the organization doesn’t yet have a clear handle on the inherent variability of its Net Promoter score, then managers could take a pay hit (or get a pay bump) for statistically meaningless fluctuations in NPS. In addition, tying NPS to compensation can encourage unseemly behavior, such as encouraging staff to engage in “score begging” or encouraging managers to make decisions that maximize NPS at the expense of other important measures (such as profitability).

We’re not suggesting never tying NPS to compensation, but it’s a step that should be taken very carefully. In addition, there are many other tactics – short of the compensation link – that companies can employ to focus their staff on Net Promoter and highlight it as a key organizational metric.

10.  Use NPS to manage your business, not just measure it.

This is perhaps the most important difference between companies that truly leverage the power of Net Promoter versus those that use it to create good annual report copy.

In its purest form, Net Promoter isn’t just a measurement tool, it’s a management tool. What’s the difference? In the former case, NPS is used primarily to gauge performance; in the latter, it’s used to improve performance.

The key to making Net Promoter a management tool is to ensure that the collection, evaluation and follow-up on NPS data is institutionalized throughout the whole organization (and not just relegated to some market research team).

Every manager should rely on Net Promoter to provide continuous insight into customer experience quality, to help inform short- and long-term business improvements and to reveal specific incidents of customer dissatisfaction that need to be addressed and remedied. That approach (typically referred to as the Net Promoter “closed-loop process”) is a cornerstone of any successful NPS program.

You can find the article originally published here.

True Value of Net Promoter Score

“Net Promoter Score” sure has its share of detractors these days. But those critiquing the measure are overlooking one of its greatest (if not widely discussed) benefits.

Net Promoter Score (NPS for short) was conceived by Fred Reichheld (a Bain & Co. consultant) and introduced to the world in 2003 via his seminal Harvard Business Review article, “The One Number You Need To Grow.”

NPS was heralded by Reichheld and his colleagues as the quintessential metric for gauging customer loyalty across many industries. It was a simple measure yet demonstrated a strong correlation with repeat purchases and referrals and, consequently, business growth.

In recent years, Net Promoter’s popularity has surged, becoming one of the most widely used customer experience measures, used by small businesses and billion-dollar corporations alike.

The “likelihood to recommend” question that’s at the heart of Net Promoter is a now ubiquitous query in customer surveys, and one with which most all consumers are familiar (even if they’ve never heard of NPS).

Net Promoter’s nomenclature – its “Promoter/Passive/Detractor” shorthand for characterizing customer loyalty levels – has become standard vocabulary in the halls of many organizations, not to mention annual reports and earnings presentations.

With greater adoption, however, has come greater scrutiny of Net Promoter. This was perhaps best illustrated by a decidedly mixed review of the measure in a recent Wall Street Journal article (“The Dubious Management Fad Sweeping Corporate America”).

See also: Is ‘Net Promoter’ Really ‘Not Promoter’?  

No performance metric is perfect, Net Promoter included. Many critiques of the measure, however, target weaknesses that relate less to the metric itself and more to how organizations have chosen to (incorrectly) implement it.

[If you’re interested in Net Promoter implementation, read this post for 10 Tips to help ensure success.]

But what gets lost in the maelstrom of Net Promoter critiques is the business philosophy Reichheld has long cited as the inspiration behind the metric: the idea that excellence in business comes from “enriching the lives we touch,” be it customers, colleagues, employees or any other stakeholder.

The structure of the Net Promoter scale, and the methodology used to calculate the NPS score, perfectly reflect that philosophy. The goal is not to satisfy those with whom you interact (“Passives” in Net Promoter nomenclature). The goal is to impress them – to create a “Promoter” by delivering an interaction so intensely positive that it all but guarantees people will want to come back for more (and tell others about the experience).

How exactly does one do that? How does one foster such a positive reaction that cultivates intense loyalty?

You guessed it – by enriching the lives of the people with whom you interact. By shaping every interaction, inside or outside the workplace, so people feel better after they’ve encountered you, as compared with before.

This is the true value of properly implemented Net Promoter programs (and one that so many critics – and even some adopters – of NPS overlook). It’s the behavioral guidance that the measure provides. It’s the picture it paints of what “right” looks like. It’s the motivation it delivers to go the extra mile.

The sheer power of that aspect of Net Promoter became clear to me years ago, thanks to a personal lesson delivered by none other than Fred Reichheld himself.

It was 2008, and I was preparing to launch what would become Watermark Consulting, the customer experience (CX) advisory firm I lead today. In an effort to better understand the market for CX consulting services (and whether there was a place for a new entrant), I did what any good entrepreneur does – I networked. I reached out to key people in the industry, seeking their advice and counsel, hoping to learn from those who had tread the path before me.

Most of the people I reached out to never responded (giving me a master class in e-Snubbing). Among the few who did reply was the most renowned luminary whom I had the audacity to contact: Fred Reichheld.

I had divined Reichheld’s Bain & Co. e-mail address, as any good sleuth would, and within 24 hours of my sending him a message, up came his response in my in-box. He hadn’t delegated the reply to someone else; it was clear he had personally written it. He appreciated my inquiry and wrote a couple of paragraphs with suggestions for me – advice that was genuinely helpful.

Here was this celebrity in the study of customer loyalty, a man famous around the world for his thought leadership, and yet he took the time to personally and thoughtfully respond to a message from me – a nobody.

Why on earth would he choose to do that (especially considering I was shunned by so many CX experts who were far less eminent than Reichheld)? It’s because he was walking the Net Promoter talk, trying to enrich the lives of everyone with whom he interacted.

From that day on, I became a “Promoter” of Fred Reichheld – a raving fan, if you will. I’ve never met the man, I’ve never communicated with him since. But what stands out in my memory is the simple kindness that he demonstrated in responding to my inquiry and sharing some helpful advice. The interaction was, in a word, enriching.

See also: How Fine Print Ruins Customer Experience  

As Reichheld, the father of NPS, demonstrated so convincingly to me, this is the true value of Net Promoter, and it’s something that gets overshadowed by the endless debates over the accuracy, relevance and predictive power of the measure.

Net Promoter is about orienting an entire organization (and individual behaviors) around the noblest of purposes: to enrich the lives of the people around you.

Who can possibly find fault with that?

You can find this article originally published here.

The Future of the Agency Channel

In today’s insurance marketplace, agencies face heavy competition from digital insurance channels and direct marketers like GEICO and Progressive. So what does the future look like for the thousands of carrier and independent agents — proponents of human engagement — who realize that all the digital insurance channels in the world can’t replace the human connection?

Independent and carrier agents can enhance and build on their own strengths to compete head-on with the impending rise of the competitive insurance channels. Agents who give personalized advice and advocacy when needed represent the great upside and the future of the agency channel.

Insurance is a security blanket. People want to know that they will be covered appropriately in their time of need, and that an advocate will be there to support them when things don’t go quite as planned. Certainly people want to know a live human being can be there when their basement floods, but being a trusted adviser relies on really knowing the policy holder – being in the life of that person with quality, frequency and continuity.

The challenge for the agency channel is building a velocity of contact with current and prospective policy holders in the insurance industry, which undeniably has the highest-touch and highest-volume requirement for interactions by its sales professionals.

When we accomplish the role of trusted adviser, it results in higher retention, cross-sell and referral business. This is being evidenced by proponents of the agency model who study the insurance industry.

See also: Reinventing Sales: Shifting Channels  

Bain & Co.’s research shows that agency/agent connection is unique to earn customer loyalty, and that a loyal insurance customer – measured by Bain’s Net Promoter Score – delivers a whopping seven times the lifetime value of a low loyalty customer and three times the value of a neutral customer. And loyal customers reward their agents by buying 25% more insurance at higher prices, staying with and consolidating their insurance with one provider and even referring friends and family.

But we are not out of the woods yet! Ernst & Young Global Customer Survey found that 86% of insurance consumers are “not very” satisfied with communications from their provider. A whopping 44% report remembering zero communications from their insurance provider in the last 18 months.

So what does all this mean for agents? The most important task for the agency channel is to focus on what they do best, offering peace-of-mind to their customers even over the values of price and convenience , which are offered by direct carriers and other emerging digital channels of the world.

To earn customer loyalty, drive growth and attract new customers, agents are adopting and mastering newer technology that can provide continuous engagement — connecting to people on email, text, phone and social media — which are the new ways consumers shop for insurance today.

In this way agents are partnering with technology to manage leads and organize marketing programs to guide consumers through an elevated, sequential customer journey geared at building relationships that are very highly valued by future insurance policy holders.

Again, research is ahead of this curve. Top insurance executives in a recent Accenture poll on the “Future Insurance Workforce” survey found that artificial intelligence is here to stay and will create workplace opportunities that will help agents work more efficiently to help drive growth and attract new customers.

In fact, the only economically feasible way to scale agency-policy holder relationship-building today is through connecting technologies that consumers now use and expect of their vendors.

Savvy agents know their customers’ values well – and are in a strong position to deliver original content through technology that best expresses the value of the agency in ways that are most meaningful to each customer. Contemporary insurance marketing automation solutions – integrated with agency management systems that maintain volume and feature sequential and automated practices – will make insurance agents more valuable in today’s market.

See also: Global Trend Map No. 9: Distribution  

Technology Tips to Compete Head-on With Digital Channels and Engage Customers

When it comes to marketing insurance, the agency connections coming from trusted advisers remain invaluable to policy holders who must choose between this and a faceless organization that relies on advertising. An agency equipped with appropriate technologies elevates the message to a much higher level! It grabs consumers and keeps them coming back for years to come.

  • Use marketing acceleration programs that induce a repeatable pattern of activity garnered from artificial intelligence and machine learning. This will inform workflows that enable agents to have smarter marketing and more personalized and predictive customer experiences that will lead to better sales outcomes.
  • Use technology tools to help meet the Telephone Consumer Protection Act, (TCPA) guidelines where everyone will need to be internationally compliant or face stiff fines for wrongfully filling out forms and other violations.
  • Use technology tools to help cope with all applicable laws and regulations of the new General Data Protection Regulation, (GDPR) that took effect in Europe and promises to take on more importance in the U.S. in light of recent Facebook privacy issues.

Is ‘Net Promoter’ Really ‘Not Promoter’?

So, you’ve added the Net Promoter “likely to recommend” question to your customer surveys.  You’re tracking the results and reporting a Net Promoter Score (NPS) on your Executive Dashboard.

Your company is “doing” Net Promoter – right?

Not quite.  What your company is doing is what a lot of companies do when they jump on the Net Promoter bandwagon – they measure NPS.  But if all you’re doing is measuring NPS, then you’re not really “doing” Net Promoter.

What many people don’t realize is that the actual measurement of NPS is arguably the least important component of a true Net Promoter program.  The hallmark of a robust Net Promoter implementation is what happens after the measurement is made.

That’s when – in Net Promoter parlance – there’s a need to “close the loop” on the measurement.

Closing the loop is about acting (not just reporting) on what you’ve learned from the Net Promoter survey.

This needs to be done at an aggregate level — looking at the themes across all survey responses and translating those insights into operational improvements.

But it also needs to be done on an individual level — initiating some type of follow-up contact with customers based on their survey response (for example, calling a customer who expressed dissatisfaction).

See also: Where a Customer-Focused Culture Starts  

Note that closing the loop isn’t just an academic exercise.  As I’ve written about in the past, your customer surveys are part of your customer experience.  The mere act of following up with survey respondents actually helps enhance their impression of your business (because it’s so rare that a company actually takes that step).

As the popularity of Net Promoter has grown, the origin of the measure – and its foundational principles – often get overlooked.

Fred Reichheld, the creator of NPS, drew his inspiration from Enterprise Rent-a-Car’s “Service Quality Index (ESQi).”  Interestingly, the ESQi survey questions and scale are completely different from NPS.

For Reichheld, however, the real defining characteristic of ESQi was how individual Enterprise branches used the survey data to drive specific operational improvements.  There was (and remains) a strong cultural ethic at Enterprise around closing the loop following any survey exercise.  Reichheld made that discipline a cornerstone of his Net Promoter philosophy.

Net Promoter is a great instrument for facilitating customer experience differentiation.  Just be sure to employ it properly – which means using NPS to manage your business, not just measure it.

This article originally appeared on WatermarkRemarks.

Digital Transformation in Billing

The word “digital” is most commonly associated with front-office transformation – client-facing activities, often in the service of acquiring business. This is for good reason, of course. Driven by their experience in other industries such as retail and banking, customers are demanding digital capabilities from their insurers, as well. Customers – individuals and companies both – expect that everything from access to information, to the ability to bind a policy, to initiating and managing a claim, to paying the bill should be easy to do and available digitally. Our consumer and SMB research reinforces this, indicating that net promoter scores (NPS) can swing 60-70 points when the entire journey is easy.

With that in mind, I’m continuing on my promised theme of looking at all of the steps in the value chain to explore digital transformation across the customer journey. This month, I’ll take a look at billing and payments, an area that, at first glance, might not be an obvious choice for digital reinvention. But it is a great way to engage with customers, optimize a process that is often manual and present additional selling opportunities, as well.

Not coincidentally, we also have a recently published thought leadership paper, The New (Digital) Face of Billing: Defining Multi-Line Insurance Billing Excellence, that takes a deeper look into digital billing.

Thinking Beyond Transactions

In my previous posts, I have talked about the need for a service mentality instead of the siloed, transaction-focused approach insurers have traditionally taken since the automation of business processes 50-plus years ago. To drive value from digital investments, insurers need to expand their thinking beyond transaction processing. Any interaction should be taken as an opportunity to develop and enhance the relationship with the customer, not as simply a means to an end.

In other words, billing is not just about getting the premium paid, although that must be done efficiently and effectively. Billing is one of the rare opportunities insurers have to interact with their customers in a relatively benign situation (as opposed to the stressful, often contentious interactions associated with claims), and it must be embraced as such.

See also: 4 Rules for Digital Transformation  

This does not just mean cross- and up-sell, although that can be an element. Customers will be wary of this, particularly if done in a clunky way, particularly when offering a product that does not match the customer’s unique needs. The overall approach must expand from a basic indemnity mentality to one of service – and the billing approach must evolve beyond simply accepting a customer’s premium. It’s important to keep in mind that the customer engagement mentality is needed across all customer types – from individuals, to businesses, to agents, to third parties and other partners.

The Customer Journey

Digital transformation must always begin with mapping the customer journey. Identifying key touchpoints and “moments of truth” in billing is the first step to mapping interactions and defining the required capabilities. Journey mapping allows you to consider how to roll out capabilities incrementally, giving you the chance to experiment with different services for unique groups and to quickly see what works and what does not.

Understanding your customers and their needs is key. Not every customer will benefit from an in-depth engagement at the time of billing. Some customers may be only interested in a hands-off billing experience, with, for example, a credit card being charged automatically on a monthly basis. Building an automated, paperless process for these customers is likely the right approach, while spending time and effort on building a deeper relationship may not result in a strong ROI. But even these customers can benefit from clear, natural-language explanations of such things as changes in their premium or renewal options.

Other customers may benefit from a deeper interaction. The moment of truth for these users can be providing opportunities for them to lower their premium through product bundling or identification of local risk factors that they may be able to address. Although lowering premium payment may seem at first glance to be a negative, the improvement in customer engagement and satisfaction – with associated Net Promoter Score (NPS) – will more than pay for the difference.

Still others may be interested in an interactive experience that doesn’t require them to speak with a human. AI and chatbots are becoming increasingly sophisticated in providing a human-like experience in a mobile setting, which can be a powerful way to prevent relatively costly calls into the call center as well as provide an engaging way to interact with customers.

But only by taking the time to understand your customers through journey mapping will you be able to make the right investment decisions. And don’t just rely on your own experience – you need an outside-in perspective to do it right.

End-to-End Journey

The customer journey for billing does not end at billing. Billing is an enterprise process – it touches on many different parts of the business. For the advanced capabilities I’m highlighting to work, it may require a wider transformation to take place first. A 360-degree view of the customer – all of the policies, correspondences, claims, etc. – is needed to offer bundling options. Customer analytics will provide cross-sell options. Core system replacement may be needed to offer paperless processing. These are just a few examples.

This is another reason why mapping the customer journey is key – it allows you to see where the process breakdowns and bottlenecks exist that need to be addressed to create an engaging customer experience.

Our research shows that all generations (including the younger “digital natives”) use a variety of touchpoints for questions and service requests when it comes to billing. This is important to map in your customer journeys and important to build into your operating model – the people, processes and technology around billing that make it work. People may still want to pick up the phone and ask why their premium went up (our studies show at least 30% of calls are billing-related). But by providing clear information to customers around the billing process you can prevent a certain amount of those calls from coming through in the first place.

Do It Right

Billing is an opportunity to engage customers, but an occasional one at best. It is of primary importance to know how customers want to be billed and how they want to pay (electronically, with a paper check, via bank transfer, etc.) and how they will want to interact if they have a question or concern (self-service, call center, etc.). But the most fundamental need is to make sure the bills themselves are accurate. Cross-sell or risk management exposed through the billing process will not have much effect if the client is double-billed or if the payment was not correctly recorded. As Novarica sums up succinctly in a recent report The New Normal for P/C Insurers: 100 Data, Digital, and Core Capabilities, “errors can be costly.” And those errors are not only costly in the sense of having more people call into your call center, but also making it far less likely that those customers will become advocates.

See also: 5 Cs of Transformation in Insurance  

Mind the Gap

In our thought leadership from earlier this year, Insurance in the Digital Age: Transforming from the Outside In, we mentioned the growing gap between customer expectation for digital services and the ability of insurers to provide them. Billing is a moment of truth for customers and a real engagement opportunity for insurers. While this makes it an excellent place to get started with your overall digital transformation, it is important to remember that you need to look at the end-to-end process as billing flows through many systems and data stores. This should not dissuade you from tackling billing, but don’t be surprised if there are some basic things that need to be done with the underlying technology (including considering retirement of old, inflexible core billing systems) and processes.

It may seem intimidating, but the benefits in terms of longer-term cost savings, efficiency and customer engagement will be worth the effort … while bringing billing into the digital age.