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Angry and Bored? You Must Be a Customer

Finding out what customers really think is a crucial first step toward an improved bottom line. New technology may help.

GE Capital Solutions has high expectations for its customers: it wants them to be so pleased with the company that they sing its praises to others. So the financial-services unit of General Electric sends out a brief survey that asks, ultimately, “Are you likely to recommend us to friends and colleagues?” The difference between the yeas and the nays is a metric dubbed the Net Promoter Score (NPS), and it’s something the company takes very seriously.

“We would lose business and never know why,” says Trevor Schauenberg, vice president and CFO at GE Capital Solutions. “We had lots of metrics, but we weren’t really very good at measuring customers. NPS gives us solid feedback on customer delight and loyalty.”

NPS was developed by Fred Reichheld, founder of the customer-loyalty practice at consultancy Bain & Co. and author of the book The Ultimate Question. Although theologians and philosophers may beg to differ, the “ultimate question” turns out to be (with apologies to Sally Field): “Do you like me? Do you really like me?” Reichheld’s influence on customer-centrism goes back a decade, when he co-authored (with Thomas Teal) a book titled The Loyalty Effect, which postulated that 10 percent of a company’s customers create 50 percent of its profits. Keeping customers satisfied, happy, and loyal suddenly became the essential sentiment of every company’s mission statement.

Figuring out how to do it has been a challenge. Traditional telephone and mail surveys are costly, slow, and off-putting. The data may be skewed — the few people with the time and inclination to fill out lengthy surveys or chat with a researcher may not be the best representatives of the customer base.

The Internet has opened up new possibilities, offering customers a quick-click way to register their opinions and giving companies an inexpensive method to extract reliable feedback. A new acronym was born, EFM (Enterprise Feedback Management), and a slew of packaged Web-based survey software and more-in-depth systems with analytical and consultative add-ons has appeared. Priced from about $2,000 a year for simpler services up to $15,000 or more for complex systems, the EFM market has grown 60 to 70 percent in the past two years, according to technology research firm Gartner Inc. “The number of deals signed with major vendors is increasing both in number and revenue,” says Esteban Kolsky, the Gartner research director who coined the term EFM. He says a year ago he got a couple of inquiries a month on EFM and now receives two or three a day. Some key vendors include WebSurveyor, Perseus, NetAdvantage, SPSS, and StatMetrics.

Brace Yourself

This boom comes not a moment too soon. “Most [traditional] satisfaction surveys have lulled firms into believing that the majority of their customers are happy,” Reichheld asserts. “Unfortunately, they got the wrong data. The truth is that the majority of customers are angry or bored.” Bain research indicates that 80 percent of companies are convinced that they provide a superior customer experience, yet only 8 percent of their customers agree. “Most customers of the average firm — more than two-thirds — are either passive about the company or are downright detractors,” says Reichheld. “Once you find out who they are and why they’re ticked off, you can take action.”

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