What is NPS? Macquarie’s Customer Experience Journey & How NPS Changed Us

April 30 2015, by David Tudehope | Category: Group

Over the past twelve months, I have written several articles about the Net Promoter Score (NPS) and its impact on improving Macquarie Telecom’s customer service journey.

As mentioned in one of my earlier posts, our NPS journey started when I was reading the ground-breaking article “The Ultimate Question” by Fred Reichheld, published in the Harvard Business Review, that I stumbled across on a plane back to Sydney, Australia in 2003.

Like most companies, Macquarie had been doing annual customer surveys forever with the number of questions topping 50! The question the Net Promoter Score hinges on, “How likely is it that you would recommend our company to a friend or colleague?” just became another question in our extensive annual survey.

While we were intrigued with the simplicity of the NPS, we began only by adopting what we felt comfortable with. We received our just rewards – nothing. That’s when we decided to embrace NPS scores completely, even the parts we found uncomfortable – but we’ll get to our results a little bit later.

First….

What is a Net Promoter Score?

Net Promoter Score (NPS) is a loyalty metric developed by Fred Reichheld, Bain & Company and Satmetrix, used to measure the most important asset a company has – its customers. Put simply, a company asks its customers one question: Using a 0-10 scale, “How likely is it that you would recommend our company to your friends or colleagues?”.

In fact, a NPS can offer insight into the health of a company. If the net profits are coming from unhappy customers, or detractors, the company is positioned in a much more tenuous position than if the profits were coming from satisfied customers, or promoters. By nature, detractors will take their business to another company when given the opportunity to do so.

Building trusting relationships with customers can be a long process, depending on the type of industry your company competes in. Companies that hold monopoly positions in an industry should pay special attention to Net Promoter Scores. A negative NPS could hinder a company from growing into other markets where it might not have a monopoly and, over time, it could lose the ability to compete on their merits with other companies in the same industry.

Placing customer service on the back burner can manifest side effects in many other areas of your company, as well. A large base of unhappy customers can also lead to a demotivated workforce. Employees at companies with low Net Promoter Scores often lose interest in innovating and might even begin to feel poorly about how shabbily the company is treating its employees, ultimately leading to a sense of apathy toward their position at the company.

Not to mention that, in today’s tech saturated world, one negative voice can be magnified across social media networks. A general rule of thumb is that it takes five positive referrals to make up for the loss generated by one negative comment (Engaged Marketing Australia, 2016).

 

Watch the ‘What is NPS’ video produced by Macquarie Telecom Group

Macquarie Telecom Group explains about how they use Net Promoter Score (NPS) to improve customer experience - 'what is NPS' video

 

How do you calculate a Net Promoter Score?

The simplicity is magic.

As we said earlier, NPS is based on calculations in response to one simple question: On a scale from 0 to 10, “How likely is it that you would recommend our company/product/service to a friend or colleague?”. “Promoters” are customers that respond with a score of 9 or 10. These promoters are considered loyal customers with a high likelihood of purchasing further products without incentives and will likely offer spontaneous referrals to friends or colleagues. “Detractors” are customers that respond with a score from 0 to 6. Detractors are unhappy customers that are likely to cost a company more in customer service, tend to defect to other companies when given the chance, and might publically critique the company or its services.

To calculate a company’s Net Promoter Score, you simply subtract the percentage of customers that are detractors from the percentage of customers that are promoters. The score falls between -100 and +100. Any score over +50 is considered exceptional.

 

Thoughts Regarding Traditional Customer Satisfaction Measurements

1. Long surveys can dramatically drop response rates. Long surveys drive costs up to implement and analyse them while response rates drop.

2. Surveys can be intrusive and disruptive. If your company’s customer satisfaction survey reaches an unwieldy number of questions, are the people that choose to answer them really representative of your customer base?

3. Some surveys are marketing campaigns in disguise. And yes, your customers will know.

4. Companies don’t adequately acknowledge a customer’s response. Even when customers do respond to intrusive surveys, many companies fail to recognise their efforts, leaving them dissatisfied.

5. Employees don’t know how to take corrective action. Complex surveys rarely offer a clear path for improving customer satisfaction.

 

Our transformative story

Macquarie operates in the telecom industry that has 4 times the number of complaints to our Ombudsman as the banking industry! We decided to set Macquarie apart from the competition.

Here are the 5 things we did that made the difference:

1. We started by measuring the NPS at every significant customer touch point in a customer’s experience cycle with us. This is critical as it highlights how important all staff contact with the customer is to the customer experience. For example, we now do an NPS measure on how well we handle billing inquiries.

2. We focused on achieving a high 40-50% customer response rate to our survey invitations to ensure we could offer real-time feedback to employees so they could identify where to focus on improvements. Our experience is that nearly everyone wants to do their best and this real-time feedback loops allows the individual to make their own, self-directed changes.

3. We also decided to be completely transparent in communicating in real time the NPS results on screens placed throughout the office so that staff could see how they are performing relative to other team members, teams can compare how they perform relative to other teams, and departments with other departments. This harnesses the power of teams in motivating and helping their own underperforming members step up. You can’t even go to the bathroom without being reminded about NPS as you walk past one of the screens on the floor!

4. Celebrating individuals and teams with high Net Promoter Scores and great customer stories has been key to our success. We haven’t needed to single out any underperforming teams. Instead, pride and team pressure has done all the work for us.

5. We have changed staff hiring criteria to ensure they have a real aptitude for delivering customer service in a technical area.

While our story started slowly, NPS has transformed the customer experience we deliver. As published in our financial results last week, our NPS was +60 over the first half of FY16, which is up almost 50 points from when we started this journey a few years ago. In comparison, our competitors, Telstra Business and Optus Business, NPS falls in the single digits. We think that transparency is the best way to earning customers’ trust so we’ve made a decision to prominently display our NPS on our website.

The results Macquarie saw from an increase in NPS were astounding – and it didn’t only affect our customers’ experience. Now that’s there’s a clear metric to measure performance against, every staff member is working towards the same goal. This has led to an increase in collaboration among our team members and between departments. Frontline staff – like the team members at our revolutionary MacquarieHUB, – have better relationships with customers. In fact, the staff actively think of ways to go above and beyond for our customers. It’s been a truly exciting shift to watch happen in the daily lives of our employees and the response from our more engaged customer base.

The bottom line of engagement in any endeavour in life is a feeling that what you’re doing matters. According to a Gallup poll, employee engagement worldwide is at 13% (Gallup, 2013). Employees, from younger generations in particular, feel a need to believe that the company they’re working for and their position has meaning to it. You can see this play out very clearly with the Millennial generation’s desire to add value to a company doing extraordinary things.

Macquarie Telecom Group explains how Net Promoter Score (NPS) changed their business and improved customer experience

Figure 1 – Macquarie Telecom Group Net Promoter Score (NPS) trend analysis compared to customer retention, cross-sell and debtors (DS) between FY2013 and FY2017.

 

Thinking about implementing NPS?

Here Are Your First Steps:

1. Begin by committing to measuring your customers’ answer to the question, “How likely are you to recommend us?” for the first 6 to 12 months. During this time, make sure that you are capturing enough information to accurately portray your customer bases’ satisfaction ratings.

2. The next step is to focus on how your company manages customer experience. Identify problem areas, link the results to KPIs, and embed them into your employee’s job. This can be used as a good metric to know whether the initiative is working.

3. Get the executives on board. Have your top people using NPS in their communication and strategy to integrate it into the core of the company’s mission.

4. Finally, make it a company-wide metric of success. Like Macquarie found, it can be a great motivator across teams and departments.

 


David Tudehope

About the author.

David Tudehope is Chief Executive and founder of successful Australian telecom and IT company, Macquarie Telecom Group. He has guided the company's development to become a fully integrated publicly listed carrier; supplying voice, mobile, data networks, managed hosting and cloud computing solutions to business and government users in Australia, New Zealand and Asia.

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