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Archive for the ‘Customer Insight’ Category« Previous EntriesThe Net Promoter Score is RubbishThursday, September 22nd, 2011  Paul Hague this week advocates a simple, new metric to measure value. In less than 10 years, the NPS or Net Promoter Score has become familiar jargon in business boardrooms. It is a single metric, a golf handicap score, that leaders can easily understand and which they can use to ruthlessly drive their businesses. The Net Promoter Score is a measure of customer satisfaction and loyalty and who can deny that these two factors are crucial to the success of any business. It is easy to understand and the fact that it requires a simple calculation gives it a sort of scientific kudos. Let us remind ourselves what the Net Promoter Score is. We ask customers one simple question – “How likely is it that you would recommend COMPANY X to a friend or colleague?” The response is recorded on a scale from 0 to 10 and the percentage of companies giving a score of 6 or less is subtracted from the percentage of companies giving a score of 9 or 10. Those in the middle ground giving scores of 7 or 8are ignored. However, the NPS is not without its deficiencies.
We think that the NPS is a good metric but we also recognise that it is dangerous to drive a company on this number alone. The NPS does not measure the value that people attribute to a brand and this must be one of the most important metrics of all. Towards this end we have developed a measure which is fast gaining ground. It is called the Net Value Score or NVS and it measures the value that people attach to a brand or a supplier. Pat Kenny, Vice President Of Corporate Marketing at PPG Industries, said the following about the NVS:
To arrive at the Net Value Score, one simple question needs to be asked:
Using answers to the question, the following steps result in the computation of the NVS:
Calculating The Net Value Score For more information on the Net Value Score, visit http://www.netvaluescore.com/ Where Have All The Price Buyers Gone?Wednesday, March 9th, 2011  It never ceases to amaze how many times I discover sellers within client companies, who misunderstand the signals they get from their customers and – as a consequence – over-estimate the number of price-buying customers they have. My most famous case occurred ten years ago. I kicked off the first day of a three-day marketing workshop to be confronted by one seller: “Before we waste three days of our valuable time, could you just explain why I should spend three days in this workshop when 80% of my customers are Price Buyers?” – A not atypical challenge. I was very interested by this claim, as I had personally never come across any market situation where there were so many Price Buyers and I had worked in a number of undifferentiated (some would say “commodity”) product-markets. On that occasion ten years ago, I managed to convince my challenger to stay with the workshop. By the end of the three days he acknowledged and agreed fully that less than 30% of his customers were actually Price Buyers. The end result put several millions of Euros on to client’s bottom line that same year and sustained into the subsequent years. This case highlights a very common issue and challenge for companies in many B2B markets and especially in the chemicals and plastics industry. Just imagine what that means to margins if we can misinterpret the needs of up to 50% of our customers! So what are the causes of this widespread phenomenon and what can we do about it? 1. Buyers defences are high Situation: Buyers are often between the rock and the hard place, under pressure to reduce raw material costs, whilst at the same time ensuring a continuous and timely supply of good quality products to the plant. That pressure is often manifested in a demand for better prices. Remedy: Sellers need to understand how difficult it is for a buyer to be a GENUINE Price Buyer – it is not easy. To be a Price Buyer the customer must have the following conditions in place:
If the customer cannot demonstrate these conditions, they cannot be a Price Buyer…..and, by the way, any customer that comes back to the seller with the offer to win or keep the business if they match the price of an alternative supplier is NOT a Price Buyer. This behaviour is a clear indication of a preference to do business with you – you must discover the basis of that preference. 2. Sellers think they are selling commodities Situation: The word commodity carries with it many connotations, not least that there is no value in marketing or customer segmentation; it’s all about getting the price right, as customers do not value anything else. Remedy: Sellers should think of these as UNDIFFERENTIATED PRODUCTS, which are just one part of the TOTAL OFFERING; this means that there may be still real possibilities to differentiate the offering on service levels (e.g. reliability or responsiveness) or on intangibles (e.g. reputation or relationship). 3. There is no meaningful and differentiating customer segmentation in place Situation: Sellers have no reference points or supporting models to help them to distinguish different buying behaviours and different customer needs. Remedy: Sellers need to be able to recognize the differences in need and behaviour of their customers. It can help to provide them with a customer segmentation model based on needs and values of different customer groups, encouraging them to seek out and recognize the differences and to gear the offering to fulfil the specific customer needs; for example:
4. There are no clearly defined customer value propositions Situation: The seller has no clearly defined value propositions to offer to the customer, based on the segment to which they belong. Remedy: Marketing needs to provide sellers with well-defined and clearly differentiated value propositions, providing them with the ammunition to beat the competition. Sellers fire the guns, marketers provide the bullets. Each of the above segments demands a clearly different and differentiated value proposition with Product – Service – Intangibles and the 4R’s of sustainable differentiation
5. Sellers typically approach a customer with one offer rather than offering choice Situation: Sellers are ill-equipped to offer choices to the customer, either because the marketers have given them no alternatives or they are not empowered nor authorised to develop their own alternatives and therefore make a single offer (“take it or leave it”). Remedy: Customers need and value CHOICE. If you do not offer choice, they must seek alternatives from other suppliers in order to be able to run the trade-off process, which is typically the core of any buying decision-making process. Marketers must provide the sellers with a palette of offerings tailored to the needs of customers in specific segments and reflecting the importance and value of the customer to the supplier, so that sellers can offer their customer a genuine choice (“which of these offers best meets your needs at the price you are willing to pay?”). Phil Allen is CEO and Value Creator at Marketing and Sales Excellence Practice, GEMS International GmbH. For more information on how B2B International can help your business segment their customer base and more closely satisfy their needs and make a profit along the way then visit – Segmentation Research Are You A Loyal Customer?Tuesday, October 5th, 2010  Tesco says its customers’ loyalty helped boost sales and profit during the first half of the year as the business benefits from “tailwinds of recovery” The supermarket chain recorded a 5.9% rise in sales to £21.8bn in the UK and 5% profit increase to £1,2bn for the six months ending 28th August. Like-for-like sales, which exclude new stores and additional space, were up 0.3% which Tesco claims outperformed market performance. Tesco says its performance has been “solid” during “a period of unusually subdued” growth and low levels of like for like sales across the industry thanks to its continued focus on the customer and building loyalty through its Clubcard scheme. In a half-yearly statement, Tesco says: “Our strategy is to earn their loyalty by helping them to spend less – through low prices, good promotions and an increased investment in Clubcard.” The supermarket claims to enjoy the highest level of loyalty among the major UK supermarkets as measured by the percentage of customers who do more than half their shopping with one retailer. Tesco says while loyalty has decreased across the sector, it has widened the gap between its rivals and maintained its high loyalty. Non-food sales n the UK grew by 2.5% to £4.4bn. Tesco Bank added 200,000 customer accounts during the period and reported a 12.9% uplift in revenue to £474m and 12.2% profit growth to £129m. Group sales across all Tesco’s territories increased 8.3% to £32.9bn while group profit before tax was up 12.5% to £1.6bn. Terry Leahy, Tesco chief executive, says: “Economic recovery in the UK is slow and steady and I believe our investment in making the shopping trip even better for customers means that Tesco is well-placed to grow in this environment.” Loyalty Cards
As per the article by Marketing Week. Could Neuroscience be a New Research Method?Monday, April 19th, 2010 
Why marketing minds have turned their heads to mind-reading By Hannah Kuchler Last month, I surrendered my subconscious to analysis. A red swimming cap was stretched over my head, long grey wires stuck to my skull and my innermost thoughts fed into a computer as I nervously watched an advertisement for Volkswagen. In turn, the computer told a team of researchers which scenes I paid attention to, what I responded to emotionally and what I would go away remembering. It was a far cry from the marketing industry’s traditional method of finding out what consumers think about their brands: asking them. The problem is, when gathered in traditional focus groups, respondents can be swayed by those sitting next to them or by the presence of researchers. Alternatively, they may be unable to articulate their responses accurately. As a result, a rising number of marketers now prefer to analyse the response of peoples’ brainwaves to brands and advertisements by using the latest developments in neuroscience. In recent months, these techniques have not just been applied to the marketing of finished products, but also to product development. “It’s about uncovering new undiscovered needs,” says Martin Lindstrom, author of Buyology , who has been studying the development of neuromarketing since its inception seven years ago. “A lot of manufacturers are struggling as it’s easy to come up with ideas consumers don’t feel they need.” He cites the example of dishwasher tablets. Consumers are attracted to tablets embedded with a blue ball because, subconsciously, they believe they clean better. However, when asked in the context of traditional marketing methods, they claim no preference about colour. “The main reason why [traditional market research often] fails is that we look at things from a conscious point of view,” says Mr Lindstrom. “We ask: ‘Do you like the brand?’ We ask the consumer to be incredibly rational and we know today from neuroscience that 85 per cent of the decisions we make are made by the unconscious part of brain.” Neuromarketers believe their work will be especially useful for products consumers find hard to describe – particularly when they need to know consumers’ reactions to smell, taste and touch. According to Neurofocus, the global market leader in neurological testing, consumer goods companies are even creating their own in-house testing units that mock up supermarkets. They can use them to change everything from shelf positioning to point-of-sale advertisements with the flick of a switch and monitor the shopper’s brain during the few seconds it takes to select a product. Professor Gemma Calvert, co-founder of UK-based Neurosense, believes the future for neuroscience lies beyond products: “I see the spread of these tools into things like the financial sector - to understand how trust is built and broken down for the banks – how do you make us feel safe and secure?” Anantha Pradeep, Neurofocus’s chief executive, believes the possibilities for neuroscience are almost limitless: “The challenge for us is to be focused because we could use it in any area of life which needs emotion and persuasion.” But some advertisers fear this adherence to science could stamp out “light bulb” ideas and destroy creativity in the industry. Neurofocus argues that mind-reading actually helps sell original thinking to companies that would otherwise stick with tried-and-tested methods. “The principles [of neuroscience] are like the keys of a grand piano – you can do a lot with them,” says Mr Pradeep. “And we’re adding keys all the time.” Perhaps a larger concern is that consumers will find it increasingly difficult to resist the pressure to buy. “We believe we’re incredibly clever, but in reality we’re less and less immune,” says Mr Lindstrom. “There’s an urgent need to create ethical guidelines. It’s like a hammer: it can be used to put a beautiful painting on the wall or to hit someone on the head.” Keep It Simple & Delight Your CustomersFriday, March 26th, 2010
After a week of globetrotting, Nick Hague reflects on his experiences to explain how a good questionnaire can be the first step in achieving satisfied – or, even better, delighted – customers. As I sat at Heathrow Airport on Monday evening waiting for a connecting flight to Athens, I was confronted by a lady wanting to ask me a few quick questions about my experience of T5. My flight had been delayed but the gate was about to been called. However, since it was a ‘short survey’ I said I would help. She asked me the usual questions about shops, eateries, toilets and spaces to sit and relax, but since I wasn’t looking to shop, I had already eaten a sandwich on the previous flight and was on a quick turnaround on my connection, none of the questions were relevant to me. It would have been good if I had chance to freely say that I am always deeply frustrated with the lack of plug sockets near seating areas in airports to allow business travelers to charge their ever-depleting laptop batteries for the forthcoming flights, but this highly structured questionnaire didn’t allow such feedback. I was now being called to the gate and so it won’t surprise you that I rattled my answers off without much thought. I then boarded the plane for the usual humdrum flight experience in cramped surroundings with little space to stretch out, never mind get some work done! However, on this occasion I was wrong to think this way as one of the air stewards must have seen my discomfort and, once airborne, I was offered the chance to move to one of the exit seats where I would have more room. That was very perceptive I thought! It was now a few hours since I had eaten and I was getting hungry. I predicted that the usual dried out meal would be as exciting as ever and would be washed down by the accustomed cheap wine – nonetheless, it would at least curb the onset of my hunger. Then the second thing that I wasn’t expecting happened – I was given a palatable meal but with the usual cheap plonk. I didn’t complain (it isn’t in the English nature) but my face must have spoken a thousand words. The air steward fittingly came back with a very nice Argentinean red – wow I thought! Now I know in-flight entertainment isn’t anything new but I had flown to Athens before and never had a movie, but as I tucked into my meal it came across the speakers that tonight’s movie would be ‘The Blind Side’. I had just read some good reviews on this movie and so sat back and relaxed to watch it. After 3½ hours I arrived in Athens at 1am and realized that even though I was a little bleary eyed, I had in fact enjoyed my flight! The next morning when I vacated my hotel and was waiting for my taxi, I was given a feedback form that asked me about my satisfaction with the courteousness of the staff, the speed of check-in, my bed, the temperature of the room, the amenities (pool, bar etc) and breakfast. I noticed that there wasn’t a question about being kept up all night by the traffic outside my window or for the fact that I didn’t have an iron in my room to iron my creased shirt and trousers for my impending meeting. Like at Heathrow, I had to dash off a response as my taxi was waiting – however, I did point out to the receptionist that there was no scope for me to add comment to the form outside of the tick box questions. That same evening I then boarded my plane home. With vivid memories of my inbound flight I quietly looked forward to my flight back to the UK. However, I should have known better. We boarded with the usual German efficiency (row numbers at a time) and we even set off on time (unlike my flight the previous day), but yes, you guessed it. I had a cramped seat, the meal was a dried sandwich, the wine was like vinegar and there was no movie! Since there was no movie, it did at least give me time to pen my looming Thursday Night Insight piece. Thinking back over the last couple of days’ events, it hit home to me what the difference was between customer satisfaction, delighting customers and customer loyalty. Was I satisfied with my flight back from Athens; yes, it got me back without crashing and on time. However, was I delighted; no, and if I ever have a choice again I will definitely choose a different airline. My reflective time also allowed me to think back to the surveys I took part in at the airport and the hotel and emphasized the importance of not only asking the right questions but also picking the right time so respondents are in the right frame of mind to answer them properly. The market research industry is probably its own worst enemy at times and latest thoughts often swing from one extreme to another. Either questionnaires are designed so detailed to get to the heart of what customers think that you run the risk of not surveying the busy but important customer; or with the desire for simplicity becoming worldwide, does a CSI (Customer Satisfaction Index) or NPS (Net Promoter Score) oversimplify things and not actually mean anything other than a number used for internal benchmarking? All researchers like their lists and so here are my 5 top tips from this week’s experience to take into account when designing a customer satisfaction or customer loyalty project:
To conclude, in designing customer satisfaction and loyalty surveys I think we should all remind ourselves of the words of Albert Einstein “Things should be made as simple as possible, but no simpler” – but remember; it can be the simple things in life that can actually delight your customer. Find out more about some of the subjects touched in today’s Thursday Night Insight. Read our:
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