How Businesses Can Improve Product Quality & Raise Net Promoter Scores
There may be no greater indicator of a company’s value in the eyes of its customers than its Net Promoter Score (NPS)—a measure of the willingness of a customer to recommend a company’s products or services to others. A score of 50 or above is considered excellent in nearly any industry and is particularly difficult to achieve in a business-to-business model. The tech industry (software and hardware) typically falls well below that mark, with average scores in the 20s, which have been dropping over the past few years (Temkin Group, 2014 NPS rankings).
Raising an NPS isn’t easy. Avaya knows the effort and investment it takes to make even the most incremental improvements. In 2011, we prioritized speed to market over ensuring quality, resulting in an NPS in the low 20s. Customer dissatisfaction grew, and our senior staff spent extraordinary amounts of time and money assuaging Fortune 500 customers and others. The cost of poor quality reached upwards of $1 billion annually as we retrieved and replaced products released to market, and we also struggled to repair relationships and regain trust.
I joined Avaya in November 2011 to address this untenable situation. With my small, independent team acting as drivers and coaches, business units across the company have steadily improved Avaya’s NPS score over the past five years—recently reaching a new high of 59.
Avaya is now among a small number of tech companies to achieve a best-in-class NPS rating—while also dramatically lowering unnecessary costs to the business. How did we do it? If you’re a senior leader who is struggling to raise customer loyalty and boost your company’s bottom line, it’s never too late to turn things around. Here’s the Avaya roadmap to establishing a successful culture with better processes and metrics:
Change Your Culture
We created the Cost of Poor Quality initiative, which “dollarized” the cost of repairing or reworking versus the cost of doing it right the first time. For example, we found that it cost a few hundred dollars to fix software defects early in the design. However, if the defect escaped and reached a customer, it could cost upwards of $25,000—a number that could be dramatically higher if it occurred on a critical account.
Armed with this knowledge, we drove a culture of prevention that took steps to understand why the problem occurred, and then corrected those issues early on in the process, quickly going from containment to correction to prevention. We also created a cross-functional culture of teamwork through various councils, metrics, and sheer force of will, establishing the CEO Quality Award for excellent team performance in the pursuit of quality.
Develop Predictive Metrics
Since NPS is a rear view metric that can show you there’s a problem long after it’s too late, we set out to develop predictive metrics to help identify what we wanted to achieve and measure how we would get there.
As a first step, we captured everything that goes into a good customer experience. For example, customers want products that have the features they need, have no code defects, and are easy and intuitive to use. When they have an issue, they want fast, effective, professional service that resolves the issue quickly. For each major function of Avaya, and for each customer touch point, we built a flow down of questions to define what good looked like. We then established metrics we could track internally and determined industry or world-class benchmarks. So basically, if we did everything that fed into customer satisfaction better than our competitors, we should be able to justify happy customers and a high NPS.
We then created the Avaya Quality Index (AQI), a report card that defined exactly what “good” is, and set a benchmark score of 80% for each of the line items. Each business unit focused on driving improvements in their core metrics. Not surprisingly, as our AQI started to go up, so did our NPS.
Establish Best Practices
Our development team benchmarked each of the processes used to develop and test software. The theory was, if we start doing things the right way from the start, we’ll get the right results. We created best practice expectations and a scoring system for the development team to measure the degree to which we’d implemented best practice with a dashboard metric we called the Implementation Quality Index (IQI). This drove quality behavior up front, which was also part of our cultural change. For example, each product was scored based on the test coverage at SV. If a minimum level of best practices utilization wasn’t demonstrated, a product did not get approved for general availability. And of course, we continued to raise the bar on the minimum acceptable level over time. This forced more and more best practices across the product line and led to a remarkable improvement in product quality. Process automation and implementation of best practices in Services, Sales, and Operations have also driven customer satisfaction higher.
In the months and years to come, we plan to continue following our roadmap to increase our NPS even further—targeting the high 70s. Whereas years ago we would prioritize staying on schedule over quality, today our products are turned away if they don’t meet the highest metrics for quality. Early in the development process, Avaya product teams are also taking it on themselves to quickly tackle any issues that could prevent a high-quality release. That is why, in addition to an NPS approaching 60, our gross margins have gained more than 13 percentage points (or 1300 basis points) to climb from 49% in fiscal 2010 to more than 62% in our most recent quarterly results.