1. SERVICE OPERATIONS MANAGEMENT
The Measure of Success
Better Metrics for Customer Satisfaction
Group 4:
Amit Raizada
Angshuman Adhikari
Rajat Prasad
Sreekanth Daruvuri
Vivek Pandey

2. The Measurement of Success
Better Metrics for Customer Satisfaction
Three Major Products
Financial-software
company
Quicken QuickBooks TurboTax
Driving Good
Profits is True
Growth???
Leadership – Scott Cook, Harvard MBA, Stint at
Procter & Gamble before cofounding the company.
Intuit’s Mission : “ To make the customer feel so good about the product they’ll
go and tell five friends to buy it.”

3. Evolution of Intuit…
Losing sight of its
relationships with its
customer.
Rapidly growing
Customer business, thousands
feedback of people in multiple
locations
was Gone Public in 1993
immediate
and direct. Vague
statistics of
Birth in 1983
“satisfaction”
“Follow-
me-home” Managers
program. focused on
profits.

4. The Challenge: Measuring Customer Happiness
Conventional customer satisfaction measures are less
reliable.
Hire Market-research firms to conduct satisfaction surveys.
Track customer retention rates. How fast the bucket is filling up?
Twenty questions on Loyalty Acid Test, Bain designed survey.
Asses the state of relations between a
A survey designed by Bain several years ago.
company and its customer.
Assistance of Satmetrix Systems ,Inc.
Develops software to gather and analyze real- Detailed information from 4000 customers,14
time customer feedback. case studies.
Measure the link between individual customer’s survey
responses and their purchase or referral behavior.

5. Discovering the Ultimate Question
What is the Ultimate Question?
Key Features:
Statistical correlation with repeat purchases or referrals
Predict customer behavior
Predict a company’s growth
Gauges customer loyalty
Which is the Ultimate Question?
Fred’s Favorite: B2C: B2B:
“How likely is it that you “How likely is it that you
“How strongly do you
would recommend will continue to purchase
agree that Company X
Company X to a friend or products or services of
deserves your loyalty? ”
colleague? ” Company X? ”

6. When do customers make a personal referral?
They believe that the Company offers superior value – In
terms of price, quality, functionality, ease of use
They must “feel good” about their relationship with the Company – The
Company knows them, understands them, values them, listens to them &
shares their principles
The 1st Condition engages The 2nd Condition engages It tests both the rational &
the Customer’s Head the Customer’s Heart emotional dimensions

7. Scoring the Answers
Optimum Scale: Right Categorization:
 Must make sense to customers  Divide customers into groups
answering the questions. deserving different attention.
 Easily differentiable  Easily understandable
 Simple Scale of 1-10 selected  Based on Consumer Behaviour
Not at all Likely
0 Detractors:
1  More than 80% of negative
2 WOM comments.
3  Some customers profitable yet
damaging company reputation.
4
Passives:
Neutral 5  Motivated by inertia more than
6 loyalty.
7  May not defect until somebody
offers a better deal.
8
9 Promoters:
Extremely Likely  Highest repurchase rates.
10  Accounted for more than 80% of
the referrals.

8. Scoring the Answers contd…%
Questions Answered:
Can the frontline managers grasp the customer satisfaction metric easily?
Does it help employees clarify and simplify the job of delighting customers?
Does it allow employees to compare their performance from week to week,
month to month etc.?
Percentage Percentage Net
of of Promoter
Promoters Detractors Score
 Any company seeking growth must concentrate on both – increasing percentage of
Promoters and decreasing percentage of Detractors.
 NPS is to customer satisfaction as net profit is to financial performance.

9. Solving Intuit’s Problem
Implementation program for measuring NPS began in the spring of 2003
Initial phone survey process based on two questions
• What is the likelihood you would recommend to a friend or colleague?
• What is the most important reason for the score you gave?
Determine the existing mix of promoters, passives and detractors in each major business line
Above the NPS
Initial NPS Room for
27 %to 52% of average US
score improvement
company – 10%
Problems with phone survey
• No way to close loop with detractors
• Open ended response manager’s interpretation
• Confusing and contradictory responses

10. Solving Intuit’s Problem
“Would
recommend” Steady flow
Formal Audit question in of NPS
transaction insights
surveys
Hot spots relating
to customer
experience with
the company
Problem Cause Solution Result
• Low NPS • Charging • Free tech- • NPS score
score for customers support for increased
customers for tech- first 30 by 30%
who called support days of
Tech phone calls ownership
support

11. Solving Intuit’s Problem
6000 member “Inner circle” of customers whose
feedback was taken for managerial decision
Problem Market share plummeted by 30 points from 2001 to 2003
Detractors Promoters New customer
Improved quality of
Cause technical support
Longer rebate process Confusing tax jargons
Improve installation 30% never used the
process product the second time
Relocated all phone tech- New priority for design
support from India to US engineers – ‘make the
and Canada Redesigned and program simpler’
Solution
simplified rebate forms Snap tax – for people with
Increased tech -support
simple straight forward tax
staffing level returns
50% reduction in
Turnaround time reduced NPS of first time users
installation related tech-
by several weeks higher than that of long
support contacts
Result time users (Snap tax
generated NPS of 64%)

12. Intuits Results: Happy customers & Shareholders
Over 2 year period from spring 2003 to the spring of 2005, Net promoter score for Turbo
max jumped
The desktop version rose from 46 % to 61 %
New user’s scores climbed from 48% to 58%
Retail market share surged from 70% to 79 % (Not easy feat in maturing market)
Provided actionable insights. Every business line addresses this as part of their strategic
plan, it’s component of every operating budget, it’s part of every executive’s bonus.
“Net promoter gives us a tool to really focus organizational energy around building a
better customer experience” - CEO Steve Bennet

13. Intuits Results: Happy customers & Shareholders
Just as 6-Sigma had helped intuit improve its business process to lower costs and enhance quality, Net Promoter
Scores were helping it set priorities and measure progress toward the fundamental goal of stronger customer
loyalty
The more metrics are tracked, the less relevant each one becomes
Each manager will choose to focus on the number that makes his decision looks good.
The concept of one single metric has produced a huge benefit for intuit – customers, employees and investors
alike
It was a business-critical priority so important to Intuit’s future that it deserved to be understood by shareholders

14. NPS - Beyond Intuit Case

15. NPS Vs American Customer Satisfaction Index
Traditional customer-satisfaction measures typically omitted willingness to recommend,
instead focusing on aspects like perceived value, customer satisfaction, corporate image,
and rational and emotional commitment
American Customer Satisfaction Index

16. Critics of NPS
Critics contend that it doesn't, that its 11-point scale has lower predictive validity than
other scales, that the segmentation of promoters/neutrals/detractors is arbitrary and
that other questions may be better predictors of growth rates
Not the Most Important Customer-Satisfaction Question
We find no support for the claim that Net Promoter is the 'single most reliable indicator of a
company's ability to grow
Doesn't Accurately Differentiate Promoters and Detractors
"The rule-of-thumb score classes proposed by Reichheld (promoters are those respondents who
give a likelihood of recommendation of 9 or 10 while the detractors give 6 or less) are not
supported statistically, mask important changes and potentially mislead management that there
is negative NPS when this may not be the case
Sources:
"A Longitudinal Examination of Net Promoter and Firm Revenue Growth“
- Ken Roberts, Forethought Research Australia

17. Critics of NPS
Less Accurate than Composite Index of 3 Questions -
A single item question is much less reliable and more volatile than a composite index.
Fails to Predict Loyalty Behaviors -
Contrary to assertions, the results indicate that recommend intention alone will not suffice as a
single predictor of customers' future loyalty behaviors.
Use of multiple indicators instead of a single predictor model performs significantly better in
predicting customer recommendations and retention
NPS is attitudinal rather than behavioral, measuring how many people say they would be likely to
recommend, rather than how many are doing so.
- Customer Satisfaction - The customer experience through the customer's eyes, Nigel Hill, Greg Roche and Rachel Allen, p. 7
The Value of Different Customer Satisfaction and Loyalty Metrics in Predicting Customer Retention, Recommendation, and Share-of-
Wallet" (Timothy L. Keiningham, Bruce Cooil, Lerzan Aksoy, Tor W. Andreassen, Jay Weiner).

18. Critics of NPS
Performs Worse than Satisfaction & Liking Questions
The paper "Measuring Customer Satisfaction and Loyalty: Improving the ‘Net-Promoter' Score"
by Daniel Schneider, Matt Berent, Randall Thomas and Jon Krosnick counter intuitively
demonstrates that "satisfaction" and "liking" are better predictors of recommendations than
"likelihood to recommend".
Performs Worse than Other Scales
Schneider et al also demonstrate that the 11-point scale has the lowest predictive value of any
of the scales tested. The authors recommend a 7-point scale with labeled ends and midpoint for
the willingness-to-recommend question but also recommend a bipolar scale for a reworded
variant