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BUILDING A CUSTOMER-CENTRIC CULTURE: INSPIRING EMPLOYEES TO

DELIGHT CUSTOMERS

Bain & Company, Fred Reichheld

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 2

Apple Retail Mission:Enrich the Lives of Customers and Employees (create promoters)

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 3

Closing the Loop: Echoing Enterprise

Supervisor Customer

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 4

A-B Testing

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 5

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 6

6 6

NPS Drives Profitable Growth

0.0

0.5

1.0

1.5

2.0

$2.5M

-20 0 20 40 60

NPS score (2009)

Average sales per unit (U.S. 2009)

* *

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Second-mile Service

• Manager works front of store

• Help mothers with small children

• Umbrellas for rainy day

• Outdoor greeter at drive-through line

• Refresh Drinks

• Free celebration dinners for best customers

• Daddy date nights

• Valentine Dinner

• Alert for people who appear sad/lonely

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LEGO

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 9

American Express-Profitable WOW

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 10

AirBNB

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 11

Tuft & Needle

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 12

How Tuft & Needle gathers NPS feedback:

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 13

Graham Weston: Chairman & Founder

Why is this so

hard?

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 14

The most common pitfalls

• Focus on the SCORE

• Unreliable score

• Linking incentives to customer feedback prematurely

• Waiting too long to establish the financial linkage

• Failing to build timely closed-loop feedback, learning and

action process

• Failure to integrate NPS into the existing decision-making

process/rhythms

• Fix detractors, but ignore innovations to delight promoters

• No system developed for ENPS

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 15 15

Johns Manville 3-12-07

“When we want your opinion, we’ll send you a survey!”

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 16

The most common pitfalls

• Focus on the SCORE

• Unreliable score

• Linking incentives to customer feedback prematurely

• Waiting too long to establish the financial linkage

• Failing to build timely closed-loop feedback, learning and

action process

• Failure to integrate NPS into the existing decision-making

process/rhythms

• Fix detractors, but ignore innovations to delight promoters

• No system developed for ENPS

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NPS ? (80% Ignore )

NPS -40%

Fixating on Unreliable Score?

NPS 50% (20% Respond)

True NPS -22% Ignores

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For B2B, it is crucial to consider WHO is providing feedback and focus on individuals

Influence

Decide

Use

Passive

Promoter

Detractor

NPS = 62%1

= 40%2

= -10% Decide & Influence 1 Response rate = 47%

2 Response rate = 55% ?

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 19

The most common pitfalls

• Focus on the SCORE

• Unreliable score

• Linking incentives to customer feedback prematurely

• Waiting too long to establish the financial linkage

• Failing to build timely closed-loop feedback, learning and

action process

• Failure to integrate NPS into the existing decision-making

process/rhythms

• Fix detractors, but ignore innovations to delight promoters

• No system developed for ENPS

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 20

Kmart – Sign in Window about NPS

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 21

The most common pitfalls

• Focus on the SCORE

• Unreliable score

• Linking incentives to customer feedback prematurely

• Waiting too long to establish the financial linkage

• Failing to build timely closed-loop feedback, learning and

action process

• Failure to integrate NPS into the existing decision-making

process/rhythms

• Fix detractors, but ignore innovations to delight promoters

• No system developed for ENPS

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Converting a passive to a promoter increases customer value 3.4x (Retail Banking)

Source: Bain Financial Services NPS Survey 2008 (N=4,327)

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 23

The most common pitfalls

• Focus on the SCORE

• Unreliable score

• Linking incentives to customer feedback prematurely

• Waiting too long to establish the financial linkage

• Failing to build timely closed-loop feedback, learning and

action process

• Failure to integrate NPS into the existing decision-making

process/rhythms

• Fix detractors, but ignore innovations to delight promoters

• No system developed for ENPS

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 24

The most common pitfalls

• Focus on the SCORE

• Unreliable score

• Linking incentives to customer feedback prematurely

• Waiting too long to establish the financial linkage

• Failing to build timely closed-loop feedback, learning and

action process

• Failure to integrate NPS into the existing decision-making

process/rhythms

• Fix detractors, but ignore innovations to delight promoters

• No system developed for ENPS

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 25

Employees who deal directly with the customer are among the least engaged

Employee Net Promoter Score

Source: Netsurvey/Bain analysis, September 2012 (n=130,000+)

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 26

Employee engagement drops with each organizational layer farther from the CEO

Organizational Layer

(0 = most senior executive team)

80%

60

40

20

0

-20

62

39 31

16 15

4

-2 -5

0 1 2 3 4 5 6 7

Employee Net Promoter Score

Notes: Calculated from Question “On a scale of 0 to 10, how likely are you to recommend your company as a place to work?” Source: Netsurvey/Bain analysis, September 2012 (n=130,000+)

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Really?

Employee NPS 0 Customer NPS 75

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How does it feel when you receive a “10” from a customer?

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Team matters

Employee

Customer

Team Support

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The rhythm of progress

Scores/Verbatim Closed-Loop

10-Wall/Recognition

Daily Shift Huddles Agile Scrums

Stack Ranking Supervisor Review Social Media Pulse

Stack Ranking Executive Review Evaluate Pilots

Recognition Awards Policy/Process Reviews

Follow-me-homes Investment Priorities

Top Down Research Engagement Survey

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The rhythm of progress

Scores/Verbatim Closed-Loop

10-Wall/Recognition

Daily Shift Huddles Agile Scrums

Stack Ranking Supervisor Review Social Media Pulse

Stack Ranking Executive Review Evaluate Pilots

Recognition Awards Policy/Process Reviews

Follow-me-homes Investment Priorities

Top Down Research Engagement Survey

HuddleUP

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Bain: A Great Place to Work

Employees’ choice 5 YEARS IN A

ROW

#1 Culture

#1 Satisfaction

#1 Training

#1 Best Firm to Work For

2012 2012

2003 2004 2005 2006 2007

2008 2009

2010 2011

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Great leaders

Great leaders don’t give teams

the right answers...

they ensure teams ask the right questions

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HuddleUp can sparq* the right conversations *(Short Poll Asking the Right Questions)

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Right employees with the right support Safe environment, effective organization, right tools and training, valued fairly

Sustained leadership commitment Strategic priority; behaviors that inspire customer and employee advocacy

Net Promoter SYSTEM framework

Feedback, learning and improvement

Individual learning and connection with

customers, autonomy

Inner Loop Outer Loop Root cause analysis,

prioritization & implementation of

structural improvements

Huddle Team problem-solving, issue escalation, innovation

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Huddle Best Practices

• Focus on Customer • Prepare in advance (review previous huddle priorities/progress) • Everybody participates • Clear objectives/short • Rotate Huddle Captain • Team must solve most issues (not leader) • But, when exec assistance required, leader clears the path • Everyone leaves with clear priority action • Recognition for team contributions • Culture of Loving Feedback

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Johns Manville 3-12-07

Enterprise Discovers THE VOTE

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Multiple Use Cases

• Drive Customer-Centric Culture/Progress

• I am happy with our team’s progress at delighting customers (0-10)

• What are you hearing from customers that our execs need to know [employee voice replaces need for customer surveys]

• What change should our team make that would most accelerate progress? (text)

• What change outside team’s control would most help us delight customers?

• Leadership development/team health

• I would recommend my team leader as a person to work for (0-10)

• Most important change our leader could make to improve team results (text)

• Rate team leader progress (list of priority development goals)

• What is holding our team back from operating at our full potential?

• Change management

• I am happy with my team’s progress on XXX (0-10)

• XXX is a top priority for my team leader (0-10)

• What single change would most accelerate progress? (text)

• What individual action will you take this week to support XXX?

• Recognize the team member who most helped team progress on XXX (list

• Culture/Values

• Which value does our team do the best job living? (select from list)

• Recognize team member who best embodies that value with specific example (list)

• On which value does our team have most room for improvement? (list)

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“Whole New Way of Thinking About Your Business”

Golden Rule

1) Repeat 2) Buy More 3) Refer 4) Feedback 5) Cut Costs

0-6

7-8

9-10

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Personal Balance Sheet

NPS 0 NPS 75

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Personal Balance Sheet

NPS 0

Love you!

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Angels

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Personal Balance Sheet

NPS 0

Jerk!

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Aaron James: Harvard Phd; Professor of Philosophy University of California, Irvine

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NPS: Building Your Balance Sheet

Employee NPS 0 Customer NPS 75

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Creating a Better World with NPS

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Net Promoter: Greatness Positioning System

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“The first number we review at every board meeting is our customer scores.”

The Future of NPS

Andy Taylor, CEO Enterprise Rent-A-Car

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Rating the customer

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netpromotersystem.com

• Videos

• Quiz

• Discussion Guide

• Blogs

• Educational Materials

• Newsletter

• Speaking/Seminars

• Forums

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Humana core

It says: Thou shalt recommend Me to your friends.