Learning from Pizza Hut & Borders: Can Performance Incentives Hurt the Customer Experience?

Under the irrefutable philosophy that happy, productive agents create satisfied, engaged customers, wise brands implement meaningful incentive programs.

By showering compelling rewards—not simply pats on the back—on top performers, leaders simultaneously encourage productivity and improve morale. In theory, the result should be drastically-more engaged agents who are drastically better at engaging customers.

But if performance incentive strategies and customer-centric outcomes moved in perfect unison, customer experience would not be a discussion topic. Every organization would be excelling, and every customer would be reveling in a world designed around his needs.

Sadly, as logic suggests and reports from organizations like Pizza Hut and Borders confirm, the positive correlation is not a certainty.

In a series of articles, advocacy website Consumerist addressed a reality more bleak than customer management optimists would like to believe: some brands—and brand employees--poison the feedback well and thus turn notions of incentivization and agent engagement on their heads.

Reading between the crust

Before getting into a broader discussion about performance incentives and the impact on customer advocacy, the website shared a submission about Pizza Hut. Contributed by a Pizza Hut delivery customer, the photo—that of a note taped to his pizza box--revealed that at least one local franchise is undermining the integrity of the organization’s feedback process by explicitly asking for a 5-star survey review. So interested in eliciting 5-star reviews is Pizza Hut that it promised a $1 coupon to anyone who shows prove of such a review ("only 5s count").

The establishment’s specific motivations are unclear, but by confirming the 5-star reviews, "help us out and [are] a credit to our store," the note reveals the skewed priorities. Rather than using feedback to gain a truer perspective into its customer experience, and then earning its 5s by acting on that feedback, the restaurant seems exclusively concerned with the benefits of those 5s. What matters is not so much how it gets its 5-star reviews but the mere fact that it gets them.

The scenario epitomizes one of humanity’s tragic flaws: affinity for shortcuts. It is a trait that can produce beneficial efficiency, but as evidenced by Pizza Hut, it can also serve to undermine our true objectives.

Regardless of what benefit the restaurant stands to receive, it is clear a Pizza Hut location is rewarded in some way—either from corporate or simply due to the branding benefit—for achieving favorable customer feedback. But the reason such business-driven and market-driven incentives exist is because strong feedback signals a strong customer experience, which is a pivotal business objective. If merchants take a shortcut to the incentives—one that does not require improving the customer experience—it defeats the purpose.

Hoping to add context to the situation, a former manager from the now-defunct Borders retail chain revealed that her organization, too, focused on scores rather than the feedback behind those scores.

According to the contributor, Borders tied "significant metrics and bonuses" specifically to "5s" on customer feedback surveys. The written feedback did not matter; Borders would view a 4 with glowing feedback as inferior to a 5 with generic comments. In fact, no matter the accompanying written qualifiers, consistent 4s would be viewed as signs of weakness and could land managers in "serious trouble."

Flawed system notwithstanding, it does seem Borders had its heart in the right place. The ex-employee strangely laments, "we had to consistently move beyond ‘hey that was a pleasant time buying a book’ to ‘THIS IS THE GREATEST STORE IN THE UNIVERSE’ to get a 5" as if that mindset is not the correct one in the age of the customer. Today’s brands and brand representatives should be striving, wherever possible, to create unforgettable experiences.

If a 5 signals such enthusiastic customer support, Borders was entirely correct to exclusively pursue such scores. Delivering a "pleasant time" might be fine, but if an organization wants to rise above pleasantness and into excellence, it should incentivize whose who drive rabid customer enthusiasm. Why incentivize those who maintain the status quo?

But by fixating on 5-star reviews, as the Borders employee suggests, the organization was missing out on the very valuable feedback affixed to other customer scores. Further, by so notably incentivizing 5s, Borders, like Pizza Hut, encourages employees to seek shortcuts—the ex-manager confirms, "We could freely admit to customers who received the survey that only a 5 gave us credit, and if we didn’t deserve the 5 please don’t take the survey."

Fives might be the truest symbol of customer satisfaction—and thus the most relevant performance indicator—but without the context of the 4s (and 3s and 2s and 1s), they mean absolutely nothing. And as long as employees scheme to inorganically attain more 5s (or reduce the number of non-5s), they are damaging that relevance.

And that is why a third Consumerist post—one that attempts to clarify the Pizza Hut and Borders stories from the senior management perspective—is so perplexing.

Promoting excellence

Buried in a mess of tangential advice about how best to get perfect customer feedback scores is a layman’s explanation of the Net Promoter Score system. While the summary is fair enough, it overlooks the most important detail: the calculation.

One calculates NPS by subtracting the percentage of detractors (scores 0-6) from the percentage of promoters (scores 9-10). Percentage is the key word, because even though there is no specific line for the passives (scores 7-8) in the calculation, their existence impacts the percentages for promoters and detractors and, thus, the score.

Brands that discourage—or actively ignore—scoring from non-promoters might receive the same number of promoter scores, but they would lose data that is essential for putting their customer experience into context. That a brand received 500 10s (or 5s, in the Borders and Pizza Hut cases) means nothing without knowing how many non-10s it received.

Barometers of success –not shrewdness

Net Promoter Score, moreover, is a merely one barometer of success. It is not the end-all, be-all of customer feedback and, in fact, provides a notoriously limited perspective of the experiential intricacies. Using NPS to excuse the aforementioned Pizza Hut and Borders examples is both a misleading and misguided pursuit.

No matter the specific scoring system used, customer satisfaction scores are designed to measure an element of the customer experience. They do not exist to rank an employee or storefront’s ability to game the system.

They are barometers of success—not shrewdness.

Scores are far easier to attain than winning experiences are to deliver. And so instead of organically earning their 5s through a productive, efficient, committed customer experience, many agents will opt to find the easiest means of achieving top scores (and the incentives that come with them).

And the victim is customer If the customer pool is encouraged to be anything less than sincere and candid in the feedback process, the entire process breaks down. The valuable insights that help leaders diagnose their brands and fix their problems become useless—if even existent—and managers have far less basis on which to drive improvement. That means woes will persist and that the customer—the very person whose feedback and "scores" are supposed to matter—will continue enduring an impersonal, inadequate experience.

Incentive plans work, and they are a great way to boost productivity and morale. But when focusing on customer-facing executives, it is imperative to build incentive programs that value those who create better experiences rather than those who best game the system.

Similarly, since feedback is essential to customer experience improvement, it is imperative to assure agents see value in collecting feedback from all customers, including (if not especially from) those who are neutral or even negative on the brand.