‘The goal for customer experience is to unpack NPS’

In this week’s podcast, the CCO of Alaibaba Group’s Lazada Group delves into NPS as a driver for success in CX.

EPISODE OVERVIEW:

Dominic Hoffmann is the Chief Customer Experience Officer – Malasia of Lazada Group, part of the Alibaba Group. He joins host Seth Adler in this week’s podcast, in which he shares that NPS might not be the definition of success as it’s currently widely understood.

That said, Dominic does agree that it’s one of the most important KPIs to measure the customer experience. The organisation even uses it as a basis for incentives, but for the customer experience practice you need to see it from a different angle.

He says you shouldn’t utilise NPS as a blunt object. The goal for CX is to unpack NPS, to understand what it entails and how its recipe might have changed from one year to the next, or over the lifetime of the organisation.

“We identified the right key levers to enable our growth. Shifting from a retail to a marketplace model, enabling the marketplace model to grow with the right assortment, enabling a cross border network so that we could drive the supply for the region.”

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TRANSCRIPT:

Seth Adler: From Lazada, Dominic Hoffman joins us. First some supporters to thank, and thank you for listening.

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Dominic Hoffman, the Chief Customer Experience Officer of Lazada, Malaysia, of the Lazada Group, of the Alibaba Group, joins us and shares that NPS might not be the definition of success, as it's widely, currently understood. That said, Dominic does agree that it's one of the most important KPIs to measure the customer experience. The organization even uses it as a basis for incentives. But for the customer experience practice, you need to see it from a different angle. Don't utilize NPS as a blunt object. The goal for CX is to unpack NPS, to understand what it entails, and how its recipe might have changed from one year to the next, or over the lifetime of the organization.

Welcome to the CX Network, on B2B-IQ, I'm your host Seth Adler. Download episodes on CXNetwork.com, or through our app in iTunes, within the iTunes podcast app and GooglePlay, or wherever you currently get your podcasts.

Dominic Hoffman.

Dominic Hoffman: Chief Customer Experience Officer of Lazada, Malaysia, which is part of Lazada Group, which is then part of Alibaba Group.

Seth Adler: Okay.

There are folks in Asia that listen to this that, of course, understand. There are folks in Europe that probably understand. There are folks in the US that probably don't understand. So just kind of give us an overview of those three entities, so we're aware.

Dominic Hoffman: Yes. So, Lazada was founded in 2012, by Rocket Internet out of Germany. Then multiple investors invested over the period of time, and then recently Lazada has been acquired by 83% of Alibaba Group.

Seth Adler: You being the Chief Customer Experience Officer, how long have you been in that role?

Dominic Hoffman: In that role for Malaysia, I've been for the last six months, but I've been with Lazada for the last three and a half years, and since I've joined Lazada, I've been in the loop for customer experience the whole time, first on the regional level, now dedicated for Malaysia.

Seth Adler: One of the things that you just had a presentation here at Customer Experience Management Asia, in Singapore, and one of the things that you said was, to be wary of utilizing NPS, and most of the interviews I have very much value NPS, if for no other reason ... this is a great KPI to measure against if we can't use cost or if we can't use profit, let's use NPS. And then you just got up and told me not to.

So, take us through the thinking as far as why not to maybe put NPS on the pedestal that we're putting it on.

Dominic Hoffman: So, to a certain extent I would say NPS is one of the key most important KPIs to measure the customer experience. That's why we talk about it so often.

In Lazada, we use it as a key performance indicator to also measure year-end incentives, for example. So yes, we kind of value it very highly.

For the customer experience practice, you need to see that from a different angle, because you cannot grow NPS year on year, if you've been doing it for five years at certain growth levels, or a certain pace. Especially when you re-pivot your business. If you add a new business towards it, and this is impacting your NPS, you might stay flat with your NPS, but you've very successfully on-boarded a new business line, which might have been on average at a lower NPS. So for CX professionals, especially in Lazada, it's very important to understand what actually entails the NPS for the organization, and how does it change over the course of a year, or the course of the lifetime of the organization.

Seth Adler: If not NPS ... understanding what you're saying ... If not NPS, what?

Dominic Hoffman: I'm in favor of a complimentary feedback infrastructure, because the customer experience, and the customer journey, if you look at it from Lazada perspective, is a very ... it's a long process. It starts with discovering the website, coming to the website, ultimately this traffic that comes to the website converting into a sales, and then the after-sales process, and potentially maybe even having a return. A single metric does not give me the right feedback what the customer thinks.

Seth Adler: So what is the entourage of metrics that you can share that you're using?

Dominic Hoffman: We use basic industry KPIs here, so we use NPS, and in addition, we have customer effort score. We have CSAT for our customer service, and then we have additional surveys, which are more geared to maybe cancellations by our customers, and failed deliveries.

Seth Adler: Okay. And so that's the suite that you're looking at.

Dominic Hoffman: Yes.

Seth Adler: What else are you taking into account? You have just gone through tremendous trajectory growth over the past five years, notwithstanding an acquisition from Alibaba, right? To what do you credit this?

Dominic Hoffman: I think there can be ... I think there's several reasons why Lazada had so much growth. First of all, I think it was the right timing for the market. There was no other ecommerce player on the marketplace here before. I think Southeast Asia, especially five years ago, was very underdeveloped when it comes to this space that we're operating in.

Then I think we identified the right key levers to enable our growth, which was shifting from a retail to a marketplace model, enabling this marketplace model to grow with the right assortment, not only from Southeast Asia, but also enabling cross-border network, that brings in, for example, items from China into the region, so we kind of drive the supply for the region. This was one of our key enablers. In addition, we set up a logistics company behind all of that, so that we also make sure that a certain portion of our parcels can be supported by our own logistics, and we're not only relying on available services that were there in the market.

And last but not least, we also enabled, I think, through a payment channel, such as HelloPay, for example, additional growth so customers were trusting us and performing their payments on the platform.

Seth Adler: What is the background of the leadership group that was able to garner this much investment? I would imagine there was a tremendous amount of money that needed to be invested to do all the things that you just mentioned.

Dominic Hoffman: Yes, I think here we're very happy to have a very diverse group of people who are working at Lazada, especially across the C-suit. Our group C all, Maximilian Bittner, he comes from Germany. He initially started Lazada, together with Rocket Internet, our first investor. And then, I think with multiple other nationalities, and a broad background of people coming from operations departments, coming from commercial backgrounds, coming also from the finance industry ... consultancy background ... I think with this diverse portfolio of initial ...

Seth Adler: Stakeholders?

Dominic Hoffman: Stakeholders ... founders, we made it this far.

Seth Adler: It also sounds like you're German?

Dominic Hoffman: Yes, I'm German as well.

Seth Adler: Where are you from in Germany?

Dominic Hoffman: I'm from Frankfurt.

Seth Adler: Okay.

So let's make sure that we understand you, and who you are. When you were growing up as a kid in Frankfurt, what were you interested in?

Dominic Hoffman: Soccer.

Seth Adler: Of course you were. I also very recently ... not too recently, but recently enough ... Germany beat the US in the World Cup. You might remember this?

Dominic Hoffman: Yes.

Seth Adler: It was soundly. It was not close. This was not a competition. It was almost like the Germans were playing a different game than the Americans. You're aware of this?

Dominic Hoffman: You mean the Americans, or the Brazilians?

Seth Adler: No, no, no. They ... oh, no, no, no, that's a different ... Thank goodness, I mean the Americans. Right? The Brazilians was a much ... yeah, that did not go well.

But how serious is football taken in Germany, for a young person? In other words, when I played soccer as a kid, you know, we did what we did. But for you, was it ... were the stakes raised, do you think?

Dominic Hoffman: No, in Germany, it's very important. I think it's the number one sport that is performed, especially by kids and young adults. And it's obviously very important, for somebody like me, growing up in Germany, to partake in soccer, or to build your team playing skills in any other forum. But I think my preferred choice was then soccer, and not handball or basketball, or any other team sport.

Seth Adler: What kind of lessons did you take from the pitch into either university or into your professional life?

Dominic Hoffman: I think preparation is key. I think, yeah. All battles are ... no, I'll say it differently. I think preparation is key. It's not only about the game, but how well prepared you kind of arrive at the game. To a certain extent also knowing your opponent, whom you're going to meet on the pitch.

And then I think what is also quite important, that everybody in the team of the 11 players has an individual role to contribute to the team. And this is kind of something where you evolve over a certain period of time, but you have this role in the game for the team. So all of a sudden, if I'm a striker, I will not be the goalie for the game, and take his gloves and say, that I can do it better. He's the dedicated person for the game. Or if I'm the captain, of course then I will take pride and aim for my team against my opponent in winning the coin toss, for example.

Seth Adler: Yeah, yeah. But you're saying focusing your mindset on what you are there to do, as opposed to complaining about what someone else is doing, essentially.

Dominic Hoffman: Exactly, yes.

Seth Adler: Yeah, all right. Where'd you go to school? Where'd you go to university?

Dominic Hoffman: I went to university at the Cologne Business School, in Germany, and I had short stints in China, and the US.

Seth Adler: Okay. Maceo Parker used to play saxophone for James Brown. He has a live album called Life on Planet Groove. During one of the very long songs on there, he says, "Let's go to Cologne, and funk with the folks." What do you think he means?

Dominic Hoffman: I think Cologne has a great reputation ... it's not only Cologne itself, but I would say it's the area around Cologne as well. I think there's a lot of very warmhearted people there.

Seth Adler: Is it a party town?

Dominic Hoffman: It's ... I wouldn't say only ... It's not only a party town, but I think it's the right mentality there to be very inviting, to be very open, and I think just to get your groove on. And I think they have great hospitality there, yes.

Seth Adler: There you go. What did you study?

Dominic Hoffman: I studied international business, but with a focus on East Asian management.

Seth Adler: Okay. So we were talking on the way over here, you did tell me why, but tell us now, why you did focus on East Asian management.

Dominic Hoffman: Yeah. During my last year of high school, I took a trip to China to spend one month backpacking China. I did it by myself. I felt quite overwhelmed in the beginning. I arrived in Shanghai, took a train to Beijing, and then went to Chongqing, and kind of made my way back through Nanjing, to Shanghai again. And I was just overwhelmed, and there were so many people, but the drive and the entrepreneurial mentality, and that everybody was kind of like owning a store, or operating a store. Everything was like constant on. I think the mindset, the pace, and kind of the spirit that they had there, was very engaging and I really wanted to come back. And I thought that Asia is the place to be, compared to Europe or compared to Asia ... compared to the US.

Seth Adler: Compared to the US. Let's take that just one step further. As far as comparing it to Europe, you know, that pace, that kind of chaos, how does that compare to what you remember as the places that you grew up and the places that you traveled in Europe as a younger man?

Dominic Hoffman: As considered more mature markets, Europe and the US, you see more structure in the cities, more signpostings, people behaving in a certain way. What really attracted me in Asia was that it was kind of like for me an unorganized chaos, but it actually seems like a very organized chaos. If you get more and more inside, if you know the flows, if you know the way through it. And I think that's what's very attractive to me, that everything was done in a little bit of a different manner, and a little bit of a different pace, and it seems a little bit that there was still so much more to do there, with so many people being involved, that I thought that the trajectory there would be much faster than maybe in Europe or the US, what I've seen before.

Seth Adler: So for a German mindset, you know, nearly everything is going to be unorganized chaos, because we're by the book, and we've got to kind of be straightforward in the way that we discussed, you know, playing football, playing soccer. Very straightforward, very organized. Preparation. How did you come to understand what you saw as unorganized chaos to be actually organized chaos? What was the trick? What did you come to understand?

Dominic Hoffman: I think that culture is key there. You really need to understand how people tick. What motivates them, what drives them, what they might work for, what they want to achieve. And then everything comes a little bit more clearer. What are really the cultures, what are like maybe the manners, or their daily behaviors kind of around certain things. And this is where I then saw also the opportunity, maybe with a German mindset in Asia, to kind of contribute in a different way. To kind of contribute in a very certain way in certain parts of an organization, not only in business, but also in my personal life, that I feel very comfortable here in the region now.

Seth Adler: All right. Fantastic. So let's talk about a quick case study here in the region. You had it on one of your slides. There was a very tiny weight scale that was delivered.

Dominic Hoffman: Yes.

Seth Adler: And in an effort to understand where you are going, let's understand where you've just been. What happened there?

Dominic Hoffman: So, we had a customer who bought from our platform, and she bought a weight scale. But there were a couple of more content pieces, and especially in the description towards it, because it was a dollhouse weight scale. So the weight scale that actually arrived at our customer's, was a dollhouse size. So it was two centimeters, times two centimeters, but the customer was kind of expecting to have a normal weight scale, because she did maybe not understand, or not properly read, that it was actually a dollhouse weight scale. In customer experience, we took this feedback very seriously, we looked at it, and then we actually sent the customer a proper weight scale, and took her feedback on how content is perceived on our website, and transformed kind of like how content is going to be inputted in the future.

Seth Adler: How so? Dive in there. What can you tell us about the way that it was, and the way that it is now and will be.

Dominic Hoffman: So considering feedback from our customers, we come up with standards and guidelines how merchants upload their content onto our website. So in the future, especially in certain categories, we might give them now the guidelines to either add maybe more pictures, or to add more contrasting pictures that is maybe not only the miniature weight scale for a dollhouse, but also maybe for handbags, so that our customers can maybe look at it from a better perspective in figuring out what is actually maybe the real size of the product that they're going to purchase from us.

Seth Adler: Right. The true size. The actual size. Okay, so, this marketplace seems to be the way that commerce is going. In other words, you seem to be ahead of the game. What can you ... what can we expect from Lazada? What are you expecting from the group?

Dominic Hoffman: I think with the recent acquisition by Alibaba, we have a ... how to say it? We have been changing, and we have been setting us up for the future, for a better standpoint. I think if you look at the market with only one percent of retail sales going to online, I think there's a big opportunity for us operating in this market to grow, and further develop. But I would say that we still have to stay properly on our toes, because we're not the only one there. And even with the support of Alibaba as our key investor, and being in the Alibaba Group now, that does not set you up for direct success. I think we need to continue to stay on our toes, and continuously innovate for our customers and see what they actually want, and deliver that.

Seth Adler: As far as Jack, have you met him yet?

Dominic Hoffman: Yes. I've met him.

Seth Adler: And what can you share?

Dominic Hoffman: His speech towards Lazada two years ago, that was the first time that I met him, was probably one of the most inspiring speeches by a business leader that I've heard so far. It was very inviting, he welcomed us to the Alibaba family, and he gave us a great outlook on what the real philosophy of Alibaba is about, of really creating an ecosystem where we enable, not only customers, but especially also our sellers to give the right supply to the right demand in the marketplaces of the world.

Seth Adler: Yeah, organizing that ecosystem, essentially. Why was it so inspiring, I wonder? You know, I get it, he laid out the vision as far as the company is concerned. Okay, fine, fantastic. We're on board. But what was the emotional piece for you?

Dominic Hoffman: What is emotional is that he approached it in a different way that I haven't heard it before. He approaches it in this multi-generation view. For him, the business plan, the vision, is for more than a hundred years. So having somebody speak so thoughtful, and inspiring, although it's such a long period of time, with such a strong vision for this lengthiness, was something that was very new to me as well. To hear it in person, obviously we heard it before, we read it kind of before, but then actually he's standing in front of you, and giving you this vision, that was quite inspiring. And also we were there with the full leadership group of Lazada, so it was very personalized so that we could really understand and portray it onto ourselves ... how, what will be this vision for me in the future of this organization?

Seth Adler: The other side of that is, across the pond from Europe in the US, we're using a phrase - the retail apocalypse. Have you heard this phrase, even?

Dominic Hoffman: I've heard it, I haven't made my mind about it yet, properly.

Seth Adler: Okay. What is going through your mind? What's coursing through your mind as we come to a place where once again we're discussing the fact that there's just not going to be any retail stores ... as Amazon opens physical book stores, by the way. You know, what does it make you think, being somebody that is from Europe, that is operating a store within one of the great retail groups of our time in Asia, what do you think when we say things like the-

Dominic Hoffman: So for me, this is not a retail apocalypse. I think that we're currently undergoing a transformation, where the customer gets a new opportunity to decide where he can consume from, and if this new opportunity is more convenient to him as a consumer, he provides ... gets a better experience, more benefits from it, then I don't think it is a retail apocalypse, but I think this is a normal retail evolution that you will see over periods of time.

I think you've seen it before, from small mom-and-pop shops, where you go then to more bigger maybe supermarket chains, and this might be the same thing on having certain consumers migrating from pure offline consumer behavior, to a more online consumer behavior. But this will still take quite a bit of time.

Seth Adler: Hey, present, you're recognizing that the future is here, type of thing.

Dominic Hoffman: Yes.

Seth Adler: Exactly. This is fantastic. You've got a definitely a different mindset, you know, with your background and in your current company than many people do. So I would love to keep talking to you, but unfortunately we don't have that kind of time, so I'll ask you the three final questions. I'll tell you what they are, and then ask you them in order.

What has most surprised you at work along the way? What's most surprised you in life, and on the soundtrack of your life, one track or one song that's got to be on there.

But first things first, we've spoken about kind of your background a little bit, and only some of your work experience, but along the way in your career, what's most surprised you at work?

Dominic Hoffman: I think what's surprised me most at work is the constant change. So, yes, I've actively chosen an industry where change is more apparent. I used to be in banking, which was very traditional, and I chose to change to be in a startup environment, to be in ecommerce. But the constant change, and how often you need to probably re-pivot your business, and realign, and kind of set a new strategy, or adjust your strategy accordingly, this was actually quite a positive thing that I did not expect like this when I entered the workforce.

Seth Adler: Yeah. How would you have made your ... After this backpacking trip, how would you have ever made your way into banking, and then how did you make your way out? I just want to ask you those two quick questions.

Dominic Hoffman: So, when you're in Germany, and you go to university, there is usually a traditional path that you want to follow for yourself, to set yourself up properly. So usually, coming out of university, you want to work for a big employer, and to have potentially later on the opportunity to work in a more global environment. So I started working at Deutsche Bank, which back then I thought would set me up properly for a more global environment. I then chose later on to choose the more global environment outside of Deutsche Bank, but I would say that they pretty well prepared me for that.

Seth Adler: Good. All right, well what did you take, I guess, from ... if there was one lesson learned from Deutsche Bank, that you brought forward. Was there kind of a mindset, or a type of thinking, or a lesson learned?

Dominic Hoffman: I think the lesson learned is, and this was from one of my mentors at Deutsche Bank, and I think is the key thing that helped me to progress in my career was, you really need to choose the topics that you want to work on. There's so many topics out there. I didn't want to refer to them as battles, but there are so many topics that you can pick and choose, if you would do all of them, you would never get done. I think what was very important for me is to pick key topics, and then kind of like progress in them, rather than choosing too many, and then not progressing a lot.

Seth Adler: That's it. Focus. Focus, focus, focus. What's most surprised you in life?

Dominic Hoffman: I think what's surprised me most in life is actually people. Biggest surprise there is that you meet so many people, they have so many diverse perspective, and I think what surprised me most, if you would go around the world and ask the same question to multiple people, you would always get a different answer.

So, I think this is what surprised me most, and I am very happy and positively surprised to have experienced this so far in very diverse environments. I used to live in Europe, I lived in the US before, I lived in China, now the last five years in Southeast Asia, so I think, yeah, people is what's surprised me most in life.

Seth Adler: There you go. As far as the US, it was in New York for banking, is that when that was?

Dominic Hoffman: It was in New York for banking, and in Boston for university.

Seth Adler: I see. Well, which university?

Dominic Hoffman: Harvard.

Seth Adler: Wait a second. We said you went to Cologne. Was this post graduate?

Dominic Hoffman: No, there was a semester abroad in the US.

Seth Adler: Ah, I see. Okay. At Harvard.

Dominic Hoffman: Yes.

Seth Adler: I mean, do you remember a specific class that happened there, I wonder?

Dominic Hoffman: Yeah. Corporate finance. It set me up for banking.

Seth Adler: That set you up for banking ... there you go. I don't have Harvard on my resume, so it's always interesting to find out. All right, most important question, Dominic. On the sound track of your life, one track, one song, that's got to be on there.

Dominic Hoffman: One song where I personally identify myself with, where I think it also reflects a little bit my behavior in customer experience, is Frank Sinatra, I Did It My Way. Because I think customer experience is very specific. There's a lot of blueprints out there, a lot of ideas out there, but ultimately, as a leader in customer experience for my own organization, I need to find the way that is right for Lazada, the right way, how I want to embed customer experience in there, together with the team. So I think Frank Sinatra, I Did It My Way.

Seth Adler: As a New Yorker, I appreciate that answer, even though he's from New Jersey.

Dominic, thank you so much for your time. Appreciate it.

Dominic Hoffman: Thank you very much.

Seth Adler: And there you have Dominic Hoffman. I'm in favor of a complimentary feedback infrastructure because CX and the customer journey is a long process. The business plan is for more than one hundred years, as far as Dominic and Jack are concerned. So very much appreciate Dominic's time. Very much appreciate yours. Stay tuned.