Net Promoter System (NPS) HNA Intro Session October 2012

1. Net Promoter System (NPS) HNA Intro Session October 2012

2. Customer Loyalty NPS? What is it? How will we use NPS? How will we use the NPS responses? Overview Net Promoter System How will we communicate NPS?

3. Customer Loyalty How Does It Work in Practice?

4. Everybody thinks they are doing it (satisfying the customer)…. Customer Loyalty Net Promoter System Source: Bain & Company Diagnostic Survey 2004 …but very few are! ‘Superior’ was defined as delivering a customer experience which scored at least 1 standard deviation above the mean for their industry 80% Companies that believe they provide a superior experience. 8% • Companies whose customers agree

5. Not about customer satisfaction… Very little correlation between satisfaction and customer retention/corporate growth ‘Satisfied’ is a low bar for customer loyalty; leaves customer open to a better offer 80% of defectors will report they are satisfied just before they go elsewhere Customer Loyalty Net Promoter System Loyalty leaders set a higher bar… Exceptional Greatness WOW! Delight Awesome Superior

6. Customer Loyalty Net Promoter System • Loyal Customers…. • Spend more • Buy more often • Buy a broader range of products and services • Have lower acquisition and retention costs • Bring other loyal customers to the table • Drive innovation in products and services Loyalty Leaders grow twice as fast Also loyalty leaders typically see a 15% cost advantage over competitors

7. Which looks like… Customers think of Howden first when they have a need for our products and services Customers want to do business with us and would prefer to give the sale to us than to a competitor Customers are willing to pay more for our products and services than an equivalent competitor’s Customers come to us with business rather than having to chase sales Customers come back to us for after sales service and support throughout the lifetime of their product “Positioning Howden as customer’s first choice” Customer Loyalty Net Promoter System

8. NPS? What is it? How Does It Work in Practice?

9. Measure the right things Engage customers in real time Close the loop on customer feedback Embed customer engagement throughout the organisation NPS? What is it? Net Promoter System

10. Not just about customer surveys • It is a process for capturing and acting on VOC and improving the way we do business with our customers Part of the business • Because NPS is about more than just running surveys it needs everyone in the business to be involved for it to succeed Ongoing process • It’s not a one-off activity; it will be a key part of the way we run the business in future as well as part of how we measure our success Requires employee involvement • Many HNA functions will be a key part of the success (or failure) of the system NPS? What is it? Net Promoter System

11. 1. A metric for measuring customer loyalty Customers score Howden based on likelihood to recommend as a supplier Provides a loyalty metric for individual contacts which can be aggregated up to customer, segment and BU level Allows measurement of improvement – ‘moving the needle’ on Net Promoter Score NPS? What is it? Net Promoter System 2. A system for continuous improvement based on VOC • NPS system focuses on taking action on the feedback that customers give us • Use what customers tell us to focus our efforts and make changes where they can provide most value 3. It’s not a traditional market survey • Traditional surveys are long, laborious, one-off research efforts • Typically, a report is published and nothing happens – hard to drive action from these • NPS is ongoing, perpetual, real-time feedback via short 2/3 question surveys

12. How will we use NPS?

13. Which looks like… Howden group evaluated multiple systems and chose to use the NPS system A pilot study was approved and BUs were invited to participate 5 other BUs will also pilot the system: HUK, HHEL, HNL, HDK, HES HNA will be one of the first companies to implement the system NPS is a great opportunity to start listening to customers and acting on their feedback HNA is a pilot group for the Howden NPS System How will we use NPS? Net Promoter System

14. Steps of HNA’s NPS Process Send Respond Address Issues Close Out Reporting How will we use NPS? Net Promoter System

15. Which looks like… Send. Send survey to a batch (we will start with a weekly batch of approx. 20 contacts every Tuesday). Once a contact gets 1 survey they will continue to receive a survey every 6-12 months, with a goal to have each company contacted at least once a month). How will we use NPS? Net Promoter System

16. How will we use NPS? Net Promoter System • Customer receives e-mail invite from Howden • Invite will be in specified local language • Signed by BU MD • Link to e-mail survey • 1 reminder after 1 week if not completed • Never receive 2 emails within 6 months

17. How will we use NPS? Net Promoter System

18. Which looks like… Respond. A 48 business hour response is expected. The assigned HNA employee will receive an email when a survey is completed and follow up is needed. Initially all responses will receive a phone call thanking them for the survey and if there are comments, identifying the root cause to take further action. Who calls will be handled as follows. Please check quality system & CRM prior to calling. • 9-10 Rating (Promoter): KAM/Sales Manager • 7-8 Rating (Passive): KAM/Sales Manager • 4-6 Rating (Detractor): Director of Sales for division • 0-3 Rating (Severe Detractor): VP of the division How will we use NPS? Net Promoter System 48 Hour Phone Call Response to EVERY Completed Survey- This is very important

19. Net Promoter Score Major Detractors Detractors Passives Promoters VP Market Sales Director KAM KAM

20. How will we use NPS? Net Promoter System

21. How will we use NPS? Net Promoter System

22. Which looks like… Address Issues. There could be several types of issues: • Quick Address: fix the issue (“just do it”), continue with business and report to NPS champion to include in bulletin. • Kaizen Address: A bigger issue that will be sent to the CBS team to consider for future Kaizens. • Other Address: Issues that have a larger scope and will be tracked and recorded by the NPS champion (Price, issues with other BUs, etc.). • Please remember to send a CAR to Quality if necessary How will we use NPS? Net Promoter System Don’t Just Listen. ACT. This is the most important piece. NPS is a tool to help employees make an impact on customers and elevate larger issues to management

23. Which looks like… Close Out. Upon fixing the problem and talking with the customer go to the survey profile, record the action you took and add “tags” to the survey comment so analysis can be accurate in future reporting. How will we use NPS? Net Promoter System Close the Loop.

24. How will we use NPS? Net Promoter System • All customer feedback is held in software system and a history is kept • Workflow management allows user to set Open/In Progress/Closed and keep a history of comments • Comments can be tagged to help searches and analysis in future

25. Which looks like… Reporting. The NPS Champion will create monthly reporting to accompany the bulletin that will be “sliced and diced” as needed using tags, issues, ratings, companies, industries, product, region, etc. How will we use NPS? Net Promoter System Identify Trends and Larger Issues to Elevate. Report the Positives & Negatives to the Team. Keep the Right People Informed.

26. How will we use NPS? Net Promoter System

27. How will we use NPS Responses?

28. Following up with customers and using their responses to build a better customer experience is the most important part of the system. Net Promoter System How will we use NPS Responses?

29. Follow-up calls have 3 aims: Neutralise Detractors – Address any requests for specific follow-ups, current service issues or simple fixes Root-cause Analysis – Identify drivers of dissatisfaction and understand in greater depth the issues being caused to customers Mobilise Promoters – Leverage references, case studies etc or for employee recognition or internal communications How will we use NPS Responses? Net Promoter System Key to success: • Do them quickly – Aim for 48 hour turnaround • Use them to understand and explain – Not to justify, argue or make excuses • Address it if you can – If its straightforward, fix an issue there and then • Don’t be afraid to escalate – involve managers right up to the MD if needs be

30. Which looks like… Address Issues. There will be several types of issues: • Quick Address: fix the issue (“just do it”), continue with business and report to NPS champion to include in bulletin. • Kaizen Address: A bigger issue that will be sent to the CBS team to consider for future Kaizens. • Other Address: Issues that have a larger scope and will be tracked and recorded by the NPS champion (Price, issues with other BUs, etc.). How will we use NPS Responses? Net Promoter System

31. It’s not about the score… BU Involvement and Participation (# of BUs with NPS running) Coverage of key accounts (% of sales, bookings, profits, etc) Contact list quality and completeness Response rates (Good 40-50%; Best in Class 70%+) Detractors and Promoters receiving follow-up Number of improvement projects initiated/ongoing/complete How will we use NPS Responses? Net Promoter System It takes time to establish the process, take action, have customers notice and see results reflected in moving the score. Anecdotally ~18 months

32. How will we use NPS Responses? Net Promoter System

33. How will we communicate NPS?

34. How will we Communicate NPS? Employees • Large group meetings and webexs Login & instruction page Nexus website Customer quarterly newsletter NPS bulletin as distributed by SMT Howden 360 recognition Sales Representatives Webex meeting Monthly sales rep NPS bulletin will be uploaded to the Hub Hub website Customers Quarterly newsletter Email with survey Direct follow up phone call upon survey completion Customers will get a call if a long term issue was fixed that they commented on How will we communicate NPS? Net Promoter System