Capturing L&D metrics too often entails asking the wrong people the wrong questions at the wrong time.
Line leaders are a CLO’s most important customers. They judge the trade-offs in spending that determine L&D’s fate in the budget process. They base their decisions on what training professionals call Level 4: Did the training impact the bottom line? Did it matter?
By and large, line leaders are not happy with L&D’s performance.
A survey of thousands of line leaders found that 77% were dissatisfied with the results of L&D. A mere 24% agreed that L&D was critical to business outcomes. Only 15% thought L&D effective at influencing talent strategy. 14% would recommend working with L&D; 52% would not; 34% were passive. (Statistics from 2011 Corporate Leadership Council, L&D Team Capabilities Survey)
If a line of business reported such shoddy scores, red flags would arise and heads would roll. A corporate SWAT team would tear into the problem. Was L&D operating this poorly or had it earned an undeservedly bad reputation? How can we put this train back on the track?
The way to succeed with line leaders is to involve them in the governance process. Acknowledge that they are L&D’s customers. Gain their support by planning with them. Monitor trends in their assessments of L&D. Use their feedback to make improvements.
What’s the appropriate yardstick for measuring the confidence and loyalty of line leader customers? I propose that CLOs adopt the Net Promoter Score® methodology developed by Fred Reichheld at Bain & Company and Satmatrix.
The Net Promoter Score® measures loyalty based on one question, “How likely are you to recommend our service to friends and colleagues?” Scoring is from 0 (Not likely at all) to 10 (Extremely likely). A open-ended question often follows to provide guidance for corrective action.
Here’s how it works: Survey your customers. Calculate the percentage of detractors (scores 0-6) and the percentage of promoters (scores 9-10). Your Net Promoter Score is the percentage of promoters minus the percentage of detractors. Passives (scores 7-8) don’t count in the equation.
In a variety of industries, Net Promoter Score correlate directly with differences in growth rates among competitors. (Fred Reichheld, The One Number You Need to Grow, Harvard Business Review, December 2003).
Customer loyalty increases profitability. It’s less costly to keep a customer than to acquire a new one. Loyal customers who talk up a company lower the expense of gaining new customers. If you’re like me, when a company exceeds your expectations, you’re much more likely to come back.
Reichheld and his peers tracked more than 10,000 Net Promoter Scores at 400 companies. This one simply number explained the growth rates in industries as different as airlines, internet service provides, and car rental companies.
Now that we’ve determined who to ask (line leaders) and what to ask them (“Would you recommend…?), let’s turn to when to ask them.
My Internet service provider asks if I would recommend their service at the conclusion of every support call. Many online merchants ask the question immediately after taking an order. Airlines distribute questionnaires to people in flight.
CLOs should wait six months before asking the question. Unlike a product that will be delivered in two business days, it takes a while for lessons to sink in and/or to disappear due to the Forgetting Curve.
You may be wondering why Net Promoter Score hasn’t taken the world by storm. Reichheld thinks that maybe market research firms can’t find a way to make money administering something so simple.
Simplicity is the hallmark of the Net Promoter Score, so much so that it represents a phase change in how we regard metrics. Instead of being buried in quarterly reports read by few, the Net Promoter Score can become a management tool.
The prime directive of any organization is to create customers. The Net Promoter Score shows how the organization is doing in terms all managers and workers can understand. The score points to relationships that need improvement. Practitioners actively intervene to convert detractors into promoters. Insiders call this “closing the loop.” Some companies factor it into the calculation of incentive compensation.
As Reichheld says, “The path to sustainable, profitable growth begins with creating more promoters and fewer detractors and making your net-promoter number transparent throughout your organization. This number is the one number you need to grow. It’s that simple and that profound.”
This column appears in the April 2014 issue of Chief Learning Officer.