Sprint has rolled out a new bonus structure for all its employees, including executives. Moving forward, 20% of employee bonuses will depend on how effectively its current customers promote Sprint to new customers. In short, Sprint is betting on the power of the Net Promoter Score, and will pay its employees big bucks for raising its score.
Here’s how it works: Surveyors ask Sprint customers to rate — from zero to 10 — how willing they are to recommend the company to others. Only nines and 10s count as promoters. Sevens and eights are considered neutral, and anything less comes out as a detractor.
The key for Sprint employees and execs is that 20 percent of their incentive pay is now tied to improving that score.
On paper, this sounds like a good idea. The rationale is that if more of Sprint’s current customers are generating positive Word of Mouth, it will lead to new customers. So Sprint wants to reward employees when its NPS increases.
Here’s the potential problem I see: By paying employees for raising its NPS, it gives employees an incentive to raise its NPS instead of creating an environment where happy customers promote the brand. What gets measured gets managed. The goal shouldn’t be improving your NPS, that should be a by-product of doing a better job of understanding your customers. The goal should be to better understand and connect with your existing customers. A by-product of this will be an increased NPS.
Here’s another example: Telstra, Australia’s largest telecommunications company, is also betting big on the power of its brand advocates. But instead of focusing on raising its NPS, Telstra has focused on its call centers, on giving customers a better and more efficient experience. Additionally, the company sends out over 11 million customer surveys a year, including 30,000 a day. The feedback from these surveys as well as call centers is then mined and applied to Telstra’s existing marketing efforts.
As a result, Telstra’s NPS has increased by 3 points in 2014.
Whenever I talk to a company about launching a brand ambassador program, we talk about the reasons why they feel they need such a program. Then I ask them to tell me what in it for their customers. Many companies can tell me exactly how they want to benefit, but when it comes to discussing the value created for the customer, they typically haven’t given that as much consideration. The goal shouldn’t be to raise your NPS, it should be to give your customers a reason to rave about you. If you do that, then your NPS will take care of itself.
Whenever you considering launching any initiative that’s dependent on your customers performing some action for you, always carefully outline what’s in it for the customer. Be able to spell out how you benefit, and how the customer will benefit.
The goal is a win-win, not a win for your brand.
Pic via Flickr user Mike Mozart
I LOVE this idea Mack. But it can be gamed too — especially when there’s a bonus incentive — which I think is your point. We need a blend. But I like the direction.
Hey Frank, yes that was exactly my point, when money’s on the line, I could see employees try to find ways to game the results. I think it would be better to base the bonuses on either an increase or decrease in some independent action by the customer. Like a reduction in complaints to the call centers, or something similar. But as you said, the direction is good.