NPS Loyalty Example from Sage
Posted by Jeffrey Henning on Thu, Jan 28, 2010
At the 2010 Clarabridge Customer Connections conference, Hal Bloom, vice president of market research for Sage, presented "Information is the Difference that Makes a Difference". Sage is an accounting software company with 14,500 employees, 27,000 resellers, 40,000 accountant partners and 6.1 million customers.
Sage has moved from traditional satisfaction research to loyalty research. Hal quoted Fred Reichheld, creator of the Net Promoter Score® (Fred's registered trademark): "The trick is to distinguish between a customer's satisfaction with a specific interaction, such as a call to customer service, and his or her loyalty to the overall relationship." Sage adopted Net Promoter five years ago.
Sage measures customer loyalty quarterly for 21 SMB brands. Loyalty research helps Sage focus attention on the right customers, helps teams increase efficiency, and makes customers the number-one marketing investment.
Hal describes the three NPS segments for Sage thusly:
- Promoters - "Loyal enthusiasts who buy and urge friends to buy."
- Passives - "Satisfied but enthusiastic customers who can be wooed by the competition."
- Detractors - "Unhappy customers trapped in a bad relationship."
Sage loyalty surveys always use a branching logic to follow up the likelihood to recommend question with a probing verbatim question. "We always ask why," Hal said. "Why did you rate us below 7? For passives [ratings of 7 & 8], what can we do next time to earn a 9 or 10? And, for promoters, what are we doing so well that you rated us a 9 or 10?" Carefully read the answers to these questions to learn the strengths and weaknesses of your organization and the opportunities for improvement.
Sage also works to link the scores and the behavior with other probing questions: "You said you would recommend us, how many times have you? We can relate it by the number of recommends: a promoter recommends ACT! [contact management software] 14 times a year; a passive recommends ACT! 5 times a year."
When it comes to interpreting the results, Hal said, "We tried very hard to tie Net Promoter to revenue; we can't tie the two. Many times a detractor is very profitable for us, but they spend so much that they are unhappy. We often get more revenue from a detractor than a passive." As a result, Sage will typically analyze promoters, passives and detractors using the following grid, placing customers on the grid by size:
The segments are labeled from A to F. Six teams are formed, one for each segment, with specific goals for the customers in that segment. For A customers, the goal is to keep them happy and grow the accounts. For D customers, grow the accounts to make them profitable. Each team will often do one-on-one interviews with its customers in order to improve: calling and talking directly to customers to explore what the issues are and to resolve those that can be resolved. Sage has moved 30% of detractors to promoters simply by having such calls; the customers are delighted that their survey responses were taken seriously. For other detractors, Sage works hard to be inquisitive, to be interested in the customers as individual accounts, and strives to make them feel that they made a good decision buying from Sage.
One practice that Sage implements is in recognition that new users want the vendor to help them. "The Welcome Team is an excellent complement to the Discovery Team. The Welcome Team call boosts NPS 16% on average for that customer and that boost lasts."
Sometimes you have to fire a customer. If Segment F customers can't be made happy or profitable, maybe Sage is not the right fit for their business. Perhaps expectations were set wrong, there was an issue in the sales cycle, or the customer is unhappy with a specific employee. Hal advises you to listen to the customer and ask for their suggestions. "Their solution might be better than yours. It might take less work than you think." Do what you can to make those detractors promoters.
Business software companies typically have Net Promoter Scores in the range of 10% to 20%. Sage Software has an NPS score of 18% overall across all its brands. For Sage, NPS is an opportunity to understand where the needle is and "to move the needle": to measure the right things, to use categorized unstructured data for opportunities to improve, to take action and improve customer satisfaction and loyalty. Truly, information is the difference that makes a difference.