Loyalty is the only customer measure statistically-correlated with increased revenue and profits.
Health care companies, hospitals, and physicians are starting to measure customer loyalty using the Net Promoter Score (NPS).
The NPS relies on a single question: How likely are you to recommend us to family and friends? The question scale is 0 low to 10 high. The score is calculated by subtracting the percentage of Promoters (9s and 10s) from the percentage of Detractors (0s to 6s).
Simply learning your NPS will not increase your organization’s financial performance. NPS is only valuable as part of a well-designed program to improve internal processes across your organization.
Your loyalty program needs five parts:
1) A customer-centric organizational culture
2) An interdepartmental NPS plan
3) Accurate operational and NPS data
4) A process to identify problem root causes and close customer loops
5) Appropriate loyalty goals and financial incentives.
1. Is your culture really customer centric?
Implementing a customer loyalty strategy with a Net Promoter program will usually entail an organizational transformation. There are five characteristics needed for alignment:
- Customer experience is embedded as a core value
- Executive management agrees to lead your Net Promoter program
- A customer loyalty strategy has been developed, communicated, and there is employee buy-in
- Line, or operations, management drives activities based on customer feedback
- Employee goals and incentives are tied to customer experience
2. Develop a customer loyalty plan
A customer loyalty plan guides the development of the program, supports innovation, and measures results. The plan is customized to direct operational and structural improvements. Operational improvements improve customer experience one customer at a time.
These improvements can be rapid, involve fewer cross-team relationships, and use fewer organizational resources. A customer calls a dental practice to complain about billing that was due before an extended dental procedure had been started.
An example of an operational improvement is when the practice manager apologizes, empathizes with the situation, and immediately extends the payment due date to support service recovery. The customer has just moved from a Detractor to a Promoter.
Structural improvements are more complex, take more time, and have a greater impact on customers. These changes deeply affect organizational processes and employees in areas such as product or service delivery, pricing, distribution channels, and R&D. The dental practice can achieve a structural improvement if the financial benefit of increasing the number of Promoters is higher than the costs of modifying the billing software and ongoing reduced cash-flow. Here are the steps for a customer loyalty plan.
Customer Loyalty Plan Steps
1. Executive engagement and proof points – Develop an economic argument between loyalty and financial performance supported by data.
2. Customer strategy and organizational context – Segment customers, identify customer touch points with the organization, and evaluate touch points for value and potential improvement.
3. Internal communications and clear accountability – Front line employees need a communications system to understand how to follow up with Detractors, Neutrals (7s and 8s), and Promoters. They need to know about expectations and what actions they can take.
4. Operational quick-win improvements – Identify service and loyalty improvements that can build success and culture change momentum.
5. Track record of data – Establish collection of data that meets validity and reliability expectations along with an effective program management structure.
6. Strategic investments – Accurate data is used by the executive team to support major structural changes. Broad employee accountability is mandated to change management processes and capabilities.
7. Assessment and ongoing improvements – The program is evaluated periodically to measure results and effectiveness. Performance is compared to goals and objectives, return-on-investment is calculated, incentives are aligned with goals, and strategic options are reviewed.
3. Map the customer experience
Understanding how customers make purchasing decisions and the critical touch points with the organization is the core of the loyalty plan. Organizations are often accustomed to defining the customer experience from the inside-out, and they begin the customer experience improvement process by examining how individual internal departments operate. A more effective approach reverses this and views customer experience from the outside-in.
Begin by researching how promoters make purchasing decisions. Evaluate external brand communications. What are the messages being communicated, and how are customers processing them?
Secondly, how do these perceptions compare to customer perspectives on specific characteristics of products and services, their purposes, and how they are actually customers experienced.
Thirdly, identify and evaluate the touch-points that are important to customers including facilities, websites, referral sources, social media, customer reference groups, and others. All three types of influences, either alone or in combination, play a role in purchasing decisions and in creating promoters.
4. Conduct ongoing customer marketing research
Developing a health care customer experience strategy is collaborative and takes time. Customer experience is also subject to change, and it needs to be continuously tracked through marketing research to stay current.
The net promoter score is an ideal research tool to change culture. It accounts for both rational and emotional customer behavior, and it can be done in real time. This enables employees to act quickly on what they can learn from customers.
5. Implement a comprehensive customer experience strategy
A customer experience strategy can be implemented if a health care organization does research to build a model of what matters to their customers, makes operational changes to eliminate customer experience pain points, and designs innovative processes that deliver value from the customer’s perspective.
Research indicates that measuring the performance of different end-to-end customer “journeys”,as opposed to individual touch-points, is statistically linked to economic outcomes. For example, an organization may be 80% successful at each customer experience stage, but only 30% of customers will have an overall positive experience.
Beginning with less complicated customer problems with the highest financial payouts will build organizational momentum. Assemble cross-functional teams to identify opportunities to improve performance. Create a set of customer experience pain points by analyzing customer feedback.
Use ethnographic research techniques to observe actual customer experiences in progress. Conduct in-depth structured interviews with customers and employees who had the experiences. Identify expectations and missed opportunities on behalf of both customers and employees.
Estimate the potential impact of reducing the cost to serve, forecast increases in long term revenues and margin, and determine the level of loyalty and net promoter score needed to support the financial projections.