Does Social Media Improve Customer Loyalty? Take the Customer Feedback Programs Best Practices Survey and Receive Free Report

Business Over Broadway announces their second Customer Feedback Programs Best Practices survey to study the use and impact of social media tools on customer loyalty.  In the previous study (conducted in 2008), Business Over Broadway found that loyalty leading companies adopt specific practices in their customer feedback programs. Specifically, loyalty leading companies, compared to loyalty-lagging companies: 

1. Have executive-level support of the customer feedback program 
2. Integrate the customer feedback program into their daily business processes and systems 
3. Conduct in-depth applied research with their customer feedback data 

Since that study, the use of social media tools in customer feedback programs has increased. Companies monitor social networking sites, build their own online communities, and measure customer sentiment in hopes to better understand their customers and improve customer loyalty.  Do these new tools work? Are companies who employ these tools better able to manage their customer relationships? Do they have higher levels of customer loyalty compared to companies who do not use these tools? The current survey is designed to answer these questions.


For the new study, we developed a survey allowing customer feedback professionals to provide their input on how their company structures its customer feedback program and uses data from this program. Customer feedback professionals have a unique opportunity to be a part of this research. In return for completing the survey, respondents will receive a free executive report that will highlight the key findings of this study.


Responses to this survey will remain strictly confidential. When reporting survey results, individual company names will not be disclosed without their permission. The survey takes about 10 minutes to complete. 

To begin the survey, please click on the link below:

http://businessoverbroadway.com/limesurvey/index.php?sid ...

To learn more about the survey, click on the link below:

http://www.businessoverbroadway.com/bestpracticesstudy.htm

Results from the first customer feedback programs best practices study were presented in the book, Beyond the Ultimate Question (2009).

<< read complete press release >>

Toyota's roadmap to recovery

I was asked, along with four other contributors, to share our thoughts regarding what companies could learn from the recent Toyota recalls. My contribution focused on customer feedback and how to ensure companies can keep their customers loyal. My portion of the article can be found here. The entire article, including thoughts of other contributors, appears in the April 2010 edition of Quality Progress.

Excerpt:
BRAND LOYALTY: Feedback Best Practices Keep Customers Coming Back by Bob E. Hayes
Toyota’s recalls—and the subsequent media blitz surrounding customer reaction, the automaker’s handling of the recall and the Congressional hearings with company executives—have deleteriously affected the company’s reputation for delivering high-quality vehicles. As a result, customer loyalty has taken a hit.

Toyota’s U.S. sales dropped 9% in February 2010 compared to the previous year, while Ford, GM, Nissan, Honda and Hyundai reported double-digit growth in the same time period. Toyota now faces a monumental task: regaining the trust and loyalty of existing customers and potential new ones... >>read more.

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

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.

Customer Feedback Programs Best Practices: An Empirical Investigation

Improving the customer relationship is seen as the key to improving business performance (Ang & Buttle, 2006; Reinartz, Krafft & Hoyer, 2004). In the course of this endeavor, popular business strategies emerged that have shined a spotlight on the importance of understanding customers’ attitudes, expectations and preferences. Customer-centric business strategies, such as CRM (customer relationship management) and CEM (customer experience management), focus on managing customers’ attitudes about their experience, fueling the proliferation of customer feedback programs (CFPs).

Customer feedback programs (CFPs) reflect a variety of types of customer programs where formal customer data are collected on customers’ perceptions and satisfaction programs, customer advocacy programs and customer loyalty programs. This study was designed to identify best practices regarding customer feedback programs.

A web-based survey was used to collect information from 112 customer feedback professionals on their company’s CFP. Survey administration was conducted using a Web-based survey tool provided by GMI (Global Market Insite, Inc.). Respondents were provided by CustomerThink.com and through the author’s professional network.

CFP Best Practices

Widely used (adopted by 80% or more) CFP business practices by Loyalty Leaders (companies whose industry percentile ranking of customer loyalty was 70% or higher) are located in the top half of Table 1 (in descending order of adoption rate).



Additionally, customer loyalty percentile rankings and satisfaction with CFP in managing customer relationships were compared for companies who adopted a specific CFP business practice and companies who did not. Results (see Table 1) showed that companies who adopted specific CFP business practices, compared to companies who did not adopt the business practices, had higher customer loyalty percentile rankings (17% difference) in their industry and higher satisfaction with CFP in managing customer relationships (1.5 difference on a 0 to 10 scale).

Applied research helps companies gain superior customer insight through in-depth customer-centric research. This research extends well beyond the information that is gained from the typical reporting tools offered through survey vendors. Applied research can take the general form of linking operational metrics to customer feedback data. Additionally, research can also take the form of linking other constituent’s attitudinal data (e.g., employee, partner) with customer feedback data. Companies that conduct this sort of in-depth research gain the knowledge of how to better integrate the customer feedback into daily processes.

Executive support and use of customer feedback data as well as communication of the program goals and the customer feedback results helps embed the customer-centric culture into the company milieu. Executive use of customer feedback in setting strategic goals helps keep the company customer-focused from the top. Additionally, using the customer feedback in executive dashboards and for executive compensation solidifies the importance of customers as a key business metric. Sharing of the customer feedback results (as well as results of applied research) throughout the company helps ensure all employees are aligned with top management’s view regarding the importance of the customer in daily operations.

The combination of a rigorous applied customer-centric research program, top executive support and use of customer feedback results, and the communication of program goals and results are key ingredients to a successful customer feedback program.

You can find the free executive summary here. For more information about the study, please contact Bob Hayes at Business Over Broadway.