The Quality Revolution was meant to be customer focused, instead became process centric and one of record keeping. Nonetheless, Total Customer Value Management can learn from the Quality movement. There is much to learn.
How Net Promoter Score is Like Global Warming
Scott Broetzmann, President of CCMC has written a brilliant piece on NPS. It is given below. For those of you using NPS, this article may make you re-think:
Some have suggested that global warming's "murky consequences aren't vivid enough to impress our distracted brains."
And so it is with many omnibus corporate customer experience metrics like the Net Promoter Score (NPS). These oversimplified measures are all too often failing to embolden leadership to act on the impending doom and disaster that accompanies a mediocre customer experience.
Addressing the fatal flaws of an orthodox NPS approach is simple but not easy; NPS can be supplemented by the use of three corrective "measures."
The three compensatory analytical techniques include:
- The Market Damage model
- A proper key driver and sensitivity analysis
- A commitment to formal action planning
- Identifies specific problems in each phase of the customer experience that cause damage.
- Facilitates the identification of the cause of problems and accountability for action.
- Quantifies the revenue and word of mouth damage of the overall level of problems (think temperature or CO2 increases in the global warming analogy) and of each individual problem in a manner that is credible to Finance and Marketing.
Assuming that the ultimate goal of any survey is to contribute to a positive, incremental and sustainable improvement in the customer experience, action planning is the magic elixir to bring about this outcome. It is the antidote to complacency.
As we define it, action planning is the intentional and ongoing process of identifying, operationalizing, and implementing specific actions that affect enough customers, over a long enough period of time, to increase positive ratings for those selected elements of the customer experience that yield the greatest payoff.
It would not be difficult to argue that NPS and related omnibus metrics have helped propagate a certain customer experience groupthink. The magic of NPS has fostered the evolution of a virtual and overly cohesive group of corporate decision makers which believes itself to be infallible or invincible when it comes to the customer experience. In many cases, nothing could be further from the truth. In such cases, its more likely that no one is paying attention to signs of impending customer doom because they lack the right data and processes.
Would love your comments and help. We are happy to help others in education and executive education on courses in Value Creation.
President, Customer Value Foundation and Inter-Link India
Founder editor, Journal of Creating Value jcv.sagepub.com
+91 98100 60368, 011-26831226
Customer Value Foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.
Total Customer Value Management (Total CVM) transforms the entire company to focus on Creating Value for the Customer by aligning each person's role in Creating Customer Value and getting shareholder wealth and Value.
I notice more and more that the Customer is taken for granted or allotted a by the way mention in new business strategies. Forbes and many others have written about this and bemoaned the fact, and warned companies not to ignore the customer.
Here is an excellent review on Gautam Mahajan's book on Value Creation written by Colin Shaw, founder and CEO of Beyond Philosophy. Colin is an international author of five bestselling books and an engaging keynote speaker..
In my book, Value Creation: The Definitive Guide for Business Leaders, I added a 4th A (Ability) to what Management gurus talk about in the 3 Aís to ready ourselves for the future
Customers tend to buy or use those products or services that they perceive create greater value for them than competitive offers. It is essential for executives and leaders to create higher value for their Customers than competition can.