The beginning of the year is always a good time to reflect and ask questions of ourselves. What resolutions should we make? What intentions should we set?
And in doing the preparation for some strategy sessions at MESH Experience I was reminded of the importance of asking great questions. I was watching Tim Ferriss talking about a process to achieve any goal. My SIMPLE Process to ACHIEVE Any GOAL You SET! | Tim Ferriss | Top 10 Rules – YouTube.
Point number 1: Ask Great Questions
In fact, this struck such a nerve that I decided to keep a list of some questions I needed to solve. Somehow writing the question seemed less daunting than thinking about a big issue or problem.
And this reminded me of a piece of work that we did with LATAM Airlines which felt impossible when I first heard the topic “We want to Monetize NPS”. Yet, when we broke down the topic, understood the issue and the real question behind it, this led us to a solution that transformed LATAM Airlines’s investment decisions and resulted in measurable business success.
We had just heard that we had won a couple of International Business Excellence Awards: one for Customer Experience and the other for Strategy, Change and Transformation. In many ways, a question I was asking of myself was “How did we achieve this success with LATAM Airlines?” so that I could replicate the process again.
It’s always worth looking back at pieces of work to see what the lessons learned are, but how often do we do so?
The first question we had for our client in 2019 when we started the project was “What exactly do you mean by Monetizing NPS?” Andre D’Abreu, Head of Customer Intelligence & Strategy, LATAM Airlines explained that every year there were lots of potential customer experience projects to consider for investment. A cost/benefit analysis was done, however, Andre’s team wanted the customers to be at the heart of the analysis. NPS was a metric that the business embraced, so he felt that if NPS was included as well as expected revenue and costs, the initiatives were more likely to be successful. There were other subsidiary issues to solve for, such as each cost/benefit analysis was done on a bespoke basis, so there was no consistency, and these analyses were very time consuming to complete.
The real question we were looking to solve for was “How can we create a tool to facilitate quicker and better investment decisions about customer experience initiatives through putting the customer at the heart, using NPS?”
Unpacking the issue and finding the true question is worthwhile devoting time to. At least we were clearer on what the task was.
Hmmmm! “Had anyone done this before?” If so, maybe we could get a head start. So armed with this question, I approached people in the research community through a networking group, Andre approached people in the airline community at a conference in Singapore and he even approached Fred Reichheld, creator of NPS. We soon got the answer to this question….No!
Lots of companies, including LATAM Airlines, had a calculation that said if you increase NPS by x, revenue will increase by y. However, this was overly simplistic for LATAM. Surely the impact on a frequent business flyer was going to be higher than a price-conscious occasional leisure flyer?
Even though we didn’t get a head start through desk research, at least we knew that what we were attempting was ground-breaking and therefore might be difficult!
OK. Where should we go from here?
We realized that there was a lot of knowledge within the business and that getting the stakeholders on board would be critical. “What can we find out from LATAM Airlines’ stakeholders?”
We interviewed senior stakeholders including those in customer strategy, finance, network and planning and the CEO of LATAM Airlines Brazil, Jerome Cadier. These stakeholders were incredibly generous with their time and supportive of this project. Their views provided a foundational learning upon which to build. We found from them that understanding CX in isolation was too narrow and that the company needed a single framework that linked CX initiatives to NPS and to economic return.
It’s always worthwhile seeing whether there is the opportunity to speak to people within the business on a project to ensure that the output is more closely aligned with the needs of all stakeholders.
After the interviews, we decided that we needed to do a significant piece of analysis to link NPS to business outcomes and then to create a calculator tool that could deliver economic return.
The next big question we asked ourselves was “What is the relationship between NPS and customer behavior, specifically churn?”
There were some decisions we had to make in asking this question. There were a number of ways we could have looked at the impact of NPS on business results and we had to decide where to start. We decided to look at churn and we needed to make decisions on exactly what churn was too. We also needed to consider which NPS data to use.
Beyond its operational NPS survey, LATAM Airlines had a competitive NPS survey which was sent to LATAM customers to understand their experience with another competitor as well as LATAM. Over 2 years LATAM had 230,000 answers for 35 airlines about 20 experience touchpoints. Analysis focused on using this dataset along with the customer data on churn to see the relationships that could be extracted.
An intensive period of analysis ensued with multiple insights emerging, including that likelihood to churn depends on relative NPS, not absolute NPS. If NPS for LATAM was high but it was higher for a competitor on this route, this was what mattered. As expected, certain customer segments were more sensitive to NPS than others. We also saw that customers flying in highly competitive routes were more NPS sensitive. We were able to drill down to in airport and on flight touchpoints to see which were most NPS sensitive. With so many hypotheses to test, this analysis could have run on for months. However, with a tight project timeline we had to be pragmatic and get something fit for purpose that could be refined later.
We found numerous relationships and insights between NPS and churn. Time was of the essence, as it often is for clients, and therefore taking a practical approach to the task was important.
Andre and his team answered the final question, “How can we build a tool that is easy to use and understandable?”
LATAM was not keen on anything that was “black box” because everyone needed to buy into the tool for it to be credible.
Finally, the tool was created. With simple drop-down menus, LATAM team members could identify where the initiative should have an impact – which country would it effect (e.g.Brazil), which route would it impact (e.g. Sao Paulo to Rio), which customer segment, which touchpoints in the airport and on the flight? By selecting the answers, the tool calculated the impact on NPS and the economic return as a result of this. Were these answers going to be absolutely accurate? Probably not! Was that a problem? No!
It is better to have something that is easy to use and 80% right than to strive for perfection.
What happened as a result of this tool being implemented in the company in August 2019 was truly transformative. Not only was the tool used to create the business case for initiatives, it was used as a planning tool to understand where initiatives were needed in the first place. The fact that LATAM team members could literally plug in customer segments, touchpoints and routes and play with the tool so easily meant that it was adopted company-wide. The fact that the finance stakeholders had contributed to the project meant that initiative after initiative received quick sign-off. $400M was spent in cabin renewals, a new premium economy was created and a segmented service offering was developed.
“What if…?” This was the question that LATAM executives were asking as they played with the Monetizing NPS tool! This tool was inherently teaching executives what was important to their customers. By asking great questions, LATAM Airlines executives achieved great results!
By Q1 2020 Strategic NPS had increased by double digit points. Churn reduced among high value customers and total number of customers grew double digits too. The results speak for themselves.
This is one way that a company truly put the customer at the heart of its business, to the extent that when the pandemic hit, the strapline LATAM used was “Stay home. Travel later.” before introducing “A new world. A new way of flying.” The world of air travel had changed, but what had endured was the business’s ability to put the customer front and center-stage.
Not only do we need to think about how to Ask Great Questions, we need to think about how to engage our clients and stakeholders to Ask Great Questions that get them closer to their customers.
