Beyond the Ultimate Question: Customer Feedback Programs Workshop

Attend this one-day workshop on October 29, 2009 in Seattle, WA to learn how to design an effective Customer Feedback Program (CFP) that will help improve the customer experience, increase customer loyalty, and drive business growth. Find out how companies like Oracle, Akamai Technologies, Harris Stratex Networks, and American Express Business Travel build their world class Customer Feedback Programs. Learn why companies need to look beyond the Net Promoter® Score as the ultimate question.

Bob E. Hayes, Ph.D., an author and recognized expert in customer satisfaction and loyalty measurement, will share research results and insights that show that, to grow their business, companies need to look beyond this simple question to efforts on improving the entire CFP. Attend this one-day workshop and receive complimentary copies of the new book, Beyond the Ultimate Question, and Measuring Customer Satisfaction and Loyalty (3rd Ed.). In this workshop(register here: http://www.regonline.com/bobcfpseattle), you will learn how to design a successful CFP that will help your company improve the customer experience and increase customer loyalty, ultimately driving business growth. Learn more about the workshop (http://www.businessoverbroadway.com/buqworkshopseattle.htm).

Workshop Details and Outline
· Six Components of Customer Feedback Programs
· How Typical Companies Structure their CFPs
· Identifying your CFP Strengths and Improvement Areas: CFP Self-Assessment Survey
· Best practices Defined
· Best Practices in the areas of:
- Strategy and Governance
- Business Process Integration
- Method
- Reporting
- Research
· Customer Loyalty as the Ultimate Metric
- Definition of Customer Loyalty
- Problems with the NPS
- How to Measure Customer Loyalty: RAP Approach
· Two Examples of CFP Best Practices in Action
- The Akamai Story
- The Oracle Story
· CFP Best Practices Award

Register Now for One-day Workshop in Seattle, WA (http://www.regonline.com/bobcfpseattle)
Cost (includes class manual and two books): $1150.00; $100 discount for 2 or more registrants from same company. Early Bird Registration (before September 25, 2009): $950.00.

Beyond the Ultimate Question: New Book Challenges the Net Promoter Score

My new book, Beyond the Ultimate Question, is released. You can purchase the book here. The official press release appears below.

Press Release: Business growth depends on more than asking a single question. Challenging the widely touted Net Promoter® Score claims, Bob E. Hayes, Ph.D., an author and recognized expert in customer satisfaction and loyalty measurement, publishes his latest findings in his new book, Beyond the Ultimate Question. Dr. Hayes provides compelling evidence that, to grow their business, companies need to look beyond this simple question to efforts on improving the entire customer feedback program (CFP)... >> Read entire press release.

Free Customer Feedback Programs Self-Assessment Survey

Customer feedback programs are designed to help companies understand their customers’ attitudes and experiences. This deeper customer-centric understanding helps companies identify ways to increase customer satisfaction and loyalty, consequently improving business performance.

These programs, however, do not always lead to improvements in the customer experience or increases in customer loyalty. Why? It may be how these programs are designed. For instance, research has shown that loyalty leaders adopt specific types of practices in their Customer Feedback Programs compared to loyalty laggers. The key to improve your program's success rests on the design of your program. Does your Customer Feedback Program adhere to best practices? Complete this short questionnaire to find out and learn how you can create a world class Customer Feedback Program. This free self-assessment tool is designed to help you understand the extent to which your company adopts best practices with respect to customer feedback programs.

Take the free self-assessment survey now by clicking the link below.

Free Customer Feedback Programs Self-Assessment Survey

Customer Loyalty 2.0 Article in Quirk's Marketing Research Review

Read the study by Bob E. Hayes, Ph.D. in the October 2008 edition of Quirk's Marketing Research Review magazine titled Customer Loyalty 2.0: The NPS Debate and the Meaning of Customer Loyalty. The article summarizes the NPS methodology, including its developers’ claims and opponents’ criticisms. Additionally, this paper includes research that examines the meaning of customer loyalty as it is measured through survey questions. You can view the article online here or you can simply download a pdf version of the article here.

The Downfall of the NPS: Customer Feedback Professionals Do Not Believe the NPS Claims

The Net Promoter Score (NPS) is used by many of today’s top businesses to monitor and manage customer relationships. Fred Reichheld and his co-developers of the NPS say that a single survey question, “How likely are you to recommend Company Name to a friend or colleague?”, on which the NPS is based, is the only loyalty metric companies need to grow their company. Despite its widespread adoption by such companies as General Electric, Intuit, T-Mobile, Charles Schwab, and Enterprise, the NPS is now at the center of a debate regarding its merits.

Fred Reichheld, the co-developer of the NPS (along with Satmetrix and Bain & Company) has made very strong claims about the advantage of the NPS over other loyalty metrics. Specifically, they have said:

1. The NPS is “the best predictor of growth,” (Reichheld, 2003)

2. The NPS is “the single most reliable indicator of a company’s ability to grow” (Netpromoter.com, 2007)

3. “Satisfaction lacks a consistently demonstrable connection to… growth” (Reichheld, 2003)

There is considerable scientific evidence disputing the findings of the NPS camp (Hayes, 2008; Keiningham et al., 2007; Morgan et al., 2006). The basic finding is that the NPS is not the best predictor of business performance measures. Other conventional loyalty questions (e.g., overall satisfaction, continue to purchase) are equally good at predicting revenue growth. Reichheld’s claims are grossly overstated with regard to the merits of the Net Promoter Score. Despite the scientific research criticizing the NPS claims, the NPS developers still presses the claim that the NPS is the best predictor of company growth.

The Net Promoter developers have not refuted the current scientific research that brings their methodological rigor into question. Instead, they only point to the simplicity of this single metric which allows companies to become more customer-centric. That, however, is not a scientific rebuttal. That is marketing.

Current Study
I was interested in understanding the opinion of other customer feedback professionals regarding the NPS debate. I recently conducted a survey in which 277 customer feedback professionals (e.g., Senior Executives, Directors, Managers and Individual Contributors of Customer Feedback Programs (CFPs)) of enterprise, medium and small businesses were asked about their company’s customer feedback program. As part of this larger study, respondents were asked to give their opinion on the NPS methodology. Specifically, respondents were asked to indicate the degree to which they agree or disagree with the following two statements:

1. The Net Promoter Score (e.g., recommend intentions) is a better predictor of growth compared to other loyalty questions (e.g., satisfaction, repurchase intentions).

2. The Net Promoter Score (e.g., recommend intentions) is a better predictor of growth compared to other loyalty indices (aggregate of recommend, satisfaction, repurchase intentions).
Additionally, respondents were asked to indicate their company’s industry percentile ranking with respect to customer loyalty. Loyalty Leaders were defined as companies whose industry percentile ranking of customer loyalty scores was 70% or higher. Loyalty Laggers were defined as companies whose industry percentile ranking of customer loyalty was below 70%.

Results
Over 80 Customer Feedback Professionals answered the two NPS questions (see Table 1). When asked to compare the NPS with other loyalty questions/items, only 26% of the customer feedback professionals agreed that the NPS is a better predictor of growth compared to other loyalty questions. When asked to compare the NPS with other loyalty indices, again, only 26% of the customer feedback professionals agreed that the NPS is a better predictor of growth compared to other loyalty indices.

When we examined the difference between the Loyalty Leaders and Loyalty Laggers, the results are much different. More Loyalty Laggers (42%) believe the NPS is better than other loyalty indices compared to Loyalty Leaders (14%).

Table 1. Percent of respondents who agreed that NPS was better than other loyalty items or indices.
Summary
The results clearly show that the NPS claims are not widely supported by customer feedback professionals. This finding is more remarkable for customer feedback professionals from companies who are Loyalty Leaders.

Yes, the NPS is a simple metric, but the issue regarding its merits is much deeper. The simplicity of the NPS does not make it the right solution; the simplicity of the NPS does not minimize the problems (e.g., research bias) of the NPS research as well as their misleading claims regarding the superiority of the NPS over other loyalty metrics. The current study showed that customer feedback professionals seem to be aware of the limits of the NPS claims. Customer Feedback Professionals need to share their concerns (along with the recent research on the NPS) with their CEOs and CMOs.

References
Hayes, B. E. (2008). Net promoter score debate: The measurement and meaning of customer loyalty. Business Over Broadway.

Hayes, B. E. (2008). Customer feedback programs best practices: An empirical investigation. Business Over Broadway.

Keiningham, T. L., Cooil, B., Andreassen, T.W., & Aksoy, L. (2007). A longitudinal examination of net promoter and firm revenue growth. Journal of Marketing, 71 (July), 39-51.

Morgan, N.A. & Rego, L.L. (2006). The value of different customer satisfaction and loyalty metrics in predicting business performance. Marketing Science, 25(5), 426-439.
Netpromoter.com (2007). Homepage.

Reichheld, F. F. (2003). The One Number You Need to Grow. Harvard Business Review, 81 (December), 46-54.

Reichheld, F. F. (2006). The ultimate question: driving good profits and true growth. Harvard Business School Press. Boston.

Net Promoter Debate: The Measurement and Meaning of Customer Loyalty (Free White Paper)

The Net Promoter Score (NPS) is used by many of today’s top businesses to monitor and manage customer relationships. Fred Reichheld and his co-developers of the NPS say that a single survey question, “How likely are you to recommend Company Name to a friend or colleague?”, on which the NPS is based, is the only loyalty metric companies need to grow their company. Despite its widespread adoption by such companies as General Electric, Intuit, T-Mobile, Charles Schwab, and Enterprise, the NPS is now at the center of a debate regarding its merits.

I have conducted some research on the Net Promoter Score (NPS). Turns out, the claims of the NPS developers are grossly overstated and misleading. I have summarized my findings (along with the current research on the topic) in a free white paper. You can download a free copy of the white paper by clicking the link below.

Free white paper on NPS debate

Bob

The Net Promoter Debate: A Summary

The Net Promoter Score (NPS) is used by many of today’s top businesses to monitor and manage customer relationships. Fred Reichheld and his co-developers of the NPS say that a single survey question, “How likely are you to recommend Company Name to a friend or colleague?”, on which the NPS is based, is the only loyalty metric companies need to grow their company. Despite its widespread adoption by such companies as General Electric, Intuit, T-Mobile, Charles Schwab, and Enterprise, the NPS is now at the center of a debate regarding its merits.

NPS Methodology

The NPS is calculated from a single loyalty question, “How likely are you to recommend us to your friends/colleagues?” Based on their rating of this question using a 0 to 10 likelihood scale where 0 means “Not at all Likely” and 10 means “Extremely Likely,” customers are segmented into three groups: 1) Detractors (ratings of 0 to 6), 2) Passives (ratings of 7 and 8) and 3) Promoters (ratings of 9 and 10). A company can calculate its Net Promoter Score by simply subtracting the proportion of Detractors from the proportion of Promoters.

NPS = prop(Promoters) – prop(Detractors)

NPS Claims

Fred Reichheld, the co-developer of the NPS (along with Satmetrix and Bain & Company) has made very strong claims about the advantage of the NPS over other loyalty metrics. Specifically, they have said:

1. The NPS is “the best predictor of growth,” (Reichheld, 2003)
2. The NPS is “the single most reliable indicator of a company’s ability to grow” (Netpromoter.com, 2007)
3. “Satisfaction lacks a consistently demonstrable connection to… growth” (Reichheld, 2003)

Reichheld support these claims with research displaying the relationship of NPS to revenue growth. In compelling graphs, Reichheld (2006) illustrates that companies with higher Net Promoter Scores show better revenue growth compared to companies with lower Net Promoter Scores. Reichheld sites only one study conducted by Bain & Associates (co-developers of the NPS) showing the relationship between satisfaction and growth to be 0.00. [1]

Recent Scientific Challenges to NPS Claims

Researchers, pointing out the NPS claims are only supported by Reichheld and his co-developers, have conducted rigorous scientific research on the NPS with startling results. For example, Keiningham et al. (2007), using the same technique employed by Reichheld to show the relationship between NPS and growth, used survey results from the American Customer Satisfaction Index (ACSI) to create scatterplots to show the relationship between satisfaction and growth. Looking at the personal computer industry, they found that satisfaction is just as good as the NPS at predicting growth. Keiningham et al. (2007) found the same pattern of results in other industries (e.g., insurance, airline, ISP). In all cases, satisfaction and NPS were comparable in predicting growth.

Still, other researchers (Morgan & Rego, 2006) have shown that other conventional loyalty measures (e.g., overall satisfaction, likelihood to repurchase) are comparable to NPS in predicting business performance measures like market share and cash flow.

Contrary to Reichhheld, other researchers, in fact, have found that customer satisfaction is consistently correlated with growth (Anderson, et al., 2004; Fornell, et al., 2006; Gruca & Rego, 2005).

Problems with NPS Research

The recent scientific, peer-reviewed studies cast a shadow on the claims put forth by Reichheld and his cohorts. In fact, there is no published empirical supporting the superiority of the NPS over other conventional loyalty metrics.

Keiningham et al. (2007) aptly point out that there may be research bias by the NPS developers. There seems be a lack of full disclosure from the Net Promoter camp with regard to their research. The Net Promoter developers, like any research scientists, need to present their analysis to back up their claims and refute the current scientific research that brings their methodological rigor into question. To date, they have not done so. Instead, the Net Promoter camp only points to the simplicity of this single metric which allows companies to become more customer-centric. That is not a scientific rebuttal. That is marketing.

References

Anderson, E. W., Fornell, C., & Mazvancheryl, S. K. (2004). Customer satisfaction and shareholder value. Journal of Marketing, 68 (October), 72-185.

Fornell, C., Mithas, S., Morgensen, F. V., Krishan, M. S. (2006). Customer satisfaction and stock prices: High returns, low risk. Journal of Marketing, 70 (January), 1-14.

Gruca, T. S., & Rego, L. L. (2005). Customer satisfaction, cash flow, and shareholder value. Journal of Marketing, 69 (July), 115-130.

Hayes, B. E. (1997). Measuring Customer Satisfaction (2^nd Ed.). Quaility Press. Milwaukee, WI.

Ironson, G.H., Smith, P.C., Brannick, M.T., Gibson W.M. & Paul, K.B. (1989). Construction of a "Job in General" scale: A comparison of global, composite, and specific measures. Journal of Applied Psychology, 74, 193-200.

Keiningham, T. L., Cooil, B., Andreassen, T.W., & Aksoy, L. (2007). A longitudinal examination of net promoter and firm revenue growth. Journal of Marketing, 71 (July), 39-51.

Morgan, N.A. & Rego, L.L. (2006). The value of different customer satisfaction and loyalty metrics in predicting business performance. Marketing Science, 25(5), 426-439.

Netpromoter.com (2007). Homepage.

Reichheld, F. F. (2003). The One Number You Need to Grow. Harvard Business Review, 81 (December), 46-54.

Reichheld, F. F. (2006). The ultimate question: driving good profits and true growth. Harvard Business School Press. Boston.

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[1] http://resultsbrief.bain.com/videos/0402/main.html