Link pay to customer delight

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

Good customer service is a key to a healthy enterprise; on that, every business owner can agree. But customer service also tends to be relegated to the squishy bin, along with personnel development. When it comes to doling out cold cash, companies generally favor tying rewards to measurable targets such as profits. Because NPS assigns a hard number to customer service, some companies have found that they can tie this metric to compensation. The results have been impressive.

Ken Gibson, 63, is founder of LearningRx, a Colorado Springs company that helps clients improve their memory and concentration. LearningRx has 66 franchises in 24 states, a steep climb from just 15 in 2004. According to Gibson, the firm is profitable, with revenues of $30 million in 2007.

LearningRx is intensely customer focused. The key to its business is building successful relationships between the tutors and their students, which include kids with learning disabilities and patients with Alzheimer's, among others. When Gibson first heard about NPS, a light bulb went off. Rather than tying bonuses to student test results, as he had in the past, he could tie them directly to customer satisfaction. In 2006, Gibson introduced NPS as what he calls a "reward and shame system."

Here's the drill. While LearningRx tracks NPS on a companywide basis, it also figures NPS for individual tutors. The scores then determine the size of each worker's bonus. Tutors who achieve a score of 90 or better receive bonuses equal to 20% their base pay; those scoring 70 to 89 get as much as 10%. Below 70, they get nada. The system seems to be working. Since it started tracking NPS, LearningRx has seen its number improve from 70 to 72.

Given that money is at stake, you might wonder what prevents tutors from trying to influence what their pupils say about them. To head off this possibility, Gibson has made it clear that anyone caught gaming the system will be fired immediately. Just to be sure, he's added a question to the follow-up interviews, which are conducted by the franchise managers: Were you in any way led or encouraged to give a higher rating?

And what about the "shame" part of Gibson's system? Well, it's also possible to calculate the NPS for each of LearningRx's 66 franchise locations. For the annual convention this summer, the franchise owners will wear nametags that feature their NPS score. Just imagine:

Paul ... 78 ... So very nice to meet you!

Stu ... 24 ... Yeah, hi.

The NPS metric may not be appropriate for every small business. If you have only a handful of customers and know them well, there's no need to set up a new system. But for business owners who want to keep in closer touch with their customers, this metric can provide valuable feedback that you can use to turn an unhappy client into one who will sing your praises. To top of page

To write a note to the editor about this article, click here.

Find Business Answers
or
Ask a Question



Ask a Question



QMy dream is to launch my own business someday. Now that it's time to choose a major, I'm debating if I should major in entrepreneurial studies or major in engineering to acquire a set of skills first. Is majoring in entrepreneurship a good choice? More
Get Answer
- Spate, Orange, Calif.
A cheapskate's guide to tech From ebooks to phone service, here are some tips for living your digital life on the cheap. More
2015 Mustang's asphalt-peeling power goes modern The new Ford Mustang has been upgraded and updated to compete globally - but never fear, it's still a monster. More
15 top executives with $1 salaries Some CEOs and founders agree to salaries of just $1 a year. But once goodies like bonuses and stock options are added in, some of those executives end up taking home many millions of dollars a year. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.