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Archive for the ‘Loyalty’ 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/ The Hardest WordThursday, April 14th, 2011  In this week’s Thursday Night Insight, Julia Cupman draws the link between the simple act of apologizing, and increasing customer loyalty. Have you ever been upset or angry by the words or actions of someone, but been ready to forgive and forget if only they could say sorry? As Elton John has sung numerous times, sorry seems to be the hardest word. A couple of months ago, I returned to my apartment building to find 3 fire engines, 2 police cars, and an ambulance outside, and a lobby that was totally flooded with water. I later found out that a major water pipe had burst on the second floor, leaking 250,000 gallons of 180 degree water (the equivalent to a quarter of the amount of water in an Olympic sized swimming pool, but boiling)! As you can imagine, this flood caused extensive damage to the building, in that it destroyed walls and flooring, and ruined the electrics – including the fire alarm system and all 5 elevators. As I live two thirds of the way up this 35 floor building, I was one of the many people who had to take the seemingly never-ending stairs for weeks, while our incompetent building management couldn’t arrange for the elevators to be fixed quickly. In traipsing up and down the stairs each day, I noticed a common theme to the complaints of the residents around me: the building management hadn’t written to say sorry for the inconvenience caused. It occurred to me that anger was surmounting, not so much at the problem the building faced, but at management’s apparent inability to effectively resolve the problem. As a market researcher, problem resolution is an issue I come across in virtually every customer satisfaction project I work on. There is always an angry respondent bitterly recounting how a problem was inadequately resolved by their supplier. It’s inevitable that in any company, problems will occur, but I have yet to come across an organization that has a procedure in place to respond to problems effectively. Indeed, it has been estimated that most companies spend around 98 percent of their time reacting to problems and less than 2 percent of their time preventing them. Why do these companies struggle saying sorry? It’s probably because we live in a litigious society in which apologizing for an error or incident is synonymous with admitting liability. Rather than face expensive lawsuits, companies choose to deny, deflect, or defer responsibility. Anything but say sorry! What these companies don’t realize is that an apology is actually a powerful relationship-building tool, for studies have shown that customers develop greater loyalty to a company if they have experienced problems that were satisfactorily resolved, than if they had never experienced a problem at all.  Of course resolving problems entails far more than simply apologizing. However, key drivers of customer satisfaction and loyalty are so often these smaller, softer things which seem so inconsequential and yet are so impactful. As for the management of my apartment building, it wouldn’t have cost them anything to send an apologetic e-mail to residents. Words are indeed cheap, but when it comes to illustrating the importance and value of your customers, saying sorry is priceless. Childbirth and How We Delight CustomersFriday, March 25th, 2011
This week Matthew Harrison thinks back to the nerve-racking day his wife gave birth, and reflects on what this tells us about the different ways in which we measure customer needs We headed down a tree-lined avenue and arrived at the hospital, an imposing building in an aspirational Connecticut suburb. A team of uniformed, white-gloved octogenarians ushered us into valet parking, transferred our belongings into a silver trolley and delicately placed my wife into a wheelchair. Our vehicle was whisked away by a Dickensian character in a towering hat. I handed $5 to his fawning colleague and scurried inside the building, behind my wife-on-wheels. The lobby of this hospital was a thing of beauty. Cherry wood-paneled walls met lush carpets; impressionist paintings vied for wall-space with portraits of benevolent local millionaires. One dry-cleaned footman after another escorted us through elevators and corridors and – finally and breathlessly – into a spacious labour room, our personal home for the next 15 hours. I reclined on a chaise longue, like many a husband before me. The flat-screen TV piped cheerful music into the immaculate room. I tuned my laptop into the wi-fi system and emailed my family the latest news. This room had everything a man could want. My wife seemed a bit angry about something. Must be the hormones – I’d read about that. The next days were the most miraculous of our lives, as our baby was born and our every need attended to by this most sumptuous of hospitals. The pièce de resistance arrived the night before we returned home, as the nurses served us a complimentary meal of filet mignon and champagne, before giving our new baby a trendy T-shirt and arranging for us to meet the ‘hospital photographer’. One sleepless night a few days later, I reflected on how lucky we were to be in America at this crucial moment in our lives. Where else would we have received such 5-star service? The hospital had not only met our expectations, it had exceeded them. The hospital had delighted us. Speaking to a friend back in England my view was confirmed. Jon’s wife had given birth in a West Midlands hospital, behind a flimsy curtain in a room full of caterwauling mothers and hyperactive visitors. No flat-screen TV, no chaise longue for anxious husbands. Nothing more than a clock radio chained to a concrete wall and a husband that was sent home to bed when visiting hours ended. I told Jon that his treatment had been a disgrace. The once-great nation I was proud to call home was falling into disrepair. What kind of animal gives birth without champagne, filet mignon and an unusually lush carpet? Jon was quick to correct me, pointing out that his wife was perfectly satisfied with the medical treatment she received, and that he placed more importance on that than on some pretentious undercooked steak. For good measure, he informed me that the UK health service provides a superior service to its US counterpart when it comes to childbirth, with infant mortality 30% higher and maternal mortality 15% higher in America (CIA World Factbook, UN World Population Prospects Report) . Treatment in the UK was less likely to delight but more likely to satisfy. Our discussion illustrated a frequent dilemma for market researchers and service providers. How do we measure customer needs? If we simply ask customers what their requirements are, they typically reply with top-of-the-mind requirements that any serious player must satisfy in order to survive in the market – in other words, hygiene issues or table stakes. A hospital, for example, must deliver babies and perform operations safely in order to remain ‘in business’. The alternative way of measuring customers’ needs is to calculate derived importance by correlating respondents’ satisfaction scores on a range of issues against their overall satisfaction with the supplier. This provides us with the drivers of satisfaction. Requirements which correlate strongly with satisfaction are differentiating factors, the non-essential requirements that – so long as basic needs are satisfied – allow companies to pick up market share by distinguishing themselves from the competition. In order to establish customer loyalty, companies must perform effectively against both stated and derived importance. The company that performs poorly against needs with strong stated importance will not be in business for long, because its offering is simply unacceptable. The company that performs poorly against needs with strong derived importance may survive for a while, but in a competitive market will become commoditized and see its margins erode over time. 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. Marketing TidbitsWednesday, July 14th, 2010  A variety of random figures and stats, which marketers everywhere might find interesting, were spotted recently in Deliver – a magazine for marketers produced by the United States Postal Service. As ever, we like to pass on useful information to our readers so, in no particular order, these include:
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