in Management & Leadership

Bruce Ertmann On Customer Satisfaction And The Net Promoter Score

I recently posted about the growing hype in marketing circles around customer-satisfaction and the Net Promoter methodology. Developed by Fred Reichheld, Net Promoter is a loyalty metric and a discipline for using customer feedback to support business growth and profitability. It’s characterized by the ubiquitous Net Promoter question, “On a scale of 0 to 10, how likely is it that you would recommend our company to a friend or colleague?”

The point of that post was to underscore that customer-satisfaction and loyalty scoring is worthless if a company is not going to act on the intelligence. That post prompted a thoughtful reply from my friend Bruce Ertmann, a marketing veteran in the automotive industry. In case you missed the discussion thread, I’ve shared his full comment here:

The NPS can be an effective tool for measuring customer loyalty, but only for those organizations that have the basic business fundamentals of customer service fine-tuned. Too many companies refer to their use of this type of survey system as customer engagement, and those are typically the companies that falsely believe they are “in touch” with their customers.

Consider an organization that dutifully uses the Net Promoter system, monitors the loyalty metrics and, perhaps, even goes so far as to allow customers to write in comments on the very survey that derives the NPS. Those surveys are often administered by a third party, and the data is input into one of too many customer databases where it usually sits siloed within the company’s “customer satisfaction” department. Mary may have been blown away by the product and customer experience, and Paul may have expressed anger over the same, but no one in the company really “hears” this and thus, there can be no response; no action.

Consumers who sometimes feel they are being surveyed to death often criticize the Net Promoter system. Many of these consumers also feel it is not very authentic, because companies often like to cheat the system by prepping customers beforehand or even rewarding them in advance for returning perfect 10 scores. The auto industry is historically notorious for this bad practice.

I don’t think anything will ever substitute for full on customer and consumer engagement via the many traditional and social media channels available to companies that are willing to do the work, willing to listen and willing to be accountable for the results. The NPS is limited in that it typically only produces a metric that (1) is derived from customer input and (2) reports after-the-fact information.

Companies that are truly on the cutting edge of continually cultivating lifetime advocates are constantly monitoring and participating in the conversations that abound about their brands—in real time. They tend to pull in customers and build their advocacy base because they demonstrate real transparency; they are authentic and credible. They’ve taken care to create a customer experience that is at least commensurate with the brand and they have integrated that important business component throughout the organization so that everyone knows what it takes to deliver on the promise. That’s how great brand reputations and trust and loyalty are built over time. Not just by chasing a metric.

And when things go awry—as they will from time to time—these great companies seek to optimize all of the above and get out ahead of the problem—in real time. Their humility is honest and believable. Failing at that, the greatness fades, and the brand may be irreparably tarnished. Just ask Tiger Woods—or Toyota.

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  • http://bit.ly/4wc4NS John Coldwell

    If you are interested in NPS you should take a look at http://bit.ly/4wc4NS

  • mikespataro

    Max,

    Thanks for the article and link back to Bruce's post. I've been in discussions with companies regarding the impact that social media, from a listening and brand activation standpoint, can have on NPS. It's a very new area for companies to think about and your thoughts on the issue are extremely helpful.

    Mike Spataro
    Visible Technologies

  • http://www.attentionmax.com maxkalehoff

    I could spend all day unpacking one how social media can integrate into customer satisfaction. First, it should happen. Second, I think my original point stands equally with the integration of social media into NPS: it's worthless if a company is not going to act on the intelligence.

  • patriciaamuir

    Chrysler has been using the NPS metric for the past year rebranded as Customer Promoter Score (CPS). There is still the temptation at the dealership level to fall back on 'fixing' the score. Dealerships that catch on to the shift between 'customer satisfaction' and 'customer loyalty + active referral' will benefit just by the shift. Dealer Principals and General Managers must get on board and ensure that they continue to improve the customers' experience based on what customers are saying – for example: focus on the relationship not the transaction

  • http://www.attentionmax.com maxkalehoff

    Dealer tendency to game customer satisfaction scoring by manufacturers
    is a huge problem, especially when the relationship bleeds into
    service. It would be great if manufacturers would take a more agnostic
    approach to the service side. I wish they would partner with more
    top-level independent shops for service and warantees, and sever the
    dealer connection. My local “Jack's Automotive” service shop easily
    beats every dealer-oriented service shop I've been to — in terms of
    customer experience, mechanic knowledge, passion for his trade, and
    fair price. And he doesn't rely on any customer satisfaction scoring,
    only good service and consequent word of mouth.

  • http://twitter.com/BruceErtmann Bruce Ertmann

    At Toyota, we found that it was difficult to get dealers to improve the customer experience without actually defining what that experience should be. It's tough to avoid focusing on the transaction, because that is, after all, the nature of the business–selling. But it should be viewed as part of the overall relationship or experience. There are two integral components of the customer experience–the physical (the new car product) and the intangible (really the process the customer goes through before during and after the sale). Both must be top notch to legitimately score well on the NPS or similar.

    And Max, don't hold your breath waiting for your carmaker to partner with “Jack's Automotive” service shop. With new car margins being pared to the bone by competitive and marketing forces, dealerships rely on their service operations to generate the revenues that will hopefully exceed their increasingly higher net operating costs. All the more reason, though, manufacturers and dealers should work in tandem to ensure the customer experience is clearly defined and not compromised post-sale in the service shop.

  • http://www.attentionmax.com maxkalehoff

    Well said, Bruce.

  • http://twitter.com/BruceErtmann Bruce Ertmann

    At Toyota, we found that it was difficult to get dealers to improve the customer experience without actually defining what that experience should be. It's tough to avoid focusing on the transaction, because that is, after all, the nature of the business–selling. But it should be viewed as part of the overall relationship or experience. There are two integral components of the customer experience–the physical (the new car product) and the intangible (really the process the customer goes through before during and after the sale). Both must be top notch to legitimately score well on the NPS or similar.

    And Max, don't hold your breath waiting for your carmaker to partner with “Jack's Automotive” service shop. With new car margins being pared to the bone by competitive and marketing forces, dealerships rely on their service operations to generate the revenues that will hopefully exceed their increasingly higher net operating costs. All the more reason, though, manufacturers and dealers should work in tandem to ensure the customer experience is clearly defined and not compromised post-sale in the service shop.

  • http://www.attentionmax.com maxkalehoff

    Well said, Bruce.

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