The Net Promoter System Podcast
Last week, on the Net Promoter System Podcast, former Telstra CEO David Thodey shared the story of the Australian telco’s dramatic transformation from the most hated company to the most respected service provider. In the second half of our discussion, David talked about the finer points of Telstra’s Net Promoter® journey, including the leadership’s role and the tactics that fundamentally helped change the culture of this large, complex corporation.
Throughout his tenure, David maintained a laser-like focus on the customer advocacy agenda. To do this, he and his team pulled almost every lever imaginable. They changed the company’s metrics for success and made a public commitment to become the most recommended telco in Australia. And they backed it up by tying 40% of senior executives’ incentive compensation to specific goals for raising Telstra’s Net Promoter Score®, compared with the competition. That was the obvious, public stuff.
But below the surface, much more was going on. For example, in order to keep customers top of mind for every employee and work group within the company, Telstra leaders instituted regular Net Promoter huddles, which they call T-Times. Even David and his direct reports used these meetings to keep customer advocacy at the top of their agenda. Establishing this rhythm of advocacy was crucial in reinforcing that priority and backing it up with action.
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In addition, David and his team instituted customer-friendly improvements, designed not only to improve customer advocacy, but also to send a clear message to staff. These included eliminating certain fees that the team determined fell into the “bad profits” category, such as certain types of late payment fees. The team also prioritized improving network performance, using a new algorithm based on the Net Promoter System’s outer loop, which incorporated customer lifetime value and other factors that multiplied the impact of their capital spending investments. And they tackled barriers to customer centricity, such as rules that prevented employees from telling customers their names or that discouraged call center representatives from returning customers’ calls. These changes were both substantive and symbolic. And, as David points out, most were cost neutral or better.
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Keep in mind that Telstra is one of Australia’s biggest companies. It operates in 20 countries and serves millions of customers. Effecting change on that scale required discipline, dedication and perseverance. It required a dedicated and explicit focus on winning over the company’s 36,000 employees. And importantly, it required overcoming the skepticism and resistance of doubters—which often undermine change initiatives at large companies—especially among frontline employees who were targets for disgruntled customers and among middle managers who had watched many change initiatives come and go over the years.
As David says, “You can never have a truly customer-centric company unless your people feel good about working at [your] company.”
David’s experience at Telstra offers many lessons for Net Promoter practitioners. If you missed the first part of our interview, I strongly recommend that you go back and listen to it. You can listen to the second half of the interview on iTunes or through the player above. Click here to browse more Net Promoter System Podcast episodes.
Net Promoter®, Net Promoter System®, Net Promoter Score® and NPS® are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
Former Telstra CEO David Thodey discusses his decision to put customers first, the difference between satisfaction and advocacy, and balancing investor expectations.