I am pleased to post an article written by John Upton, CEO of MetricsLS. The thinking it sets out coupled with a recent comment from Steve Easterbrook, CEO McDonalds, reinforced by Harvard Business Review’s famous Service-Profit Chain (brought to life in many successful companies around the world) makes it very worth reading.
Steve Easterbrook: CEO, McDonalds
“.....we had a really good understanding of who our customers were, what their needs were.”
QSR magazine, 2018
Article by John Upton
Let’s be clear from the start, we like metrics and KPIs and how they drive business performance. Many KPIs are very good and play a positive role in helping companies do a better job for their customers and their shareholders.
One of the most popular and impactful metrics is Net Promoter Score (NPS). NPS is popular because it’s so easy to understand and measure. That’s also led to it being used across multiple businesses as the key customer success metric, both in daily operations and business planning.
Use with care
Many companies tend to naturally rely on the NPS score alone because they don’t have enough time (or resources) to digest all the accompanying customer comments they get. As a result, very few, if any, of the words actually shared by customers (the verbatims) get to see the light of day. I know from my own experience in fast-growing restaurant businesses just how hard it is to find the time to look behind the headline metrics.
However, by not taking the time to read what customers say can significantly increase the risk to your future success. By way of example, one of my colleagues recently told me about a well-known company he’d done some work with. Headline KPIs were all trending positively, NPS all good, sales were growing etc. However, when he reviewed the actual customer verbatims, 12.5% of customers said that they wouldn’t come back, or were thinking of not coming back………
Just take a moment to digest that. What if 12.5% of your customers told you that they weren’t coming back? When did you last look at your customer verbatims to check what they’re saying? Stats like this certainly sharpen the mind about making time to look behind the headline score.
Customers’ words and needs…
There’s a further challenge with the increasing over-reliance on the NPS score.
The score alone won’t tell you if you are meeting your customers’ needs, and more importantly which ones you are not meeting. A need can be defined as “something that must be there as without it the whole experience, service and proposition fails.” You therefore either meet a need or you don’t – it’s a binary equation to address; it’s not a % or score to incrementally improve.
As a result, meeting customers’ needs has to be the fundamental deliverable and focus for your business. If you don’t consistently meet needs, due their binary nature, you place your business (and its growth) at risk. Relying on improving your NPS score alone is not enough.
But don’t just take our word for it as to the importance of meeting needs. Take a look at Harvard Business Review’s famous article about the Service-Profit Chain (SPC) and which has been brought to life in many successful companies around the world.
The SPC tells us that revenue and profit growth is built on customer satisfaction. And customer satisfaction is based, in turn, on delivering a service/product that is designed and delivered to “meet targeted customers’ needs”. One of my colleague’s former employers, John Lewis, is a great example of a business that’s been getting this right for decades.
NPS + Needs
It’s not that we don’t like NPS – we do! NPS has made, and continues to make, a real and positive difference to customer service all over world. However, it should be used as a kind of snapshot as to how you’re doing in relation to your customers rather than anything deeper. And we must force ourselves to reduce our reliance on the NPS score alone and to read more of our customers’ words. Just as Fred Reichheld, the creator of NPS, told us to.
To get the best results for your business, NPS has to be complemented by a ‘needs centric’ approach that provides a comprehensive answer to this question: How well are we meeting our customers’ needs on a day-by-day, week-by-week and month-by-month basis?
If you’re not 100% clear on whether or not you’re meeting your customers’ needs (or even what they are), how can you make the best strategic decisions for your business? Getting more of these decisions right, and by satisfying more customers’ needs, you will grow your revenue faster and outperform your competition.
After all, think about what NPS actually asks. How can a customer give you a good recommendation, or keep buying from you, if their basic needs are not being met?
John Upton chairs a number of restaurant brands and works with iCustomer, using Artificial Intelligence to help businesses identify and meet their customers’ needs (www.icustomer.co.uk).