Satisfied customers?

31 July 2014 | Tim Phillips

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Tim Phillips

Blog Author | Freelance writer


“The customer is truly always right,” says Jim Leach, VP of marketing at RagingWire Data Centers. “Customer feedback through NPS is fundamental to our business planning.”

“The customer is truly always right,” says Jim Leach, VP of marketing at RagingWire Data Centers. “Customer feedback through NPS is fundamental to our business planning.”

RagingWire is one of an increasing number of telecoms companies that measure what its customers think of it through the metric called Net Promoter Score, or NPS. At the end of 2012, it claimed the highest NPS (+59) in the whole data centre industry.

Customer satisfaction has been a long-term problem for many telecoms and technology companies. The American Customer Satisfaction Index, which tracks this for companies and sectors, shows that satisfaction with fixed-line providers is 5% lower than the national average for all companies and has been in long-term decline since the 1990s. ISPs and wireless providers have similarly bad numbers.

In the experience of Rob Markey, the head of Bain Consulting’s Customer Strategy & Marketing Practice, companies often ask too many questions – with the best intentions – and so measure their failures in detail without acting on them at board level.

“We all say we want actionable information,” he says. “But often that’s just a code for ‘too much detail’.”

Fans of NPS, which Markey helped devise in 2003, say it solves this problem. It is a one-number metric: you ask your customers or business partners how likely they would be to recommend you on a scale of 0 to 10. People who answer 9 or 10 are promoters, those who answer 6 or below are detractors, and you subtract the percentage of detractors from the percentage of promoters to get your NPS.

It has many advantages: the survey is quick to do, the score is easy to understand and can be built into a process of continuous improvement. Even though its job is to build and operate data centres, which seems light years away from the operations of companies like Lego and Chick-fil-A, Leach claims the number is a useful device for creating improvement at RagingWire.

The telecoms industry, however, is filled with companies using misguided applications of NPS. While NPS is successfully used in some B2B environments (RagingWire is an example), the exact question to ask is often a problem. Recommendation for a $10 million contract is not the same as for take-away chicken.

Bain Consulting recommends alternative questions, such as “how likely are you to continue to purchase from us?” or “how likely are you to recommend to colleagues that we do more of our business with you?” as more useful measures for B2B NPS implementations. Also, having a single number can lead to executives trying to move the number in the short term, rather than improve the business process – especially if a bonus is attached to it.

But by far the largest problem is that NPS, used by thousands of businesses worldwide, is often considered the outcome of, rather than the input to, a programme of improvement. Markey says he often sees his innovation being used, and wishes they had just asked him how to do it first. The biggest problem, he says, is that the measurement does not create an action.

“The same thing happened with six-sigma or re-engineering: people wish they could get strong just by measuring things, without closing the loop,” he explains. “No-one has ever become stronger simply by measuring the circumference of their biceps.”