jeffrey henning - festival of new mr - 2014

The Fes'val of NewMR 2014 would not be possible without our sponsors. Thanks to:

Our Pla'num Sponsor for 2014

Silver Sponsors

Session Sponsors

Media Partner Fes'val Supporters

•  Schlesinger Associates •  GMI •  krea

The Fes'val of 2014

Jeffrey Henning, Researchscape International, USA Festival of NewMR, December 2014

Embrace, Extend, Ex'nguish NPS Driving Revenue with BeKer Loyalty Measures

2014 Pla9num Sponsor

Jeffrey Henning President, Researchscape Interna'onal USA


Embrace!


Embrace?!

My love affair with NPS:

•  Very easy to implement

•  Simple to explain

•  Nega9ve scores can be improved


How likely is it that you would recommend [brand] to a friend or colleague?

Not Likely at All

Neutral Extremely Likely

Image credit: hGp://blogs.sas.com/content/customeranaly9cs/files/2013/06/B-‐Solis-‐Net-‐Promoters.jpg


Follow-‐up Ques'on: “Why?!”

Ra'ng Segment Why?

0 Detractor “Because I don't give out recommenda9on unless under great or poor service instances.”

6 Passive “I have had good experiences with them in the past and my friends probably will too.”

8 Passive “They have the best cell coverage of all the networks by far. I get service in many areas that I did not before.”

8 Passive “Absolutely! I’ve shown my new phone off to a bunch of friends.”

10 Promoter “I don't have any problem with the service.”


Dear Net Promoter Score,

It’s not you. It’s me. I mistook infatuation for love, and I am sorry if I hurt you. Wait a minute – it is you...


Noise Masks the Signal

•  11-‐point scale has the lowest predic've value of any scale tested (Schneider, Berent, Thomas, Krosnick; 2008)

•  “Sa'sfac'on” and “liking” are more predic've of recommenda'ons (diGo)

•  Not predic've of loyalty (Keiningham, Cooil, Aksoy, Andreassen, Weiner; 2007)

•  Segments are counter to how ques'on is asked and not differen'ated sta's'cally (Roberts; 2007)

•  Less accurate than mul'ple ques'ons (Hill, Roche, Allen; 2007)

•  Less accurate than ACSI (Keiningham, Cooil, Andreassen, Aksoy, Weiner; 2007)

hGp://bit.ly/NPSsucks


Not the Ul#mate Ques'on!

NOT


Backfire

•  “A natural defense mechanism to avoid cogni9ve dissonance” – Brendan Nyhan, University of Michigan

•  Confidence in knowledge inversely correlated to actual knowledge – James Kuklinksi, University of Illinois

•  “Facts don’t have the power to change our minds...

•  “Like an underpowered an9bio9c, facts make misinforma9on stronger...

•  “The more the par9cipant cared about the topic, the stronger the backfire.” – Joe Keohane

hGp://bit.ly/FactsBackfire


Given that NPS Has Its Promoters, Too...

What Should YOU Do?


Steal a Page From Microsob...

Embrace Extend Ex9nguish

“Embrace, extend and ex9nguish.” – Paul Maritz, Microsoj vice president, describing in 1995 Microsoj’s strategy towards Netscape, Java, and the Internet




•  <marquee> •  Ac9veX •  VBScript •  Java incompa9bili9es •  Display Office documents




0%

20%

40%

60%

80%

100%

1995 1996 1997 1998 1999 2000 2001 2002

Internet Explorer Netscape Others


Applying to NPS


•  “Absolutely we’ll include NPS in this survey!”


Applying to NPS


•  “And so that we can put the NPS results in context, we’ll ask other ques9ons about sa9sfac9on, loyalty, and customer experience.”


But Let’s Not Be Just Like Microsob


Let’s look at proprietary measures for inspira9on but modernize them and make them open:

� ACSI � Forrester Cxi � BOB

� ECSI � Temkin � Apostle

� NCSB � TNS � Vovici


Survey Authors Ignore Research Into Scales

•  Fully labeled scales have greater reliability and validity and are preferred by respondents

•  5-‐point scales are best for unipolar measurement (e.g., 0-‐100%)

•  7-‐point scales are best for bipolar measurement (e.g., end points are opposites)

•  Avoid numeric values, which alter the meaning of labels and confuse respondents

•  List nega9ve choices first for a slight bias against the most posi9ve choice

•  Where possible use standard scales rather than write your own

Source: Krosnick, J. A., & Fabrigar, L. R. (1997). “Designing ra9ng scales for effec9ve measurement in surveys.”


Survey Authors Ignore Research Into Scales

•  Fully labeled scales have greater reliability and validity and are preferred by respondents

•  5-‐point scales are best for unipolar measurement (e.g., 0-‐100%)

•  7-‐point scales are best for bipolar measurement (e.g., end points are opposites)

•  Avoid numeric values, which alter the meaning of labels and confuse respondents

•  List nega9ve choices first for a slight bias against the most posi9ve choice

•  Where possible use standard scales rather than write your own

Source: Krosnick, J. A., & Fabrigar, L. R. (1997). “Designing ra9ng scales for effec9ve measurement in surveys.”

For purposes of external benchmarking, use the benchmark’s scale, even if subop'mal


Applying to NPS


(When we’re done, you’ll see that these other methods provide more informa9on.)


The ACSI Score CUSTOMER

SATISFACTION (ACSI)

Sa'sfac'on Expecta'ons

Comparison with Ideal


85 Personal Care & Cleaning

84 Credit Unions Pet Food

83 Breweries Electronics (TV/VCR/DVD) Food Manufacturing Sob Drinks

82 Automobiles Express Delivery Internet Retail

81 Ambulatory Care Property & Casualty Insur.

80 Apparel Full Service Restaurants Search Engines Major Appliances

79 Athle'c Shoes

78 CigareKes Health Stores Life Insurance Limited Service Restaurants

76 Specialty Retail Stores Supermarkets

75 Banks Hospitals Hotels Internet News

74 Dept. & Discount Stores Energy U'li'es Gasoline Sta'ons Personal Computers

73 Fixed Line Telephone Health Insurance

71 Cellular Telephones Computer Sobware

70 Mo'on Pictures

69 Network/Cable TV News

68 Wireless Telephone

67 Broadcas'ng TV News

64 Cable & Satellite TV Newspapers

62 Airlines

ACSI Score

Source: TheACSI.org


One Method of Calcula'ng Score

•  Actual formula is proprietary •  Weights vary by industry and even by company •  Real world validity

–  Macroeconomically, ACSI has been shown to correlate to growth in GDP and PCE (Personal Consump9on Expenditure)

–  Microeconomically, ASCI predicts stock market performance for indices as well as individual stocks, and even correlates to CEO bonuses!

–  Source: "The Effect of Compe99on on the Contrac9ng Use of Customer Sa9sfac9on: Evidence from the American Customer Sa9sfac9on Index (ACSI)", Clara Xiaoling Chen, Ella Mae Matsumura, Jae Yong Shin, 2008


The ACSI Model – 15 Key Ques'ons

CUSTOMER EXPECTATIONS

Reliability Overall

Customiza'on

PERCEIVED OVERALL QUALITY

Reliability Overall

Customiza'on PERCEIVED VALUE

Price Given Quality

Quality Given Price

CUSTOMER LOYALTY

Repurchase Likelihood Price Decrease

Price Increase

CUSTOMER SATISFACTION

(ACSI)



CUSTOMER COMPLAINTS

Complaints Behavior


But The ACSI Model Is Showing Its Age


•  20 years old

•  Research shows many aspects are redundant or have liGle impact

•  Doesn’t follow ra9ng scale best prac9ces

•  Doesn’t incorporate new measures of loyalty or customer experience


Customer Expecta'ons Diminish In Importance Over Time*

*Source: "The evolu9on and future of na9onal customer sa9sfac9on index models”; Johnson, Gustafsson, Andreassen, Cha; 2000.

CUSTOMER EXPECTATIONS

Reliability Overall

Customiza'on


Reliability Overall


Price Given Quality

Quality Given Price

CUSTOMER LOYALTY

Repurchase Likelihood Price Decrease Price Increase




CUSTOMER COMPLAINTS

Complaints Behavior


Complaint Response Drives Sa'sfac'on Not a Consequence of Dissa'sfac'on*



Reliability Overall


Price Given Quality

Quality Given Price

CUSTOMER LOYALTY


Price Increase




CUSTOMER COMPLAINTS

Complaints Behavior


Quality and Value Overlap*



Reliability Overall


Price Given Quality

Quality Given Price

CUSTOMER LOYALTY


Price Increase





NCSB Adds Price Comparisons + Quality Drivers That Vary by Industry*


INDUSTRY-‐ SPECIFIC QUALITY DRIVERS

X Z

Y

PRICE COMPARISONS

To Expecta'ons To Quality

To Compe'tors CUSTOMER LOYALTY

Repurchase Likelihood

Price Decrease

Price Increase





NCSB’s SERVQUAL/RATER Quality Drivers Had LiKle Effect*

INDUSTRY-‐ SPECIFIC QUALITY DRIVERS

X Z

Y

PRICE COMPARISONS




Price Decrease

Price Increase






What Can We Replace The Quality Drivers With?

PRICE COMPARISONS




Price Decrease

Price Increase





Evolu'on of Customer Research

Customer Sa9sfac9on (1980s)

Customer Loyalty (1990s)

Customer Experience (2000s)


Forrester CXi (Customer Experience Index)

Forrester CXi components

1.   Usefulness

2.   Ease of Use

3.   Enjoyability

•  Although only launched in 2007, Forrester’s CXi (previously CxPi) has emerged as an important new index

•  CxPi = (% of customers with a good experience)-‐(% with bad experience) for each ques9on

•  CXi = (average()-‐1)/4*100 •  Public results for 113 organiza9ons in

12 industries •  Watermark Consul9ng correlates it to

stock market performance: •  Stock of CXi leaders appreciated

23% from 2007 to 2011 •  Stock of CXi laggards fell 46%


CXi Correlates To Loyalty

Source: Bruce Temkin, Experience Ma5ers blog


CUSTOMER EXPERIENCE

Effec'veness Enjoyability

Ease

CX Ques'on Wording

Forrester CXi Temkin Experience Ra'ngs

Generic Wording

Usefulness/ Func9onal

Thinking about your recent interac9ons with these firms, how effec9ve were they at mee9ng your needs?

Thinking of your most recent interac9ons with each of these companies, to what degree were you able to accomplish what you wanted to do?

How effec9vely did our organiza9on meet your needs?

Ease/ Accessible

Thinking about your recent interac9ons with these firms, how easy was it to work with these firms?

Thinking of your most recent interac9ons with each of these companies, how easy was it interact with the company?

How easy was it to work with our organiza9on?

Enjoyability/ Emo9onal

Thinking about your recent interac9ons with these firms, how enjoyable were the interac9ons?

Thinking of your most recent interac9ons with each of these companies, how did you feel about those interac9ons?

How enjoyable were your interac9ons with our organiza9on?


Integra'ng Customer Experience Measurement into Our Model

CUSTOMER EXPERIENCE


Ease

PRICE COMPARISONS




Price Decrease

Price Increase




Source: Researchscape Interna9onal


ACSI Loyalty

•  “The next 9me you are going to purchase a [category], how likely is it that it will be a [brand] again?”

•  “Let us imagine that [brand] raises its prices. If other companies remain at the same prices, how much can [brand] raise its price before you definitely would not choose it the next 9me you purchase a [category]?” [0% to 25%]

•  “Let us now imagine that [brand] lowers its prices. If other companies remain at the same prices, how much must [brand] lower its price before you would definitely choose it the next 9me you purchase a [category]?” [0% to 25%]

CUSTOMER LOYALTY


Price Decrease

Price Increase


CUSTOMER LOYALTY


Reluctance to Switch

Recommend Likelihood

Common Loyalty Indices ACSI ECSI NCSB Forr-‐

ester TNS B2B

BOB Adv.

BOB Prch.

Price increase tolerance X

Price decrease recep9vity X

Reluctance to switch X

Likelihood to choose again for the first 9me X

Likelihood to repurchase X X X X X X

Likelihood to increase purchase size X X

Likelihood to increase purchase frequency X

Likelihood to purchase different products X

Likelihood to recommend X X X X X

Likelihood to speak favorably X

Compe99ve advantage X

Overall sa9sfac9on X X


CESL Model (Customer Experience/Sa'sfac'on/Loyalty)

CUSTOMER EXPERIENCE


Ease

PRICE COMPARISONS











CESL’s 12+ Ques'ons 1.  How likely is it that you would recommend Acme to a friend or colleague? 2.  Why? 3.  Thinking about your recent interac9ons with Acme... How effec9ve was Acme

at mee9ng your needs? 4.  How easy was it work with Acme? 5.  How enjoyable were your interac9ons with Acme? 6.  What is your overall sa9sfac9on with Acme? 7.  To what extent has Acme met your expecta9ons? 8.  How well did Acme services compare with the ideal? 9.  Given your ini9al expecta9ons, how you would rate the price that you pay for

Acme services? 10.  Given the quality of our services, how would you rate the price that you pay

for them? 11.  Given compe9tors' prices, how would you rate the price that you pay for

Acme services? 12.  How reluctant are you to switch your business from Acme? 13.  How likely are you to repurchase from Acme?


1. How likely is it that you would recommend Acme to a friend or colleague? > 0 -‐ Not likely at all > 1 > 2 > 3 > 4 > 5 -‐ Neutral > 6 > 7 > 8 > 9 > 10 -‐ Extremely likely 2. Why? >> ... 12. How reluctant are you to switch your business from Acme? > Not at all reluctant > Slightly reluctant > Moderately reluctant > Very reluctant > Completely reluctant 13. How likely are you to repurchase from Acme? > Not at all likely > Slightly likely > Moderately likely > Very likely > Completely likely

CUSTOMER LOYALTY





3. Thinking about your recent interac9ons with Acme...How effec9ve was Acme at mee9ng your needs? > Not at all effec9ve > Slightly effec9ve > Moderately effec9ve > Very effec9ve > Extremely effec9ve 4. How easy was it work with Acme? > Not at all easy > Slightly easy > Moderately easy > Very easy > Extremely easy 5. How enjoyable were your interac9ons with Acme? > Not at all enjoyable > Slightly enjoyable > Moderately enjoyable > Very enjoyable > Extremely enjoyable

CUSTOMER EXPERIENCE


Ease


6. What is your overall sa9sfac9on with Acme? > Not at all sa9sfied > Slightly sa9sfied > Moderately sa9sfied > Very sa9sfied > Completely sa9sfied 7. To what extent has Acme met your expecta9ons? > Not at all > Slightly > Moderately > Very much > Completely 8. How well did Acme services compare with the ideal? > Not at all close to the ideal > Slightly close > Moderately close > Very close > Extremely close to the ideal





9. Given your ini9al expecta9ons, how you would rate the price that you pay for Acme services? > Very poor given your expecta9ons > Poor given your expecta9ons > Average given your expecta9ons > Good given your expecta9ons > Excellent given your expecta9ons 10. Given the quality of our services, how would you rate the price that you pay for them? > Very poor given the quality > Poor given the quality > Average given the quality > Good given the quality > Excellent given the quality 11. Given compe9tors' prices, how would you rate the price that you pay for Acme services? > Very poor given compe9tors' prices > Poor given compe9tors' prices > Average given compe9tors' prices > Good given compe9tors' prices > Excellent given compe9tors' prices

PRICE COMPARISONS

To Expecta'ons To Compe'tors

To Quality


The Apostle Model

Apostle Hostage

Detractor

Mercenary

Low Medium High

Customer Sa'sfac'on

High Medium

Low

Customer Loyalty

•  Jones and Sasser pioneered their own loyalty segmenta9on

•  For sa9sfac9on scale, use CSAT ques9on or ACSI’s 3 ques9ons

•  For loyalty, use likelihood to repurchase or a loyalty index

•  “Apostle Model” a misnomer: top quadrant are really “Loyalists”


TNS Loyalty Model

Champion Cap've

Rebel

Moral Supporter

Low Medium High

Customer Advocacy

High Medium

Low

Customer Loyalty

•  Can be used in addi9on to the Apostle Model

•  Again, for loyalty, use a single ques9on or an index

•  TNS segments into equal quadrants; best results by keeping Apostle Model’s smaller top quadrant


Vovici Champion Model

None Completely

Customer Advocacy

Completely

None

Customer Loyalty

•  Inspired by the TNS CLI model

•  Goal: Turn the Bench into Starters, Players into All-‐Stars and All-‐Stars into Champions

Champions

All-‐Stars

Starters

The Bench


Correlate Results Across 22 CESL Measures To Real-‐World Behavior*

•  12 closed-‐ended ques9ons •  4 main indexes

•  1 index of indexes (all 12 closed ques9ons) •  1 custom index (CSAT/repurchase/recommend)

•  4 segmenta9on models (NPS, Apostle Model, TNS Loyalty Model, Vovici Champion Model)

*Renewal, repurchase, upsell...


Case Study •  Wireless service provider

•  NPS of -‐8% •  Seeking to improve reten9on

•  Correlated loyalty metrics against subsequent renewal (next 30 to 60 days)


Case Study Rank Metric Correl

a'on

1 Customer Loyalty Index 0.762

2 CSAT/Loyalty Index 0.751

3 Vovici Champion Model 0.749

4 Likelihood to Repurchase 0.730

5 Likelihood to Recommend 0.728

6 Index of Indices 0.685

7 CSAT 0.639

8 Apostle Model 0.604

9 TNS Loyalty Model 0.590

10 Reluctance to Switch 0.585

18 NPS 0.502

22 Ease 0.402

•  Wireless service provider

•  NPS of -‐8% •  Seeking to improve reten9on

•  Correlated loyalty metrics against subsequent renewal (next 30 to 60 days)


Correla'on of CESL Indices to Renewal

CUSTOMER EXPERIENCE


Ease

PRICE COMPARISONS









.762

.549

.534

.624


.685


Simplify CESL for Subsequent Fielding

CUSTOMER EXPERIENCE


Ease

PRICE COMPARISONS

To Expecta9ons To Quality

To Compe9tors CUSTOMER LOYALTY





Sa'sfac'on Expecta9ons


.762

.566

.528

.639


.738


Embrace, Extend, Ex'nguish


Streamlined instrument

Champion Model segmenta9on for driver analysis


CESL Pros & Cons

Strengths

•  Synthesis of best prac9ces from many vendors

•  4 possible segmenta9ons

•  22 different measures to test

•  ACSI and CXi correlate to stock market performance

•  Free, and public domain

Weaknesses

•  12+ ques9ons

•  Not independently, academically validated

•  Benchmarks to ACSI and CXi aren’t pure comparisons


Different Results for Different Cases

Measure Different Real-‐World Behaviors •  Small installed base, looking

to win lots of new customers

•  Medium installed base with low spend, looking to increase amount spent by customers

•  Large, stable market share, looking to maintain customer base

Different Measures Win for Different Companies •  Customer Loyalty Index •  CSAT/Loyalty •  Likelihood to Recommend

Winning Segmenta9on: •  TNS Loyalty Model •  Apostle Model •  Vovici Champion Model


Special Thanks

•  Bain & Company (NPS)

•  Business Over Broadway (ALI, PLI) •  CFI Group (ACSI) •  Forrester Research (CXI, CLI) •  Rela9on Monitor (ECSI)

•  Temkin Group (Experience Ra9ngs)

•  TNS (CLI, Loyalty Model)

•  University of Michigan (ACSI, NCSB)

•  Verint (Vovici Champion Model)


THANK YOU

2014 Pla9num Sponsor

Jeffrey Henning President, Researchscape Interna'onal USA

The Fes'val of NewMR 2014 would not be possible without our sponsors. Thanks to:

Our Pla'num Sponsor for 2014

Silver Sponsors

Session Sponsors

Media Partner Fes'val Supporters

•  Schlesinger Associates •  GMI •  krea

The Fes'val of 2014


Embrace, Extend, Ex'nguish NPS Driving Revenue with BeKer Loyalty

Measures

Jeffrey Henning President Researchscape Interna9onal [email protected] @jhenning Work: 888-‐983-‐1675 Mobile: 617-‐620-‐6142

jeffrey henning - festival of new mr - 2014

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