It would have been OK if Fred Reichheld, Satmetrix, and everyone else involved with Net Promoter took time to pat themselves on the back at the first annual Net Promoter conference in New York. But no laurels were evident at the conference, and none were rested on. Instead, organizers and panelists answered their own ultimate question -- how is Net Promoter working?
The conference included several case studies describing the use and implementation of the Net Promoter Score (NPS) process. Raimund Schmolze, vice president of customer insights at T-Mobile, detailed the advantages of measuring the willingness to recommend T-Mobile among its 100 million worldwide customers, showing a 20 percent rise in its overall NPS over the past year. T-Mobile has
been particularly successful, he said, in measuring customer recommendations and satisfaction across the EU.
For example, Net Promoter scores differ in Germany from those in the U.K., which was something that T-Mobile had been unable to measure before implementing NPS at the beginning of 2005. With the new information, they can focus on customer service improvements at the root of the problem, instead of larger, blanket initiatives companywide. Schmolze said T-Mobile used in-depth NPS surveys to
determine competitive factors in the U.K. after one of its biggest competitors there, Orange, introduced a pay-as-you-go plan that stole market share as well as customer satisfaction.
"Two years down the road we expect that Net Promoter will become a good reflection of our market share as well as customer satisfaction measurement," he said.
Other presenters echoed Schmolze's expectations for the long-term effects of NPS. Laura DeSoto, senior vice president of innovation and synergy at data firm Experian, explained that Experian's NPS scores actually declined over the first five quarters of the program before seeing positive results. Net Promoter, like other customer-centric efforts, can take a while before results emerge. Patience can be hard to come by when there's an executive board breathing down your neck, which could become a roadblock
to Net Promoter efforts at some companies.
"Creating a customer-centric culture and driving client loyalty is a long-term business strategy, not a quick fix," DeSoto said. "Especially in a B2B environment with complex client relationships, it may take several survey cycles -- a full six to 12 months -- for a client to recognize your headway in delivering an excellent client experience in their survey response. They may not give you 'credit' for your gains until they've seen it consistently over a period of time. At Experian, once we delivered a great client
experience consistently, our clients acknowledged this and rewarded us handsomely with a higher Net Promoter score."
T-Mobile's Schmolze was also candid about his experiences with NetPromoter's limitations. The problems reflected in poor scores are not always simple product or service-related. In Q2 2006 T-Mobile offered a new pricing plan in the EU designed to drive customer acquisition. In the third quarter T-Mobile's NPS dropped. The problem, upon further analysis, was at the call center. New customers coming in from the
new pricing model overloaded the call center and led to a downturn in the willingness to recommend.
The disciplined approach
Dr. Laura Brooks, codeveloper of Net Promoter and vice president of methodology and consulting at conference organizer Satmetrix, explained that discipline is crucial to a successful Net Promoter initiative. The "Net Promoter Discipline" encompasses executive sponsorship within companies, organizational alignment with the executive vision, and system infrastructure for collecting, analyzing, and distributing customer feedback within the organization.
"Our recent research on loyalty best practices has shown a gap between the vision executives articulate for loyalty initiatives and the reality of how successful companies are at driving operational changes and action at the front lines," Brooks said. "Net Promoter offers a solution to this gap, allowing organizations to rally around a powerful and straightforward score that links to customer loyalty and growth. But achieving results requires a disciplined approach that drives customer focus throughout the organization."