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Rob Markey Global Leader, Customer Strategy

& Marketing Practice

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 2

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From score to system: NPS and Culture Change Employee advocacy and the Net Promoter® System(SM) Rob Markey May 2015

®Net Promoter, Net Promoter score and NPS are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc. and Fred Reichheld Net Promoter System and Promoter Flywheel are service marks of Bain & Company, Inc.

@rgmarkey

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+

Empowering and driving change at the front line

20,000 employees in 24 countries

Source: The Ultimate Question 2.0; Fortune; American Express website

Jim Bush

• Scripts for consistency, quality, and speed • Average handling time for unit cost targets • Call quality monitoring

High employee turnover, stalled customer satisfaction

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 5

Bush adopted an approach we call “Leading by Letting Go”

Source: “Leading by Letting Go,” Rob Markey, Harvard Business Review 2013

Call center scripts and average handling time

limits eliminated

Hiring criteria changed to emphasize hospitality

and values versus technical skills

“Telephone Service Center Reps” became “Customer Care

Professionals” with increased pay and schedule flexibility

Supervisors’ jobs reworked so they could spend

double the time coaching and training

Closed-loop Net Promoter System

implemented

Focused Customer Care Professionals on

a single metric:

Customer NPS

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 6

Clear, simple goal that resonates

Freedom within a framework (guardrails)

Coaching and support

High-velocity closed-loop feedback

Leading by Letting Go requires four crucial enablers

Source: “Leading by Letting Go,” Rob Markey, Harvard Business Review 2013

Copyright 2015 Bain & Company, Inc.

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 7

Bush’s approach resulted in breakthrough performance

• NPS doubled • American Express won the

JD Power Award for service 5 years in a row

• Employee attrition cut in half

CUSTOMER SERVICE AND EMPLOYEE ENGAGEMENT

IMPROVED RESULTING IN HIGHER

PROFITABILITY

• Costs came down 10% per year (as a percent of revenue) due to: -  Fewer dial transfers -  Lower average handling time -  Fewer repeat calls – higher first

contact resolution

Source: “Leading by Letting Go,” Rob Markey, Harvard Business Review 2013

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 8

The Promoter Flywheel(SM): Employee and customer advocacy go hand-in-hand

Work here! Buy from

here!

Employee advocacy

Enthusiasm, energy,

creativity

Profitable, sustainable

organic growth

Buy from here!

Excellence, trust, value

Growth, opportunity

Customer advocacy

The Promoter Flywheel is a service mark of Bain & Company, Inc.

Copyright 2015 Bain & Company, Inc.

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 9

Employee engagement is especially strained at the front line of the organization

ENGAGEMENT IS WORSE THE LOWER YOU GO IN THE ORGANIZATION

ENGAGEMENT IS POOR AMONG CUSTOMER-FACING EMPLOYEES

Source: Netsurvey/Bain analysis, September 2012 (n=27,628); Forrester, Nov 2010, “Do your employees advocate for your company”?

Employee NPS

Boardroom Front line

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Satisfaction is necessary but insufficient to generate energy, enthusiasm and creativity

I have a safe work

environment*

I have what I need to do a good job**

I am valued (and compensated)

fairly

Employee satisfaction

Foundational basics: Eliminating employee pain points

*Safe in both physical and emotional terms **Including resources, training, technology, process, personnel, and organizational effectiveness, among other things

Extraordinary purpose and

accomplishment

Extraordinary teamwork and

affiliation

Employee advocacy

Differentiators: Creating promoters

Extraordinary autonomy,

learning, growth

Copyright 2015 Bain & Company, Inc.

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 11

Employee advocacy delivers a completely different experience to customers

Call Center

Example

PROMOTER EMPLOYEE

• Energetic: Never rushes customer off call, demonstrates empathy throughout

• Enthusiastic: Ensures full resolution of customer issues

• Creative: Proactively identifies new ways to please customers

PASSIVE

• Perfunctory; answers only what is asked

• Provides additional info only when requested

• Sounds detached, indifferent, following a script

DISENGAGED DETRACTOR

• Tries to end call as quickly as possible

• Disagreeable, may blame customer for not understanding policies

• General negative tone, not a team player

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 12

Net Promoter Score predicts individual and firm-level performance; common language

0-6

7-8

9-10

Extremely likely

Extremely unlikely

Would you recommend us to a friend?

% Promoters

Net Promoter Score (NPS)

Minus NPS of the best relevant competitor

% Detractors

Relative NPS (rNPS)

Minus

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 13

Net Promoter System – mechanisms that support a culture of customer-centricity

Reliable, trusted currency/metric NPS/eNPS; common language; loyalty economics

Feedback, learning and improvement

Individual learning, behavior change,

and connection with customers

Inner Loop Outer Loop Root cause analysis,

prioritization & implementation of

structural improvements

Huddle Team problem-solving, issue escalation,

mutual commitment

Sustained leadership commitment Strategic priority; inspirational behaviors that earn customer and employee advocacy; sponsorship spine

Employee/team environment focused on loyalty Safe environment, effective organization, right tools and training, valued fairly

Robust operational and analytic infrastructure Copyright 2015 Bain & Company, Inc.

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 14

Inspirational leadership: at the heart of creating a customer-centric culture

Walt Bettinger CEO, Charles Schwab

View the video at http://NetPromoterSystem.com/greatness

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Set the ambition

•  Establish a clearly defined and compelling vision for the future

•  Set inspiring but achievable goals for competitive NPS leadership and continuous improvement

Walk the

walk

•  Invest in the skills of leaders from the executive level to the front line

•  Recognize and make the most of linchpin employees, those leaders that have a big influence on the customer or employee experience

Inspirational Leadership: Three steps

Cascade commitment throughout the organization

• Make regular time to interact with customers and employees (closed loop)

•  Focus attention on customer issues • Coach employees, support your teams,

make things better every day

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Inner Loop: High velocity closed-loop feedback accelerates learning and customer focus

Close the loop to listen and if applicable, fix customer issues

Learn and grow with the benefit provide active coaching

Engage the employees Get customer feedback

•  Follow up with any customer whose feedback indicates it is merited

•  All groups share in follow-up •  Listen with empathy; address

open issues as appropriate

•  Collect feedback only at moments of truth

•  Respect the customer’s time with very short survey

•  Document what was learned from customer follow-up

•  Commit to individual improvement

•  Coach and train individuals •  Reinforce positive behaviors

•  Share each piece of feedback individually and immediately with employees

•  Emphasize individual events, not statistics

Follow up with select customers

Identify actions & coaching

needs

Execute on actions & coaching

•  Provides employees with a sense of autonomy as they respond to customers’ needs •  Increases the quality and frequency of employee coaching and learning •  Turns many customer detractors into promoters

Follow up with select customers

Identify actions

and coaching

needs

Execute on actions and

coaching

Communicate

customer feedback

Gather and understand

Individual learning & connection with

customers; autonomy

Inner Loop

Copyright 2015 Bain & Company, Inc.

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 17

Huddle: Create a sense of teamwork and ownership; surface themes for escalation

HOW DO THEY DO IT? WHAT IS A HUDDLE ?

Frequent and highly interactive two-way dialogue among supervisors and their teams

-  Discuss how well we are taking care of customers and review customer verbatims

-  Celebrate employees who contributed most to our success The “Daily Download”

Escalation of key themes to the Outer Loop to improve processes, policies, products, and more – requests for the support needed to do a great job

Team problem-solving sessions to discuss biggest challenges, barriers to success, and opportunities

-  Employees work together to identify root causes of challenges and suggest solutions

-  Employees make personal commitments to do things differently

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 18

Vanguard and the Outer Loop: Connecting with customers when it matters most

View the video at http://NetPromoterSystem.com/videos

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 19

Outer Loop: a rigorous, transparent process instills confidence and engagement

Develop solutions; implement

Understand root causes Analyze feedback & data Communicate Prioritize

opportunities

Determine root cause

Identify and

propose potential actions

Prioritize actions; decide

which to implement

(PMO)

Approve necessary resources

(PMO) If analysis requires

significant resourcing

Other actions surfaced by

business (e.g., non-client

experience actions)

Synthesize

Front-line NPS

Comp bench-marks

Other em-

ployee input

Opera-tional data

A

B

Item triage shared with employees to encourage

full transparency

Triage and assign item

owner

Just do

Study further

Defer/don’t do C

Explain why to employees

and close loop with clients

Imple-ment by testing, learning,

and modifying

Encourage adoption and close loop with crew and clients

If PMO decides against implementing

Source: Bain case experience

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Each primary element of the Net Promoter System helps engage and energize employees more deeply

Source: Bain case experience

Feedback & scores delivered daily to each agent

Daily NPS feedback requested via SMS, answers registered

Coaching sessions

Structural issues identified and escalated

NPS, competitive intel, complaints, operational data analyzed

Five why’s, additional customer interviews, etc.

Cross-functional teams form to develop, test and implement potential solutions

Leaders communicate improvements directly to customers and to agent teams

Individual learning & connection with

customers; autonomy

Inner Loop Outer Loop Prioritization &

implementation of structural improvements

(e.g., pricing, product, process, policy, etc.)

Huddle Group problem-

solving, issue escalation, mutual

commitment

Gather and understand

Follow up with select customers

Identify actions

and coaching

needs

Execute on actions and

coaching

Communicate

Analyze feedback and other

data

Identify issues and

opportunities; prioritize

Under-stand root

cause and develop empathy

Develop solutions and

implement actions

Communicate with employees

& customers customer feedback

Agents, supervisors, leaders make follow-up calls

Agent level trends monitored; Individual dashboards generated

Actions taken to repair customer relationship

Frequency, severity, impact, readiness

Copyright 2015 Bain & Company, Inc.

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 21

Net Promoter System and culture change: Typical risks along different parts of the journey

Energetic, enthusiastic, and creative

Time

Resistant, pessimistic, disengaged

Employee engagement

Uninformed optimism

Informed pessimism

Hopeful realism

Informed optimism

Senior leaders

Front line and middle management

Jaded cynicism

“Valley of despair”

Build foundation

and factbase Pilot & early

implementation Rollout &

full potential Maturity &

re-invigoration

Common risks:

•  Leadership team not aligned

•  Intent and case for change missing

•  Sponsorship spine broken

•  Customer-centric behaviors not reinforced

•  Unrealistic roll-out plan •  Cross-functional

processes ineffective

•  New priorities steal attention

•  Fatigue

Hopeless defeat

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 22

The results are clear: companies with engaged employees deliver superior financial results

… AND IMPROVE PROFITABILITY

• More customer loyalty -  Higher average revenue per

customer -  More customer referrals -  Less customer churn

Revenue

Cost

• Reduced attrition -  Less hiring and training

required -  Less onboarding

• More efficiency -  Increased productivity -  Lower absenteeism

•  And for some industries: -  Less shrinkage -  Higher quality -  Fewer safety incidents

COMPANIES WITH HIGHER ENGAGEMENT GROW FASTER…

Source: Hay Group Insight “Engaging and Enabling Employees to Improve Performance Outcomes” (2009 Hay Group global normative database)

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 23

Net Promoter System – mechanisms that support a culture of customer-centricity

Reliable, trusted currency/metric NPS/eNPS; common language; loyalty economics

DRAFT

Feedback, learning and improvement

Individual learning, behavior change,

and connection with customers

Inner Loop Outer Loop Root cause analysis,

prioritization & implementation of

structural improvements

Huddle Team problem-solving, issue escalation,

mutual commitment

Sustained leadership commitment Strategic priority; inspirational behaviors that earn customer and employee advocacy; sponsorship spine

Employee/team environment focused on loyalty Safe environment, effective organization, right tools and training, valued fairly

Robust operational and analytic infrastructure Copyright 2015 Bain & Company, Inc.

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 24

NetPromoterSystem.com

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. 25

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