Matthew Harrington, January 18, 2017
It’s 1974, and a man walks into a store in Anchorage, Alaska. He has the intention of returning a set of car tires he purchased at that location. One important detail for the customer’s return of unsatisfactory tires, is that there is no more tire store. The tire store was sold and Nordstrom’s fashion retailer moved in. Nordstrom does not sell tires, they specify in shoes and high end fashion garments, but Nordstrom has a ‘no questions asked, return policy.’ The customer was supposedly sincere on being able to return the tires and receive a refund, so the empowered salesman granted the request, took the tires, and paid the customer the amount of the refund.
This story has become legendary for the Nordstrom brand. Ownership and management over the years have confirmed the story. The reputation of the brand having industry leading customer service and engagement has only been strengthened by a generous gesture by a store salesperson some 40 years ago.
Nordstrom has but only a few guiding principles in order to make this story possible. It’s been said that upon being hired, there is only one rule in the employee handbook: ‘Use good judgment in all situations.’ This simplicity is at the foundation for Nordstrom being widely recognized as a leader in great customer experience.
Let us dive deeper to find solutions in order to strengthen your company’s customer experience.
1. Define your Company Purpose. And once company purpose has been defined, as a leader, you will be able to inspire and align your employees to deliver that purpose for your customers. Nordstrom has defined their purpose as, ‘deliver the best possible shopping experience, helping customers possess style—not just buy fashion.’ As a new employee is introduced at Nordstrom, I can certainly imagine that this purpose, along with one rule in the employee handbook, can be simply aligned. If everything I do as a Nordstrom employee is to deliver the best possible shopping experience, and help customers possess style, then it is no wonder Gallup Poll recognized Nordstrom as customer experience leader.
2. Create and encourage Raving Fans! What is a raving fan? They are loyal consumers, and have a genuine connection with a team, a fashion company, or a little known rock band. Those passionate, raving fans of the Leicester City Foxes and the Chicago Cubs were rewarded handsomely in 2016 after decades of toiling in mediocrity. And don’t think we haven’t heard those fans shouting from the rooftops.
Raving Fans are your loyal ambassadors, and they share in your company’s passion, through word of mouth or through multiple social media channels. Because of social media, consumers are heavily influenced, but most importantly reliant on other’s experiences and reviews of company products and services for their decision making.
Raving Fans can strengthen your customer experience by sharing what really drives their own positive experiences with your brand. They are a magnifying tool for what you do well, whereas the experiences you are already creating can be explored more, utilized and promoted.
If you have a strong company purpose, alignment of your employees with that purpose, and engage with your customers, you are on the right track to finding those Raving Fans. But there is also a tool to gauge your customer loyalty.
A scoring system was created by Bain and Company in 2003 in order to identify Raving Fans, and in turn, measure companies against others in their industry. That scoring system is called the Net Promoter Score or NPS.
There is only one question to ask your customers: “How likely are you to recommend our company to a friend or colleague?”
The question comes with a 0-10 rating, 10 being ‘extremely likely’, and 0 being ‘not at all likely’.
Your customers are divided into three categories depending on the score they choose.
Those who score a 9 or 10 are your ‘Promoters’, or your Raving Fans. They identify with your company, are passionate and loyal, and most likely will snap a photo to share on Instagram, leave a review in Yelp or Tripadvisor, or simply promote your company in everyday conversation.
Customers who score a 7 or 8 are your ‘Passives’. At first glance this may seem like a very high score. You may be patting yourself on the back already. But the reality in the Net Promoter Scoring system is that they count for nothing. Why you ask? Because they are simply satisfied, and may choose to shop, buy, eat, or stay with the competition next time. Passives will not be actively sharing their experiences online, or in conversation.
And finally, customers that rate a 0 – 6 are your ‘Detractors’. They have had a bad experience somewhere along their customer journey, and they are likely to share their experiences. Think of how often you have reconsidered buying a product or staying at a hotel, because of multiple bad reviews online? The Detractors have influence. But those of us that have been in customer service realize that we have an opportunity to turn a Detractor into a Promoter depending on how we as a company or individual deal with those customer experiences. Just draw from the Nordstrom story and imagine how that one instance could turn that (potential) customer into a Detractor or Promoter of Nordstrom.
Your final Net Promoter Score is calculated by finding the Percentage of Promoters minus the Percentage of Detractors. Once again, those simply satisfied customers, your Passives, are not accounted for in this equation.
For those that are interested in an ROI, consider that, Promoters account for 80 percent of referrals in most businesses (Net Promoter System, 2013). Detractors account for 80 percent of negative word-of-mouth (Net Promoter System, 2013). Promoters generally defect at lower rates than other customers, which means that they have longer, more profitable relationships with a company (Net Promoter System, 2013). On average, an industry’s NPS leader outgrew its competitors by a factor greater than two times (Net Promoter System, 2013).
Along with identifying your Raving Fans through the NPS question, you have an opportunity to receive feedback from your customers. And as we all know, your Detractors may be keen to let you know where improvements can be made.
In order to strengthen your customer experience, along with addressing individual customer needs and expectations through the NPS, you must…
3. Support new customer expectations. Not exclusively, but ‘What do Millennials expect?’ I am sure you can imagine the experience needs to be faster, simpler, connected to social media, mobile, more fun, more experiential.
New customer expectations involve elements of self-service. In this day and age of multitasking and modern technology customers acknowledge and appreciate speed and efficiency. If you customer journey does not allow for any self-service then it should be re-evaluated.
New expectations have stripped away much of the luxurious, white gloved service we may have grown accustomed to in the past. Many Millennials are looking for genuine interactions with service orientated employees and companies. Scripted greetings and responses from staff, or total conformity of appearance by employees are less likely preferred as a customer experience.
Your company’s values, or purpose, is important to the new consumer. And if your company values involve the understanding of how your company adds to global sustainability then it certainly can influence. The new consumers connection to the ‘greater good’ is a real concern that extends to the companies overarching influence. What used to be expected from ‘farm to fork’ restaurants have evolved into larger expectations for a sustainable company. The old adage of never over-promise and under-deliver is important to consider, as a Gallup Poll finds consumers believe companies deliver on their brand promise only half the time.
As customers become more mobile, more reliant on technology and self service, and more likely to research, review, and be influenced online before purchasing, online marketing has evolved to support new customer expectations. The Harvard Business Review details what is know as ‘Decision Simplicity’ and ‘Simplified Marketing’. The Decision Simplicity Index ‘a gauge of how easy it is for consumers to gather and understand (or navigate) information about a brand, how much they can trust the information they find, and how readily they can weigh their options.’ In effect, your Promoters, or Raving Fans play an influential part in the ‘Decision Simplicity’ Index. As explained by HBR, ‘in the context of decision simplicity, “trust” isn’t about trusting the brand; it’s about trusting the information gathered.’ So analyzing how you can use these new online marketing algorithms to identify where the consumer is in their purchase journey, and then directing them to the most appropriate webpage has a huge impact on whether your customer experience is simple, fast, reliable, socially connected, or even fun.
4. Strive for High Satisfaction and High Engagement. Engaging your customers is found on the sales floor, in the hotel lobby, with social media, in post purchase surveys, and marketing efforts. But this certainly is more difficult than acquiring satisfied customers. A Gallup poll illustrated that although 50% of customers were satisfied with a ‘given brand, but only 38% of customers were engaged with the brand’.
The difference between the two has been illustrated with the Net Promoter Score. Gallup delved deep into the importance of both and even defined each with examples.
If your goal is to strengthen your customer experience, then customer engagement plays a role. Just look at what Gallup defines as ‘Satisfaction’. You see qualifiers such as ‘wide array of amenities’, ‘speed’ and ‘wait time’. I do not feel any emotion in those examples. But when I consider the examples of engagement given by Gallup, such as ‘energetic’, ‘warmth’, and ‘takes care’, then I feel emotion. Evoking the emotional aspect of the consumer is key to driving engagement.
Albeit, not all companies need full engagement and satisfaction to be profitable. Gallup illustrates this argument and asks company leadership to define which ‘quadrant’ their company strives for. It categorized companies into four quadrants:
Quadrant I: Low Satisfaction/Low Engagement -- Doomed Relationship: No company should be here.
Quadrant II: High Satisfaction/Low Engagement -- Relationship of Convenience: Market-share leaders who have scale, pricing power and innovative models of delivery -- such as big-box retailers or fast-food chains -- usually fall into this category.
Quadrant III: Low Satisfaction/High Engagement -- Insulated Relationship: For these companies, engagement provides insulation, and the rational factors become largely secondary. Highly successful, upscale hotel chains and theme parks can fall into this quadrant.
Quadrant IV: High Satisfaction/High Engagement -- Dual-Path Relationship: Companies in this quadrant understand that a competitive rational experience is not enough to attain a market edge. Businesses must also make memorable and meaningful emotional connections, typically through human channels such as great service.
Probably not by coincidence, Gallup felt a great example of a Quadrant IV company is…Nordstrom.
Which Quadrant will your company choose for?