We wanted to share our current thinking on how you can build “robotic” systems to enhance the e-commerce customer experience. The key elements: * automated customer surveys to understand voice-of-customer and Net Promoter® Score in real-time * automated customer segmentation by lifetime value * automated customer segmentation by loyalty (using Net Promoter Score) * process to help customers needing immediate response * clustering customer issues together for longer-term strategic fix * close-loop monitoring of results (Net Promoter Score and other metrics) * Responding to customers with updates on your actions You could roll-your-own solution, but we believe CustomerGauge has all the parts you need to start this now – and we have proof points from our major e-commerce clients including Canon, Philips and Vodafone.

1. The Loyalty Robot
Learn how to increase customer loyalty and grow online sales automatically
Adam Dorrell
Webinar 10 Mar 2010
Adam.dorrell@directness.net

2. Agenda & Hosts
• Introduction Adam Dorrell
CEO CustomerGauge
• Why build a “Loyalty Robot”? 12 years+ e-Commerce
• Economics of returning customers
• Identifying Valuable Customers
• Segmenting using Net Promoter®
Score
• Using customer feedback
• Continuous Improvement
• Rescue/Reward Model
• The Robot (step 1) Melanie Otersen
• The Robot (step 2) Net Promoter Expert
Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld.

3. What we do: Directness
B2b
customers
• We provide technical solutions to help
companies add strong metrics to marketing Consumers
activities
– CustomerGauge: Automatically measure,
understand and analyse customer sentiment,
using Net Promoter Score®. Identify and grow
your most loyal customers.
– DemonstratorGauge: Collect and analyse field
marketing events, demonstrators, mystery Field
Marketing
shoppers. Track activities and show ROI on events
budget
• Used by global organisations
– +1 million end-customers measured since 2007
– +25,000 marketing events tracked since 2008
• Company background: hi-tech marketing:
Selected Clients
Sony, Dell, Compaq, HP, KPN etc
– Privately funded, based Amsterdam, NL

4. Why Build a Loyalty Robot?
Customer
Database E-commerce
site
• Traffic costs $$$ ~$1
• New customer
acquisition is
expensive Adwords etc
– 50 cents a keyword ~~$50
@ 1% conversion =
up to $50 for a new
customer sale
100%
• Returning customers 90%
80%
– Lower marketing costs 70%
60%
– More profitable 50%
• Lesson: Hold on to 40%
30%
Returning
your customers 20% Customers
10%
New
• … but how to do it 0%
Customers
effectively

5. Lesson in Inequalities…
5% of
• 95% of Guinness
Guinness
drinkers
consumed by 5% of
customers
95%
volume
• Pareto Principle
(80-20 Rule)
– 80% of revenue from
20% of customers
Source: Malcolm McDonald, CIM

6. E-Commerce Economics
Total Revenue
80% 50% 20% 10%
Number of customers
30% 10% 5% 1%
• Actual results (from CLIENT X)
– 7% of customers (1540) account for
50% of revenue
– 1,5% of customers (326) account for 20% of
revenue
– Just 0.6% of customers (129) account for
10% of revenue
• Average customer value is 15x higher in top 1%
Results from blend of results from 10 e-commerce companies, 2009-2010

7. Finding the Value of Repeating Customers
• Take a sales report (last 6m or 12m),
open in spreadsheet
Customers v. Revenue
• Group customers together by email
address (or customer number) 100%
• Sum up the order values by customer 90%
• Sort “total order value” from high 80%
to low 50%
70%
• Divide customers into sensible
segments: LOW/HIGH or 5/10/85% 60%
93% Repeating
50%
Customers
40% New
Customers
30%
50%
20%
10%
7%
0%
Number of Revenue
customers
: Best Buy
Data Fact its
at 7% of
found th t ed
s accoun
customer s.
f its sale
for 43% o

8. Segment by value
Customer Segmentation
Hi-spending
customers
$$$ 7% of total,
50% revenue,
1500 customers
AVE VALUE: €1150
Value
(spend, profit)
LO-spending
customers
$ 93% of total,
50% revenue,
20,300 customers
AVE VALUE: €163

9. Loyalty Measurement: Net Promoter® Score
• Becoming a standard in Fortune 1000 companies
• Simple to implement and understand
• Ideal for surveying e-commerce transactions

10. Segmenting Customers by NPS
Detractors cost
money
Promoters are profitable

11. Net Promoter Score and e-Commerce
Invite by email: WEB SURVEY: ASK Plot the results ACT ON THE
all customers NET PROMOTER COMMENTS
to rate you on Lots of spreaDsHeet
QUESTION & ASK
work! GRAPH, segment
Every order! FOR COMMENT etc. GOAL IS TO DISTRIBUTE COMMENTS
IMPROVE OVER TIME to those who can use
Usually NO permission You can ask other them.
needed, but explain up
questions about
Front AND add
“unsubscribe” option specific issues and ask
if further action
needed, but keep it
short.
EXPECT 20 – 30%
RESPONSE

12. Becoming a customer focused organisation
• Best practices:
• Communicate to entire organisation
• Publish regular nps results - Weekly/
monthly updates
• Bonus managers on NPS improvements
Net
• Delegate responsibility to Promoter
departments Champion
• STructure for success Assistance
in scoring
and admin
Customer
Logistics Web Product Finance
Service
Champion Champion Champion Champion
Champion
KEY ISSUES:
- Checkout
- Help pages
- merchandising

13. Acting on Comments
• Best practices:
• Get regular feedback
so you can manage it:
Daily/weekly is best!
• Classify comments to
help prioritise issues
• GET COMMENts to the
right people
• Act on customer
feedback – within 24
hours
Problems! Suggestions Praise
Service issues Service Testimonials
Logistics Logistics Improvements
Returns etc
FINANCE
WEB

14. Segment by Loyalty
Customer Segmentation
20,000 surveyed
25% response
DETRACTORS promoters
20% TOTAL 45% of total,
1012 customers, 2250 customers
19 gave “0” score 1643 gave “10” score
459 comments 833 comments
☹ ☺
Detractors Promoters
LOYALTY
(Net promoter
score)

15. Value & Loyalty Matrix
Customer Segmentation
Take actions to
Rescue
Key customers
IN DANGER OF
Value RESCUE REWARD
(spend, profit) defecting
&
LOWER PRIORITY
Reward
Key customers
Detractors Promoters who can help
grow sale
LOYALTY
(Net promoter
score)

16. Building your Loyalty Robot by hand
? Set up processes to
continually monitor
customer scores and
feedbacK
Survey customers
automatically
Data in from
e-commerce
system
“we’d like you
Find urgent Prioritise to trial our new
product”…
customers to customers to
be rescued be rewarded
“What do you
think of this?”
You said you would
Call center recommend us –
thanks! We’d like to
feedback
offer your friends a
£20 voucher to try
us!
Measure
referred sales
Regularly
report nps
results, Learn from Publish
returning customer testimonials to
customers etc feedback the web

17. Can it be automated?
• Can you survey customers automatically?
• Can you make sense of customer input with a machine?

18. A real Loyalty Robot: CustomerGauge
• CustomerGauge is a system that
– Plugs into your ecommerce system to
automatically survey customers about
their experience, every day
– Brings voice of customer feedback into
your organisation
– Measures customer loyalty with industry
standard Net Promoter Score®
– Shows results on dashboard in realtime
to help improve customer experience
and retention sales
– Simple to use, quick to implement
– No hardware or software needed
• Optional extras:
– Workflow module to guide feedback to
appropriate department
– “Marketing Robot” to help you segment
and automatically target offers to most
engaged customers
Survey every transaction, automatically
• Coming soon:
– Automatic sentiment detection

19. Automatically segmenting returning customers
Built in rules to
help rescue and
reward
customers
Analyze the
response history
CustomerGauge from your most
helps you prolific
measure and customers
understand your
VIP customers
- J. Smith@directness.net
Look at individual
customer
spending
patterns, and past
comments/scores

20. CustomerGauge – Customer Rescue
ATTN: THIS
CUSTOMER
Automatic REQUESTED HELP:
workflow “WHERE IS MY
SHIPMENT? I
“rescue” CALLED 3 TIMES!”
message SENT j.smith@...
to call agent
queue
AGENT CAN
IMMEDIATELY
RESPOND, UPDATE
CUSTOMERGAUGE
SYSTEM
You CAN check
customer issues
are being closed
• From survey to solution,
CustomerGauge helps you
solve customer problems one
by one

21. CustomerGauge – Strategic change
management
SURVEY: CUSTOMER gives
multi-choice feedback
on likes/dislikes
Understand root
causes
SURVEY: VOICE OF
CUSTOMER comments
Assign to
project
• To help make managers
strategic change: Track NPS
– Identify root causes improvements
of issues
– Put a value on
impact of each issue
– Set up projects to Understand value / NPS impact
“Close the loop”
– Track NPS
improvement as a
result

22. Summary
• Identify your most valuable returning
customers
• Continually ask for feedback using Net
Promoter Score methodology
• Rescue & Reward the most important
customers
• Automate the process wherever possible:
build a Loyalty Robot
• Make it part of your company’s DNA – use the
best tools out therE!
Thank
More information: info@directness.net
you
Directness BV, Silodam 253, 1013AS Amsterdam, The Netherlands
Telephone: +31 208 20 21 60
© CustomerGauge 2010
*Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain &
Company, and Fred Reichheld.