CREATING A CULTURE OF CUSTOMER ADVOCACY SESSION: AP068.
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Transcript of CREATING A CULTURE OF CUSTOMER ADVOCACY SESSION: AP068.
CREATING A CULTURE OF CUSTOMER ADVOCACYSESSION: AP068
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
3Microsoft APC 2011_Customer Loyalty_FINALMEL
Objectives for today
• Introduce/recap Net Promoter Score
• Link customer advocacy and company economics
• Introduce the Net Promoter System
• Discuss what the Net Promoter System could mean for you and your business
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
4Microsoft APC 2011_Customer Loyalty_FINALMEL
We measure our success by our clients' results
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Australian client share price performance
Bain & Company Clients (14.9% CAGR)
All Ordinaries (5.4% CAGR)
Note: Dates are at end of monthSource: Datastream; Bloomberg
What makes Bain different?
• Practical answers
• Collaborative way of delivering results
• People passionate about your success
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
5Microsoft APC 2011_Customer Loyalty_FINALMEL
Advocacy has been an important, and evolving, aspect of Bain’s customer strategy practice
CustomerStrategy and
Marketing
PerformanceImprovement
Mergers and Acquisitions
Information Technology
Results Delivery—Change Management
Strategy
Organisation
2004 2006 2011
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
6Microsoft APC 2011_Customer Loyalty_FINALMEL
Loyalty Leaders:Faster revenue growth
0
20
40
60
80
100%
Average Loyalty Leader
Costs
0
100
200
300
400
0 5 10 15 20
Years
Growth ( indexed )
Loyalty Leader
Average
Loyalty Leaders:Faster revenue growth and lower costs
2.2xCAGR
15% Lower
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
7Microsoft APC 2011_Customer Loyalty_FINALMEL
Loyalty transforms economics
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
8Microsoft APC 2011_Customer Loyalty_FINALMEL
Companies whosecustomers agree
8%
‘Delivery gap’
Everyone believes
20
40
60
80
100%
Percent of companies
Companies that believethey provide a superior
proposition
80%
Source: Bain Customer Led Growth Diagnostic Questionnaire
0
Everyone believes, but few achieve
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
9Microsoft APC 2011_Customer Loyalty_FINALMEL
Tools to manage profits are stronger and far better understood than for loyalty
Effective and well established
Tools to measure and manageProfit
Source: Bain & Company
Ineffective and underdeveloped
• 100+ years track record with strict standards
• Widespread understanding throughout organisation
• Six sigma processes for quality
• Limited track record with no standards
• Qualitative understanding throughout organisation
• Ad hoc, complex survey processes
Tools to measure and manageLoyalty
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
10Microsoft APC 2011_Customer Loyalty_FINALMEL
% Promoters
0-6
7-8
9-10
Net Promoter® Score (NPS)
minus
% Detractors
Extremelylikely
Extremelyunlikely
"On a scale 0-10, how likely is it that you would recommend our company to a friend or colleague?"
Net Promoter® Score (NPS) evolved from Bain's loyalty work as the best simple metric
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
11Microsoft APC 2011_Customer Loyalty_FINALMEL
NPS ties directly to customer behavior and economics at the individual customer level…
0
20
40
60
80%
Detractor
43
Passive
49
Promoter
62
Share of wallet w/
primary bank
0
20
40
60
80
100%
Detractor
100
Passive
63
Promoter
33
Attrition rate
(Indexed to detractor )
-4
-2
0
2
4
0.5
-2.2
1.3
-0.4
3.2
Average number of...
Detractor Passive Promoter
0
Promoters stay longer...1 …buy more...2 …and refer others more3
Above the line = RecommendationsBelow the line = Criticisms
Detractor Passive Promoter
Source: Bain NA Financial Services NPS Survey 2008 (N=3,427)
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
12Microsoft APC 2011_Customer Loyalty_FINALMEL
Net Promoter score
Credit card companies
Net Promoter score Net Promoter score
Supermarkets Retail
-20
-10
0
10
20
30%
-40 -20 0 20%
CAGR
-20
-10
0
10
20%
0 20 40 60 80 100%
CAGR
-10
0
10
20
30%
-50 -30 -10 10 30 50%
CAGR
…and correlates with growth across many industries
Source: Fred Reichheld, The One Number You Need to Grow; Analysis from Bain & Company Boston Sept 2003; Satmetrix Net Promoter Data 2001-Q12004, Nilson Report 2000-2004
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
13Microsoft APC 2011_Customer Loyalty_FINALMEL
NPS scores are relatively dispersed within most sectors of the Australian economy
-20
0
20
40
60
80%
Home
broadband
61
30
-9
International
airlines
52
41
3
Retail
banking
42
29
-2
Mobile
phone
16
6
-7
NPS (2010 )
West
ne
t
TP
G/iiN
et Sin
ga
pore
A
irlin
es
Air
N
ew
Z
eala
nd
ING
D
irect
Be
ndig
o Vir
gin
3
Note: TPG and iiNet tied for #2 position in Home BroadbandSource: Bain Australian NPS Survey (2010)
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
14Microsoft APC 2011_Customer Loyalty_FINALMEL
The basics:“Eliminating
nuisance factors” Product or service meets basic needs
Product or service works as expected
Problems are resolved as expected
Satisfaction
Ordinary services delivered
exceptionally
Exceptional services/features
delivered well
Loyalty/AdvocacyDifferentiators:
“Creating the wow-factor”
Loyalty leaders go beyond delivering “the basics” to design and deliver the “wow-factor”
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
15Microsoft APC 2011_Customer Loyalty_FINALMEL
Serving loyal customers is a lot more fun
Net Promoter Score 24% Net Promoter Score 71%
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
16Microsoft APC 2011_Customer Loyalty_FINALMEL
Will employees who are not advocates create an army of Promoters?
?
Net Promoter Score 24% Net Promoter Score 71%
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
17Microsoft APC 2011_Customer Loyalty_FINALMEL
The Promoter Flywheel
Enthusiasm, creativity
Excellence, trust, value
Growth, opportunity
EmployeeNPS
CustomerNPS
Buy from here!
Come work here!
Profitable, sustainable
organic growth
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
18Microsoft APC 2011_Customer Loyalty_FINALMEL
Positive team member behavior and attitude leads to customer promoters
Root causes
of detraction
Drivers
of promotion
Behaviour
and
attitude
Knowledge
and
expertise
Availability
Customer Responses
Most important levers
DISGUISED CLIENT DATA
• Friendliness • Clear explanations• Honest/manages expectations• Empathy
• Thinking with the customer• Right resources and systems• Subject knowledge
• Clear number • Waiting time (service level) • Transferring to other desks
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
19Microsoft APC 2011_Customer Loyalty_FINALMEL
Approach: Create real change via burning platform and frontline pull for customer focus
• Burning platform via-NPS competitive rankings
-NPS economics analysis
• Universal customer loyalty language: NPS
• Prioritisation of product, process and system improvements
Front-line employees, supervisors
Functional managers and process leaders
Snr. leaders • Process
improvement
• Closed feedback loops at critical touchpoints
-Measurement-Individual customer dialog
• Frontline employee empowerment and NPS mindset
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
20Microsoft APC 2011_Customer Loyalty_FINALMEL
Approach: Listen, learn and act
Listen
Learn
Who
How
What
UnderstandPrioritise
Design
TrackA
ct Deliver
Drive to action with
improvements to customer experience
Capture feedback – what’s great,
what’s not
Prioritise actions
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
21Microsoft APC 2011_Customer Loyalty_FINALMEL
Listen
Learn
Who
How
What
UnderstandPrioritise
Design
TrackA
ct Deliver
• Identify most important interactions, e.g.
- Plan preparation- Annual review
• Call customers and capture feedback (by third party)
• Ask for permission tocall back
• At the front line: Build feedback into daily routines
- Account planning - Relationship management
- Coaching
• At the centre: Improve end-to-end customer experiences
- Fix processes and systems
- Improve support and tools for the frontline
Approach: Build customer focus into the way you do business
• Pass feedback to frontline
• Follow-up with customers (by frontline)
- Capture in-depth feedback- Understand key issues- Resolve problems- Ask for referrals
• Develop personal and team action plans
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
22Microsoft APC 2011_Customer Loyalty_FINALMEL
Companies that have benefited from NPS focus include a host of familiar names
• Lego tied employee bonus to NPS improvement and achieved 20% increase in NPS over a 2-year period
• By focusing on customers, additional 10% of its business has attained leadership/co-leadership positions in NPS in 2-year time frame. Accounts where NPS improved grew revenue by 69% within a year
• After launching NPS programs in 2007, achieved 16% increase in relative NPS, 23% increase in operational NPS and record low churn of 1.2% (20% reduction) in one-year time span
• Focus on closed-loop feedback system with its policyholders, potential customers, claimants, and agents has led to 8.5% increase in loyalty NPS and 15% in claims NPS over a 2-year period
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
23Microsoft APC 2011_Customer Loyalty_FINALMEL
“It [NPS] is the first thing I look at when I get to my office every morning.”
Walt Bettinger President and CEO
NPS has become central to management metrics and activities at Charles Schwab
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
24Microsoft APC 2011_Customer Loyalty_FINALMEL
Schwab was experiencing a serious decline in customer acquisition and revenue
0.0
0.2
0.4
0.6
0.8
1.0
2002 2003 2004
Total Revenue (Indexed )
Source: OneSource; Bain Experience
•Experiencing a serious decline in revenue and new customer acquisition, and increased attrition
•NPS well behind its key competitors
•Primary objective was to drive revenue growth by dramatically improving the customer experience
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
25Microsoft APC 2011_Customer Loyalty_FINALMEL
Schwab discovered promoters were six times more valuable than detractors
0
200
400
600
Client NPV ( Indexed )
NPV
of
detractor
100
Lower
Attrition
50
SOW
Gain
150
Cross
Sell
50
Eliminate
Negative
Word of
Mouth
50
Referrals
200
NPV
of
promoter
600
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
26Microsoft APC 2011_Customer Loyalty_FINALMEL
Schwab built NPS into the way they do business
Weekly coaching ‘huddles’
NPSas keybranchmetric
Executive Leadership
Cross-functional teams to
drive priorities
Proven value of loyalty
Closed-loop feedback
HR: Hiring, training, job descriptions
etc.
Client feedback
communities
Touchpoint priorities
Case for change
Feedback loops
Business processes
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
27Microsoft APC 2011_Customer Loyalty_FINALMEL
“It’s really helpful for the branch manager to come back to the team and say, “Let’s brainstorm as a group on how to improve our score.””
Financial Consultant
“We’ve identified technological improvements to the website… the whole front-line feedback process has been really helpful.”
VP, Client Loyalty
“You really need to be committed. It’s not something you can just look at part-time or occasionally.”
VP, Branch Manager
“Those are probably the best conversations I have at Schwab. To call a client in the first 24 hours after they’ve filled out a survey, has a tremendous impact, even if they are unhappy.”
VP, Branch Manager
Closed loop feedback in action
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
28Microsoft APC 2011_Customer Loyalty_FINALMEL
Focusing on the customer experience at Schwab has driven significant value
-10
0
10
20%
-3.6%
17.5%
2003-2005 2005-2007
Retail NPS Revenue
-40
-20
0
20
40
NPS
-35
23
2004 2007
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
29Microsoft APC 2011_Customer Loyalty_FINALMEL
Don’t ask for feedback unless you’re prepared to listen, learn and act
“I’m sorry, dear. I wasn’t listening. Could you repeat what you’ve said since we’ve been
married?”
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
30Microsoft APC 2011_Customer Loyalty_FINALMEL
What it means for you
• Know your clients: Segment by value and advocacy – know advocacy economics
• Learn directly from customers and close the loop with them – listen and act
• Build feedback disciplines into your weekly routine – the system, not just the metric
• Share best practices and ideas with others – inside and outside
• Leverage the power of referrals – build active promoters