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Notes From The Gartner CRM Summit September 14, 2008

Posted by Elana Anderson in Customer Experience, Marketing.
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Last week, I attended my first-ever Gartner event – the Gartner CRM Summit. After five years as a Forrester analyst, it was nice to get exposure to how the other half lives. According to Gartner over 600 attendees representing 25 countries attended the event held at the National Harbor Resort (a surreal manufactured enclave just outside of DC). I don’t know how other attendees felt but, I have to say, the venue was a bit reminiscent of that Jim Carrey movie The Truman Show

My favorite Gartner speaker was Ed Thompson who presented the opening keynote entitled “Improving the Customer Experience.” Ed warned the audience that he would speak quickly and accelerate as he went on and, that, he did.

Ed’s opening one-liner: “Why should you care about customer experience? The boss says you have to…” That certainly jives with my experience that “customer experience” is a top initiative in most companies these days. But, as Ed aptly pointed out, few companies have a clear and consistent definition for what they mean by “customer experience” (CXP). Often, depending upon which group you talk to within an organization, you get several different definitions. Different groups also measure customer experience in different ways. For instance, customer service groups might measure customer satisfaction, while marketing measures retention, and engineering measures quality. All that’s ok – in fact it’s a good thing. The key point? Before embarking on a CXP initiative bring all of the diverse people together clearly define your objectives, the tactics for achieving those objectives, and how you will measure success.

In fact, Ed says “lots of companies give up before they see the improvement.” Many companies have applied the model developed by Professor Noriaki Kano to CXP projects.

Ed’s pointers:

  • Get the basics right.
  • Focus on moving above average before, during, and after the experience. Plan to move some investment to setting customer expectations, getting more customer feedback, and reacting to the feedback.
  • Stay on top and avoid the middle ground by excelling in one of three dimensions: 
    1. Product leadership (e.g., Apple)
    2. Customer intimacy (e.g., USAA)
    3. Operational efficiency (e.g., Southwest Airlines)

To the investment point above, I was disappointed, although not terribly surprised, to hear the results of a Gartner study revealing that while 95% of firms survey customers to get feedback, a paltry 10% do anything with that feedback.

Ed also talked about the large numbers of companies creating executive level positions focused on customer experience (e.g., VP of Customer Experience). Unlike some industry pundits who espouse Customer Experience Officer C-level positions, I was happy (because it aligns with my own view) to hear Ed indicate that, in his experience, he typically sees this position reporting to the CMO. Is the CXP executive a fad role? “No,” says Ed, “if European companies are adopting it, it couldn’t just be a fad started in California” (this elicited another chuckle from me).

Finally, I was happy to hear Ed fire a few bullets at NetPromoter (NPS) saying (as I have also said) that the metric isn’t a silver bullet, that more than one question is necessary, and NPS doesn’t help companies with causal analysis. He further indicated that NPS is useful in some industries some of the time, but not in all channels, and isn’t a great metric across all company types (e.g., B2B firms). The best use of NPV? Give to your board of directors, but don’t stop analyzing and measuring lots of other things.

Net Promoter Score is not a customer metric October 31, 2007

Posted by Elana Anderson in Customer Analytics, Customer Experience, Database Marketing, Marketing, Marketing Strategy, Marketing Technology.
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Did the title attract your attention? Good! I’ve heard a lot of people talking about Net Promoter (NPS) as the “one metric” – the “killer metric” – that marketing needs to worry about. This concerns me!  I’m not here to bash NPS, there are others who are taking that on. As for me, I think Net Promoter is indeed a useful metric – primarily because it is so simple. And that simplicity is what has the marketing community falling head over heels over it. Well folks, let’s not go too gaga.

Why do I say NPS is not a customer metric? At an aggregate level, according to the research led by Fred Reichheld, a high NPS score correlates to business growth. But, aside from a segmentation of promoters, passives, and detractors, it doesn’t tell you much at an individual customer level. Most importantly, it doesn’t give you any insight into your customers’ needs, desires, and motivations or help you determine what to do or how to treat individual customers. Sure, you might think, “we need to turn the passives into promoters,” but how are you actually going to do that when what motivates one passive is completely different from what motivates another?

There is no killer metric

Sorry to say it, but there is no killer marketing metric. Yep, you need to take a balanced approach. You need value metrics to help evaluate the value and impact of marketing investment. You need operational metrics to help run the operation, diagnose issues, and improve efficiency. The way I’ve heard some executives talking lately, I fear they are focusing their marketing team solely on NPS and turning their businesses upside down to turn every customer into a “promoter.” My response? Pull back the throttle and apply a measure of basic business logic – you don’t want to end up with a lot of happy customers and an unprofitable business. If you review the details of what they have to say, this is certainly not what Reichheld and the folks at Satmetrix intended.

NPS, among others, can be a very useful gauge of the satisfaction and general well being of your customer base. But, it must be combined with other customer metrics (like retention, profitability, etc.) and insight (like life stage, attitudes, etc.) in order to effectively inform customer interactions. The bottom line? Business and marketing executives out there need to recognize that building an effective marketing measurement and customer analysis capability requires resources, focus, new skills (analytic and technical), and a lot of elbow grease.

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