Forbes: Earning, and keeping, customer loyalty—and how to measure it

Grapevine, TX, October 29, 2020 – Excerpt from an article by Roger Dean Duncan featured on Forbes.com.

“A Texas startup called BILT has come to the rescue of all of us who need some adult supervision with product assembly.

BILT creates 3D interactive animated instructions for products requiring assembly, installation, repair, or maintenance. Having trouble assembling that backyard grill? Download BILT’s free app to your smartphone and get easy-to-follow, step-by-step instructions.

That kind of support is of course great for consumers. It’s also a boon for sellers. And it breathes fresh energy into something called loyalty economics.

What’s loyalty economics? It’s the study of how much a customer is worth to a brand over time.

The most famous expert in the field is Fred Reichheld, named by The Economist as the “high priest” of loyalty marketing. Reichheld recently joined the board at BILT, which makes perfect sense because he’s the creator of the Net Promoter System℠ (NPS). That’s a suite of organizational tools and processes geared to help companies enrich customers’ lives and win their loyalty.

He’s author of several bestselling books, including The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World.

Rodger Dean Duncan: How is a company’s Net Promoter score calculated, and how many customer responses are required to give you confidence in the score?

Fred Reichheld: We ask customers one question, usually—”On a scale from 0-10, how likely would you be to recommend us to a friend?” Responses of 9-10 are promoters, 7-8 passives, and 0-6 detractors. The Net Promoter Score is calculated by taking the percentage of responses that are promoters and subtracting the percentage who are detractors.

Duncan: What’s the actual correlation between a company’s Net Promoter score and the future behavior it can expect from its customers?

Reichheld: How strongly the Net Promoter Score correlates to future customer behavior depends on how effectively surveys are implemented. The best test to calibrate your own process is to examine the revenue growth of a sample of promoters, passives, and detractors (drawn from the same customer segment). A well-designed process in a competitive industry should show that, compared to passives, promoters generate superior growth and profitability, and even more so versus detractors.

Duncan: Why is assembly/installation such a “socially sensitive” time in the customer’s experience?

Reichheld: First impressions set the stage for the remainder of a consumer relationship. Companies don’t get a second chance to make a good first impression. Paramount in that initial experience is helping the customer feel comfortable, capable, and that their time is valued.

Duncan: What’s the benefit of capturing NPS on a SKU level, and how does the 0-10 NPS scale compare to the easier and more common 5-star rating system?

Reichheld: Retailers and brands must know which specific product is generating their feedback score in order to interpret and take appropriate action. Ideally, feedback will be linked to all relevant purchase data—for example, which channel, the specific outlet, the time of day, relevant discounts/promotions, and so forth. The primary advantage of the 0-10 scale is that it separates out the true promoters from passives much more effectively. Five-star systems often yield 80% of responses at the 5-star level, which hides the difference between “Wow” and “Meh.”

Duncan: A lot of companies pay lip service to the importance of loyalty, engagement, and enthusiasm of their customers. What are the observable behaviors of a company that’s genuinely serious about excelling with these issues?

Reichheld: I know a company is serious about customer loyalty when executives allocate their time and financial resources in support of initiatives to treat customers well so they come back for more and bring their friends. These companies also measure their progress by carefully tracking and sharing NPS results. The most advanced companies have found ways to track not just the growth from their existing customer base, but also how many new customers are joining primarily as the result of recommendations, or positive word-of-mouth, or ratings by existing customers.

Duncan: You recently joined the board of BILT, a company that creates 3D interactive animated instructions for products requiring assembly, installation, repair, or maintenance. How does BILT help companies deliver a customer experience that translates into loyalty and enthusiastic promotion?

Reichheld: BILT is the first company I’ve seen that not only measures NPS at a relevant touchpoint, it actually helps deliver a wow experience at that very-leveraged episode of installation and initial use. The product ratings and reviews captured by BILT indicate that some users are so impressed by the animated 3D interactive instructions that they’re willing to forgive other product shortcomings like imperfections in manufacturing or minor damage that might have occurred in transit. Some users even suggest other products they’d like to see on the BILT app. That’s enthusiasm.

Duncan: What are some of the applications of BILT’s process that you envision for customer relationships?

Reichheld: I hope that we can find a way to recruit customers to provide feedback not just after assembly/first use, but every few months over the product’s lifetime. By keeping surveys very short, and by providing an appropriate incentive, I believe we can transform response rates and greatly increase the usefulness of this feedback stream. This will enable powerful analytics which help focus the most important initiatives to continuously upgrade the customer experience.”

Read the full article on Forbes.com.

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