The Sound of Your Brand Speaks Volumes

Customer Experience Research and sonic branding

A Conversation with Sonic Branding Expert Tom Eymundson

In mid-September, we had two fantastic guest speakers presenting to a number of our top clients at The Verde Group CX Summit in New York City. One of those speakers, Tom Eymundson, is a leading sonic branding expert and the CEO of The Pirate Group Inc.

I caught up with Tom after the Summit to learn more about the power of sonic branding and how companies are using it to establish and reinforce their brands.

Paula: Tom, thank you so much for joining us today! So how would you explain sonic branding to someone who’s never heard the term before?

Tom: Thanks Paula, and it’s great to be with you. Well, if we were at a party and someone asked me ‘what is sonic branding?’ I would say, “listen to the music at this party. It conveys a certain mood and tone that the host wants us to feel, and sort of determines how this party is being experienced.”

Music and sound are that powerful and persuasive. Sound has the unique ability to connect people and brands. You see, brands are like people. How they look is how they’re seen, and how they sound is how they’re heard. Essentially, sonic branding is the strategic use of music, voice and sound effects to create emotional connections between people and brands.

 

Paula: What are the most critical steps for creating true brand differentiation through the use of sound?

Tom: A brand has to draw some honest conclusions about what its vision, values, promise, and personality are. That essentially defines the essence of your brand, and your sonic identity should be designed to embrace that essence. It should be as unique and articulate as your visual identity. That’s what will differentiate you from your competition.

 

Paula: Can you give an example of a brand that’s done an effective job of that, just with sound and no words?

Tom: McDonald’s has done a really good job of it with their ‘I’m Lovin’ It’ campaign. It’s been running since 2003, so it’s certainly stayed the course — and that’s imperative in order to have a sonic brand that’s recognizable.

It’s also evolved. What started off as a Justin Timberlake song with the familiar bridge followed by the words ‘I’m loving it’ has since distilled down to just the bridge. We as consumers fill in the rest. That’s how powerfully it’s been etched on our minds.

Another example, perhaps my favorite, is Intel. Their sonic branding is also ingrained in everyone’s mind. Intel also stuck to the course and embedded their branding in everyone’s offerings. So IBM would launch a computer with an Intel chip and Intel basically got to brand off of IBM’s back.

The actual sound, the ‘Intel Bong’ as it’s referred to, is often called the ‘Stairway to Heaven’ of sound logos because of its global ubiquity. I’ve read that it’s heard every five minutes somewhere in the world and that it’s played in more than 130 countries.

 

Paula: I know sonic branding has been around for a long time. Do you think it’s making a resurgence now because companies feel customers are over-saturated with visual stimulation?

Tom: Well that’s certainly true. The other thing that’s different is that we’re now receiving sound from so many sources, whether it’s the devices we’re holding, in our cars, or what’s on our walls or in our lives. What used to be a just print or visual media are now immersive, so there’s sound embedded in them.

For example, when you go to the New York Times website you’re no longer just reading a newspaper, you can get as deep and as immersive as you want, with full video and audio. As a result, sound has emerged an essential component of our strategic branding initiatives. I think that any brand out there today that’s not taking this into account stands a chance of being left behind.

 

Paula: So are you seeing more companies exploring sonic branding as a result?

Tom: Absolutely. Most companies are recognizing that sonic branding has to be a part of their overall communications strategy. There’s a great book called “Brand Sense” by Martin Lindstrom published in 2010 that explores the concept of sensory marketing, which is a shift from just visual sense marketing to targeting all five senses. He states that 41 percent of customers consider sound to be a central element of brand communication.

 

Paula: You’ve been involved in sonic branding for over 25 years. What’s your method for partnering with clients to develop an iconic sound for their brand?

Tom: We employ a three-step methodology when working with clients. It’s anchored in a strategic rationale which helps remove subjectivity — that’s key to why it works.

The first step is to determine the ‘what.’ What are we trying to do? This entails a comprehensive analysis of all existing brand and audio assets, a competitive audio review, and a technical audit – are we exploring something new and distinct or refreshing something that already exists?

Step two is the ‘why.’ Why do we want to do it? This involves identifying all brand and audio opportunities, formulating strategic guidelines then developing audio mood boards and sonic signposts.

Next, we determine the ‘how.’ This is where the creativity begins. We start with concept development, then present three concepts to the client. Once reviewed, we generate more options if required. When all parties are satisfied, we move on to concept refinement and re-calibration.

At that point, we dig deeper into the concept and explore topics like media applicability, ethnic suitability, and overall flexibility. Then the testing stage comes, which is internal qualitative testing for the agency and client to review. It’s difficult to actually test sonic branding without it being released — you’ll only know if it’s effective once it’s had time in the market. Repetition is key.

And finally, we have our handoff. All sonic branding assets are presented in pre-selected formats, broadcast ready. Adhering to this ‘what, why, and how’ methodology is how we develop the right sounds that resonate with customers. The reason it works is that we resist the urge to jump to an execution (the ‘how’) before we figure out the ‘what’ and the ‘why.’ That’s also how we avoid ‘flavor of the month,’ and ‘what’s hot now’ traps.

 

Paula: Given all the changes in technology Tom, what do you see for the future of sonic branding?

Tom: For one thing, the whole world of artificial intelligence, as it relates to voice assistants, has opened up a whole new level of sonic branding. Now it’s being dubbed VX, or Voice Experience. Brands can now have a dialogue with their customer, in front of the customer, and in the comfort of the customer’s own home. Think of the data mining possibilities there.

Brands also have the opportunity to extend their sonic identity to include that of a branded voice assistant. According to The Smart Audio Report, 65 percent of users say they wouldn’t go back to life without their smart speaker. And even Pandora noted in their Definitive Guide to Audio 2018 that there’s never been a better time to be a marketer who invests in audio.

 

Paula: That’s pretty exciting stuff, Tom. I’d like to end by asking your advice on behalf of our readers. What are the top three things you would tell a company considering a sonic branding initiative or campaign?

Tom: Sure. If a company is considering sonic branding, then it clearly already understands the power and importance of an effective sonic communication strategy. So I would say that the three most important rules for leveraging their sonic branding efforts are: 1. Be creative. 2. Be distinct. 3. Be consistent over a long period of time.

Paula: That’s excellent advice! Tom, thanks so much for your time, and for sharing sonic branding expertise. We’ll be listening for your work!

Tom Eymundson, CEO of Toronto-based The Pirate Group Inc., is a talent director, music producer, and sound designer. A winner, juror and Jury President of many international advertising awards shows (including Cannes Lions and the London International Awards), Tom has been helping brands find their voice for over 20 years.

Find out more about Tom and the Pirate Group at http://piratetoronto.com.

Paula Courtney is Chief Executive Officer of The Verde Group.

Captive Customers: When Customers Want to Leave You But Don’t

We’ve all heard it, and probably even said it: “I’m never shopping there again!”

But is there a tipping point, a ‘red line,’ that once crossed means customers will leave you for good? It turns out that things are not so simple. The point where customer dissatisfaction actually impacts repurchase intent varies from industry to industry, and to make things even more complicated, ‘never’ is not always forever

How lack of choice affects customer behavior
Certain industries appear more immune to customer defection than others, as an example, think of your bank or airline you choose to fly. In these industries, customers perceive there is a limited choice between suppliers, and that other supplier alternatives are just as flawed.

Customers may believe that their provider’s problems are endemic to the industry, and are truly not fixable. So why bother going through all the hassle to switch a provider if the alternative isn’t any better?

An obvious example is the cellular provider market. Most customers believe there are only a handful of viable alternatives. And most would say that those suppliers shared common issues (cryptic billing, excessive data charges, etc.) And virtually all customers would say that cellular providers are unable — or unwilling — to find fixes for these issues.

In these cases, the level of friction between a customer and their supplier can reach very high levels before the customer is ready to jump ship. In research done by The Verde Group, 90% of wireless customers reported having at least one problem with their provider in the past 6 months. More likely, these ‘captive customers’ will carry on in the relationship, unhappy but unwilling to make a change.

The problem with captive customers
Marketers in these industries shouldn’t be complacent, however. Captive customers pose at least two risks — including one that could strike a non-recoverable blow to the business.

The first risk involves cross-selling and up-selling to these customers. True, they buy from you today, but they don’t really want to. As a result, your ability to sell new products and services to them is minimal and requires a tremendous amount of marketing dollars to get a little bit of lift in sales. This is not good news for providers looking to grow their business by way of their installed base.

That pales in comparison to the second risk — disruption. Those unhappy customers will be quick to embrace non-traditional alternatives when they emerge. And that can have devastating effects.

Just ask Yellow Cab, once San Francisco’s largest taxi company, who filed for bankruptcy protection in 2016 — largely thanks to Uber. And what about Airbnb’s impact on the hotel industry? Morgan Stanley forecasted that in 2018, due to Airbnb, U.S. and European hotels’ revenue per available room would decrease by 2.6 percent.

Problem frequency and category killers
So when do customers actually leave a supplier? Again, it varies by industry, but The Verde Group research shows that across industries, problem frequency is a strong predictor — the incidence of a specific number of problems, regardless of what they are, tends to be the tipping point. In retail, for example, our research indicates that after just two issues, things are at their worst point with customers. That’s when they’re most susceptible to defection.

Another type of issue that leads to customer loss is a ‘category killer’ problem — one that happens infrequently but does maximum damage to the customer relationship. These problems tend to be related to your core value proposition.

For example, a delivery company who cannot reliably deliver, or an insurance company who doesn’t pay claims properly. These types of issues have one thing in common —they tend to sever customer loyalty completely, and recovery is almost impossible.

Never say never again
Although ‘never’ is not really a relative term, different industries use different timeframes to measure customer loss. In retail, for example, a customer who stops shopping for three or four months is the equivalent of a 100 percent loss. They may return after six months, but at that point, they’ll be considered a ‘new’ customer.

If you’re in the agricultural industry, the measurement is different. It’s an annual cycle, so if a farmer doesn’t purchase from a supplier for a year, they’re deemed to have left. If they return in three years, they’re classified as a new customer.

They may come back — but when?
While some customers never (and I mean never) come back, many do. And often it’s the type of problem they encountered that determines the length of time before they return. This is known as ‘the ‘decay’ period.

Core business problems or egregious issues typically have a much higher decay window. In other words, don’t hold your breath. Those customers aren’t coming back anytime soon — if ever.

Peripheral issues (such as customer support, stock problems, or delivery challenges) can have shorter decay periods. Customers may in effect put their suppliers in the penalty box, but some eventually come back, and do so in a shorter period.

Understand your customers’ issues
It’s critical for companies to develop a complete view of customer problems. They need to monitor frequency, resolution, and customer perception. They also need to be vigilant in guarding against catastrophic, category-killer issues.

Finally, even if doesn’t appear that customers are ripe for defection, companies can’t afford to be complacent. After all, the next Uber could be right around the corner.

Paula Courtney is Chief Executive Officer of The Verde Group and Product Founder at WisePlum.

 

 

 

How Educated Customers Raise the Bar on Retail Experience

Customer Dissatisfaction - how educated customers are raising the bar on retail experience The Verde Group

Customers love the ability to shop anywhere — online, in the store, or over the phone. What they hate is the fact that often they feel they don’t have all the information they need to make an informed decision. Or worse, they feel they’ve been misled.

Retailers should consider that their customers usually aren’t wrong. Instead, they may have made a wrong choice because they’re unclear, and it’s often because the retailer didn’t give them all the information they needed.

Educating customers has never been easy, and it’s getting more difficult. The multi-channel shopping experience means customers may get a different experience depending on how they interact with a retailer.

Customer dissatisfaction – broken communication
For example, if the customer bought something online and decides to return it, can it be returned to a brick and mortar store? Is there a cost to return it via courier versus in-store? If the customer phones the store, will the person who answers be able to accurately describe their options and the implications of each?

To make matters more complex for retailers, customers are relying on a number of methods — both online and in-store — to educate themselves prior to purchasing.

A 2017 Canadian Consumer Retail Research Study conducted by WisePlum, Microsoft and the Retail Council of Canada determined that 68% of department store shoppers found that ‘comparing product details or specifications in-store’ was very useful. At the same time, 61% said that ‘comparing product details or specifications online’ was very useful, and 60% said the same about ‘browsing for information on their smartphone’.

Even as retailers struggle to provide complete and consistent information to customers across all channels as part of a true omnichannel experience, customers’ expectations continue to rise. They’re not just comparing retailers with their direct competition, but with every other recent customer interaction they’ve had.

So if they recently had a flawless return experience with Amazon, then a poor experience with another retailer, the former is the new benchmark, and the latter is viewed as a failure.

Customer dissatisfaction – problems pre-purchase
And, according to the 2017 WisePlum research, that shopping experience is often anything but flawless. For example, 39% of department store shoppers said they had at least one problem before purchasing, with the number rising to 47% for Gen Y and Gen X shoppers.

Shoppers encountered many of these problems while they attempted to educate themselves pre-purchase — determining online availability, slow and challenging website navigation, discrepancies between online and in-store pricing, and even a lack of information about delivery charges.

While it’s true that many retailers are making heroic efforts to proactively educate their customers and provide them with complete information, customers could be forgiven for thinking that things are getting worse, not better. Especially if they’re using a credit card or renewing their cable service.

Credit card companies don’t make it easy for consumers to understand their statements. From hidden fees to service charges to how interest is calculated, many customers are unable to untangle the information and make poor choices as a result.

The rules often change with credit card companies as well. Look no further than ever-shrinking payment grace periods. According to consumer advocacy site WiseBread, “Grace periods are getting shorter or being eliminated”.

While cable companies are also known for indecipherable statements, it’s their ‘secret negotiation’ tactics that make many customers’ blood boil. Come renewal time customers know there’s a good deal to be had, but they’re not given the basic information they need in order to make a decision. Instead, they’re forced to speak to a line-up of customer service reps and loyalty managers, repeating their story over and over and watching the clock until a deal is finally reached.

Bad actors aside, there is a lot that retailers can do to reverse customer perceptions and make sure their customers are well-informed. Here are three points to consider:

  1. Look outside your industry for best practices
    Savvy retailers know that they share their customer’s wallet with a wide range of suppliers, not just those in their own segment. Many companies are both creative and effective in how they educate and inform customers.  There is much retailers can learn from them.
  2. Understand how customers buy, and not just from you
    Retailers should use customer feedback and detailed interviews to learn how customers buy and consume from everywhere, and what they view as their most positive experiences. Once it’s understood how they buy and what they’re most receptive to, education efforts are much more likely to hit the mark.
  3. Fix the customer’s problem first, then fix your system
    When a customer has a problem, fix it. They don’t need (or want) to know why your back-end process won’t let them do something or the 12-step escalation chain of command they need to follow. Retailers need to create a culture that says, “Send the customer home happy, then work things out”.

As customers embrace the omnichannel shopping experience, keeping them informed and educated is more important than ever. And if they do have a problem, companies can’t let the customer’s lack of information or understanding get in the way — they need to just fix the problem.

Think of the Ritz-Carlton hotel chain, who authorizes employees to spend up to $2,000 per day to improve the guest experience. Who will be raising the customer experience bar even higher tomorrow?

Paula Courtney is Chief Executive Officer of The Verde Group and Product Founder at WisePlum.

Why Do We Lose Customers?

The Verde Group Customer Research

Every business knows the value of keeping their customers.

Yet despite companies’ best efforts customers still leave, and the reason often feels like a mystery. Why do they go?

They experience a problem
This is by far the biggest reason customers move on. 68% to 73% of customers stop doing business with companies because they experience a problem according to Forum, Bain, Verde customer research.

Many companies place a huge focus on fixing the problems they hear about from their customers. It’s a logical action, yet it misses the mark. In fact, more customers will leave for problems companies never hear about — the ‘silent killers’.

You have become irrelevant
This happens when you’ve stopped delivering a product or service that the customer feels is appropriate. Either another company has taken your place, or you’re no longer communicating with the customer in a way that’s meaningful to them.

This last point takes on more significance in the era of data-sharing and personalized social media. Customers assume that when companies take their data, they’ll use it to customize and improve the customer’s experience.

Companies continue to ignore this at their peril. For example, if a customer doesn’t have children but a company promotes online offers at them for diapers, soon the customer may begin to question that company’s relevance in their life.

They don’t need your product or service
Perhaps the customer no longer uses that type of product. More likely, however, they no longer view you as competitive — with your price, your customer service, or the freshness of your product offering.

Reading The Signs
There are clear signs that customers may be headed for the exit. Shopping frequency declines. Share of customer spend drops off. Surveys show a spike in customer problem experiences. Separately or together, these signs all point to a significant risk to the business.

What actions should companies take? They need to engage with their customers and relate to them in a meaningful way, invest in what the customer wants, and understand what those customers are buying from other companies.

Companies should understand that from a customer experience perspective, they’re not just competing with others in their segment. The last, best experience a customer has will become their new benchmark — their expectation for a buying and service experience they now demand from everyone. Fair? Maybe, maybe not. But is it the reality? Yes.

Companies cannot afford to simply react to systemic customer problems. Even if the company recovers, there’s still a permanent dent in customer loyalty.

Recovery systems aren’t enough. With today’s multi-channel businesses and mobile, online and in-store customer interactions, it’s almost impossible to build and maintain a consistent, flawless recovery system. Companies can’t rely on them alone — they must also identify and understand potential ‘iceberg issues’ and do their best to steer clear.

The Uber Effect
Many companies are looking at more radical approaches to transform the customer experience and maintain or increase relevance with their customers. They look to Uber as an example where a technological innovation (in this instance, one that dynamically matches consumer demand to driver supply) has transformed the customer experience, disrupted an industry and allowed Uber to take huge market share from traditional taxi companies.

Companies going down this path will want to look outside of their existing businesses to incubate and innovate. If a transformation is attempted in-house and within the trappings of their industry, the most likely result would be a cycle of continuous improvement, not innovation.

Paula Courtney is Chief Executive Officer at The Verde Group and Product Founder at WisePlum

 

The Four Biggest Mistakes Companies Make When Implementing a Customer Measurement Program

Transform your customer insights by avoiding these common errors 
Technology and analytics have provided companies the means to understand their customers in ways they couldn’t have imagined even a few years ago. Almost every large organization invests heavily in customer measurement programs, yet many don’t achieve the customer insight they’re looking for.

Why?

It turns out that a handful of common missteps are responsible for the unsatisfactory results:

#1. Unclear Measurement Goals
What are the reasons for undertaking the measurement program? Is it a desire to improve your customer’s experience? Are you trying to gauge the success of a recently launched product or service, or understand how you stack up against a competitor?

Companies need to establish clear objectives for measurement programs and ensure there is alignment across the entire organization. Extensive planning and engagement with key stakeholders are critical, as is a clear strategy for the use of the data captured. What decisions will be driven by that data, and who is accountable to take action?

 

#2. Not Enough Time Spent Establishing Ownership
Building alignment within the organization is fundamental to the success of any measurement program. But it’s not enough to just inform stakeholders, collecting their input into the objectives of the program, how it will be structured, and how findings can positively impact their specific business metrics — these are all are critical to the success of the program. And all require a lot of work upfront to get it right.

The most important step is to establish a link between the findings of the measurement program and business issues those findings promise to address. Stakeholders need to know how the program findings may help improve or transform their business.

 

#3. Measuring Customer Loyalty or Satisfaction in a Vacuum
Customer surveys only provide a single data set in any customer measurement program. A single data source provides an incomplete picture, and sometimes a very misleading one.

To truly gain customer insight, you need to establish multiple listening posts across the entire organization. This means gathering information from your sales team, the call center, your service teams, and your complaint management system.

All of this information should be reviewed and packaged holistically. The different data sources may corroborate some findings and create different perspectives for others. This provides a much broader understanding of your customer’s experience.

 

#4 Thinking You Know What Customers Want
Preconceptions can ruin a customer measurement program. Often programs are built in isolation and structured based on what is perceived as important to stakeholders.

Good programs need to be constructed outside-in. Speak to customers before building a survey. These upfront discussions provide customers with the opportunity to tell you their full stories, and many times it’s the qualitative insight you gather that proves most valuable.

This feedback also helps you understand and adopt the language your customers use to discuss your business, which may not align with your internal company vocabulary. For example, if your survey poses questions about the effectiveness of your claims department, but your customer refers to it as your customer service department, your findings will almost certainly be skewed or incomplete.

 

My Challenge to You
Customer measurement programs can provide you with critical customer insight that helps improve your business metrics and shape your company strategy. For these programs to be effective, however, you need to establish clear goals, cultivate alignment and ownership across your organization, and most critically, ask for your customers’ input as you’re building the program.

Paula Courtney is Chief Executive Officer of The Verde Group and a lecturer at The Wharton School

Verde Update: New Product Partnership Launched with LoyaltyOne Consulting

 

Verde Group and LoyaltyOne Consulting partner to deliver innovative Customer Experience solution

I am pleased to share exciting news. Verde Group has partnered with LoyaltyOne Consulting, a global customer loyalty consultancy specializing in the design and development of customer engagement strategies for Fortune 1000 brands, to develop an innovative new customer experience (CX) offering to add to Verde Group’s suite of services. The new offering will link the specific customer experiences most damaging to a company’s financial performance to specific shopping behaviors to gain maximum return on revenue and market share.

We recognize that in today’s hyper-competitive retail environment customer experience excellence is critical to market leadership. The offering will integrate LoyaltyOne’s behavioral analytics expertise and strategy consulting practice along with Verde Group’s 20 years of customer experience measurement and our Revenue@Risk™ methodology. The output will be a highly actionable segment-specific roadmap to create authentic customer loyalty, based on the CX improvements statistically linked to customer spend and brand equity. The data insights will have enterprise wide applicability, from corporate CX strategy development to location-specific implementation of CX delivery tactics.

We have partnered with LoyaltyOne because they are well aligned with Verde Group’s goal to provide you with experiential insights, strategies and treatments to take your business to the next level of customer engagement. Our partnership will deliver a unique blend of experiential and behavioral data insights to allow you to make business decisions differently and more powerfully than you do today.

Thank you for your interest in Verde’s work. As our offering with LoyaltyOne develops, I look forward to sharing more details on how it may be of value to you and how we can work together to achieve and sustain authentic customer loyalty.

Sincerely,

Paula Courtney, President & CEO
Verde Group
71 Ontario Street
Toronto, ON M5A 2V1

www.verdegroup.com

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About LoyaltyOne

LoyaltyOne is a global leader in the design and implementation of coalition loyalty programs, customer analytics and loyalty services for Fortune 1000 clients around the world. LoyaltyOne’s unparalleled track record of delivering sustained business performance improvement for clients stems from its unique combination of hands-on practitioner experience and continuous thought leadership. LoyaltyOne has over 20 years history leveraging data-driven insights to develop and operate some of the world’s most effective loyalty programs and customer-centric solutions.

www.loyalty.com

An Obsession with Success Metrics Won’t Create More Success – Find Out What Will

iStock_000028580136XLarge

I understand why companies like to focus on positive measurements — be they sales, profits or stock price. We all want to feel good.

But if you want to improve, you also have to identify what you need to do differently or stop doing.

In my last post, NPS: the danger of its singularity, I examined the Net Promote Score (NPS), a phenomenon in the world of customer experience measurement. But, as I explained, a sole focus on NPS can force you to overlook the complexity of company-customer relationships and the cause of your problems. What’s more, it measures an outcome, not the actions required to achieve it.

Stop, replace or adjust

Just as the mechanic must understand what’s wrong with your car in order to fix it, marketers cannot focus only on their successes. You want your car, and your company, to perform as well as it can. That means looking under the hood, with the help of computer diagnostics of course, to see what needs to be stopped, replaced or adjusted.

Diagnostics and measurements need to inform action. They need to look beyond the success yard stick of NPS. They need to identify problems, such as employee churn, customer churn, customer complaints, and customer problem experience.

Ultimately, the role of a good marketer is to figure out the measures that inform action. In the ideal world, those actions should drive more of those success outcomes – like improved sales, profits and market share.

Or they’ll stop buying

Customer problem experience is one of the best predictors of market impact. When customers experience problems, they are far more likely to take action than those who do not.

That action may be manifested as inaction or disloyalty. That is, the customer will stop buying from the company. They will buy less frequently and, depending on the problem severity, they will tell others about it – spawning more potential disloyalty to the company in question.

Based on over 250,000 customer responses from research conducted by Verde Group over the past four years, about 70% of consumers who choose to stop doing business with a company do so because they experienced a problem. Imagine being in control of that much risk.

Attitudes and behaviours tend to be consistent. Positive attitudes lead to approach behaviors; negative attitudes are associated with withdrawal behaviors. Negative attitudes, particularly when emotionally charged, can cause very negative withdrawal or disloyal behavior.

Ask about specifics

The measure of problem experience is not straightforward. You can’t simply ask a customer if they’ve had a problem. Most will say “no”. That doesn’t mean they didn’t experience something negative.

The best way to measure the extent to which your customers are experiencing problems is to ask them specifically about potential known problems. Have them answer “yes” or “no” to your list. Then use the output from that line of questioning to analyze the attitude-behavior link. Customers will answer differently. In the end, you will get a clear picture of the key experiences that are most likely suppressing market behavior and therefore, market value.

It takes guts to scrutinize problems. But that’s what leadership is all about.

Paula Courtney
Chief Executive Officer, The Verde Group

Learn more about Paula Courtney

 

 

 

 

NPS: The Danger of its Singularity

Metrics Ruler iStock small

After Fred Reichheld published The One Number You Need to Grow in the Harvard Business Review, many customer experience professionals thought they had to ask only a single question: “How likely is it that you would recommend company [x] to your friends and colleagues?”

Gone were the “overall” questions that had dominated customer surveys, as in “Overall, how satisfied are you with…” or “Overall, how would you rate the value of …” and the inevitable follow-up “Why?”

Soon this one question would become the de facto way to measure customer sentiment. Everyone seemed drawn to the simplicity of Net Promoter Score (NPS). And, it became a forcing function for many organizations. Finally, everyone was talking about wanting to improve the customer “metric”.

While we all want the simplicity of a single metric, whether it’s for business growth, weight loss or a happy marriage, we know it’s rarely that easy.

Believing that NPS is sufficient can be dangerous as it:

  1. overlooks the complexity of company-customer relationships
  2. is a description, not a cause and
  3. measures an outcome, not the actions required to achieve it.

Customer relationships are complex

Most experienced executives appreciate the complexity of the customer-supplier relationship. They:

  • Think about the hundreds of touch points customers have when they do business with a company.
  • Factor in the variety of products they can choose from and the various people with whom they interact
  • Lead complex marketing programs, campaigns and pricing strategies designed specifically for certain customer segments.

So why do many think a single metric, NPS, can sum it all up? Wishful thinking, I’d say.

Imagine this

A broker presents you with an investment opportunity, based on only one number, the company’s sales. Do you invest? No.

Or your doctor wants to assess your health. Can she do that with only one number? BMI, cholesterol, blood pressure or blood sugar? Humans are too complex to be assessed with one number.

So is the relationship between company and customer. While NPS is an important indicator, it’s not the only important number.

NPS is not a cause

Although Reichheld claimed that “willingness to recommend” was, by far, the best predictor of business growth, he never made a causal connection. Companies with high NPS scores had high performance, he observed. To many people, this implied causality.

But, that would be like watching videos of musicians with lots of tattoos and insisting their success was caused by the tattoos. You wouldn’t make that leap. You’d know that the tattoos were a common feature of the musicians, but not the cause of their talent or popularity. Similarly, high NPS scores are a common feature of growing companies, but not the cause of their success.

An outcome is not an action

NPS is a significant outcome of a good company-customer relationship. But NPS does not tell you what you need to change or do to encourage customers to recommend your company.

Experiences cannot be measured by a single number, any more than your BMI can give the full picture of your health. Descriptions and outcomes don’t tell you what you need to do to influence customer attitudes and behaviours.

What does? While there’s no simple “metric”, there are answers, too long for one post.
Subscribe to this blog or check back soon to find out how to measure experiences for ultimate market behavior.

See the follow up to this post: An Obsession with Success Metrics Won’t Create More Success – Find Out What Will

Paula Courtney
Chief Executive Officer, The Verde Group

Learn more about Paula Courtney