Most companies assume they're giving customers what they want. Usually, they're kidding themselves. Bain & Company recently surveyed 362 firms and found that 80% believe they deliver a "superior experience" to customers. But when Bain asked their customers, they said only 8% are really delivering.
Bain dubbed the 80% the "believers" and the 8% the "achievers." Whatever the nomenclature, this ten-to-one ratio suggests a startling gap between those who think they're doing right by the customer and those who truly are.
It's just this gap, of course, that Net Promoter Scores can help close. Create a credible, timely NPS system and companies will be well on their way toward focusing their organizations on what customers are really thinking, feeling, and doing.
There are two reasons for the gap. The first is a basic paradox: Most growth initiatives damage the most important source of sustainable, profitable growth—a loyal customer franchise. To increase revenue and profits, businesses do things like raise transaction fees that end up alienating their core customers. Efforts to pursue new customers compound the problem, distracting management from serving the core.
The second is that good relationships are hard to build. It's extremely difficult to understand what people really want, keep promises and maintain a dialogue to ensure customers' changing needs are met. Even initiatives to "better understand" customers can backfire, drowning firms in a sea of data.
How can companies close the delivery gap? Bain found, in analyzing the achieving 8%, that they rigorously focus on treating their most profitable customers in ways that ensure they come back for more and recommend the company to friends. Unlike most companies, which instinctively turn to product or service design to satisfy customers, the elite few pursue three imperatives simultaneously. These are the "Three D's": They design the right propositions for the right customers. They deliver those propositions at the lowest system cost. And they develop the institutional capabilities to do it again and again. Each of these Three D's reinforces the others. Together, they ensure the company is continually led by the voices of its customers.
Design. Most large companies are adept at traditional market research, segmentation and product design. But in their efforts, the 8% who succeed include customer interaction—focus groups, interviews and observation—that leads to real insights. They convert those insights into truly differentiated propositions reflecting a customer's total experience.
Company example: Commerce Bank
Delivery. The achievers treat every customer interaction as a precious resource, continually listening to what customers want. These companies set up cross-functional teams to ensure that they keep their promises to customers at all touchpoints.
Company example: USAA call center
Developing capabilities. Finally, companies that delight customers build processes to maintain a real dialogue. They establish capabilities that foster ongoing, systematic improvement and feedback loops that identify shifts in customer attitudes.
Company example: Intuit