Last year, I wrote a blog post entitled What is a ‘Good’ B2B Net Promoter Score?. For some reason it turned out to be surprisingly popular. The blog still gets dozens of hits every week. I’m guessing that was because there’s a lot of nonsense posted on the Internet about companies achieving Net Promoter Score (NPS) results of +62 or even +78, or about people being hugely disappointed because they only achieved a score of +25.
Meanwhile, some of our own clients at Deep-Insight would get upset when I tell them their customer NPS was only marginally positive or – even worse – negative. The two simple messages in that blog post were:
“Be careful about how you interpret NPS figures”
and
“A customer Net Promoter Score of approximately +10 is the average for European B2B firms.”
eNPS versus NPS
In that blog, I was discussing NPS as a measure of customer advocacy. More and more, it is also becoming the de facto standard for measuring employee advocacy and employee engagement. So this blog will address the question: “What is a ‘Good’ Employee Net Promoter Score?”
Before I let you know what that magic number is, it’s worth digressing slightly to explain the basics of how NPS is calculated. If you’re already a net promoter aficionado, skip the box below.
HOW IS THE NET PROMOTER SCORE CALCULATED?
For the uninitiated, a company’s Employee Net Promoter Score (eNPS) is based on the answers its employees give to a single question:
“On a scale of 0 to 10, how likely are you to recommend Company X to a friend or colleague?”
Employees who score 9 or 10 are called ‘Promoters’. Those who score 7 or 8 are ‘Passives’ while any employee who gives a score of 6 or below is a ‘Detractor’. The actual eNPS calculation is:
Net Promoter Score = the percentage of Promoters minus the percentage of Detractors
Theoretically, companies can have a Net Promoter Score ranging from -100 to +100.
So think about it. The only Promoters you have in your company are those employees who are prepared to give you a score of 9 or 10 out of 10. In the average American company (remember that the whole Net Promoter concept originated in the USA) that makes sense. Americans tend to score very positively when they are satisfied, so having a high cut-off point is appropriate. However, if you’ve grown up and live and work in a European country, you approach the Net Promoter question from a very different cultural perspective.
It's a Cultural thing
Many – nay, most – Europeans regard 8/10 as a very good score. Some will argue that 9s or 10s are only handed out in exceptional circumstances. This is culturally ingrained into us Europeans through our schooling system and particularly through our university grading system.
In European universities, a First Class Honours degree requires a score of 70% (7 out of 10). Scores of 75% are remarkable, while scores of 80% (8 out of 10) and higher are almost unheard of. These cultural differences have to be taken into account when interpreting whether a particular Employee Net Promoter Score is ‘good’ or ‘bad’.
The Magic Number
So what is a ‘Good’ Employee Net Promoter Score? We have been measuring NPS and eNPS since 2006. We do this mainly for European and Australian companies. The average Employee Net Promoter Score (eNPS) across all of our clients during that time has been a paltry -10. Yes, that really is a negative sign before the 10.
MINUS TEN!
Put it another way: achieving a positive Employee Net Promoter Score is a solid achievement for most European firms. Rarely do we see eNPS results in excess of +20.
So there you have it. If your company has just received a negative eNPS in the latest employee survey, don’t feel too bad. You’re in good company! To find out more about Deep-Insight’s employee assessments, click here.
* Net Promoter® and NPS® are registered trademarks and Net Promoter SystemSM and Net Promoter ScoreSM are trademarks of Bain & Company, Satmetrix Systems and Fred Reichheld
Many of our B2B customers struggle with the challenge of turning their sales people from mere order takers into true relationship managers. Or better still: into a ‘Trusted Advisor’.
This is particularly true of companies who sell to large and complex clients. I’m talking here about situations where a large account generates annual revenues of €1m (or £ or $) or more, often as part of a long-term contract.
The same challenges apply to smaller accounts but the dynamics of large accounts and big deals are a little different. For starters, winning a 5-year or 7-year contract worth €5-10m a year is always an expensive and long-drawn out sales process. Bid teams are often assembled, and may spend months (or even years) working on a bid. Service buyers often start with a long-list of potential suppliers, whittle it down to a short-list and then have a ‘bake-off’ between the final two. The worst position of all for a bidder is to end up coming second, as they may end up with bid costs running into seven figures with nothing to show for it at the end.
Knowing the Decision Makers
It’s critically important to qualify any opportunity properly. A key question – probably THE key question – to answer during the qualification process is “How well do we know the decision-makers?”
If the answer is “Not very well” or even “Actually, we have no idea who the real decision-makers are” then the right answer is probably to decline to bid. If you do decide to continue, do so in the knowledge that you are unlikely to win. The winners are often insiders, people who already have the ear of the chief executive, or who are known to the Board. So if you do end up coming second, don’t complain about ‘the old boys network’ working against you. The reason you lost was because the people making the decision were asking different questions to the ones you answered in the Request For Proposal (RFP). Questions like “Do I trust this person?” and “Can I rely on the team to transform my business?” or even “If this all goes horribly pear-shaped, am I likely to lose my job?”
You may think that the evaluation criteria that the buyer has shared with you is what determines the decision. Don’t be fooled. Many buying decisions are made independently of the stated evaluation criteria, and quite often the scores are adjusted after the event to fit the decision.
The Importance of being a Trusted Advisors
Ultimately, decision-makers spend big money in the expectation that it will transform their business. And because there is a strong emotional component in the decision-making process (their reputations and jobs may be at stake) they base their decisions on an assessment of the individuals making the sales pitch – possibly more so than the product or solution on offer. That’s where it’s important to know the decision-makers and be seen as a trusted advisor by them – a true ‘relationship manager’ as opposed to a bidder or ‘order-taker’.
You won’t become a trusted advisor overnight. You first have to build credibility with the client, and be seen as a person who can add value outside of a pure technical or sales role. You have to spend time with them and be able to put yourself into the shoes of the CEO and understand the business issues that he or she is facing.
Trusted advisors are not meek. They are comfortable having robust conversations with senior executives and are not afraid to challenge them. Similarly, good senior executives are happy to be challenged, as long as they think you have a well-thought through point of view, and are acting in their best interests. That requires integrity, an intimate knowledge of the company, a business perspective rather than a technical perspective, and a genuine desire to help solve the problems faced by the business.
Reinvigorating your Sales Team
I’ll leave you with a final thought. If you are managing a sales team, be aware that not everybody in your team is capable of becoming a trusted advisor. For some, no amount of training or up-skilling will help them make the leap from ‘order-taker’ to true ‘relationship manager’. If you’re a CEO or Sales Director and you think this might be an issue in your organisation, you will need to bring in some new blood. Excellent sales directors are great at motivating their people but they are also ruthless when they feel a sales manager does not have the capacity to become a trusted advisor.
To find out more about turning your sales team members into Trusted Advisors, click on the image below. Better still, contact us here.
We run B2B customer assessments for large corporate clients in the Netherlands and elsewhere. Very often I get asked questions like this after we deliver the customer feedback to senior management:
“OK, you’ve told us what our customers think of us, but what do we do about it now?”
“Tell us what we do in the next few weeks so that we don’t lose momentum.”
So here’s what I tell them:
1. BRIEF YOUR PEOPLE.
Typically, you need to brief at two levels and both are equally important:
– Executive Team. The senior executives in your organisation need to ‘own’ the overall results. If the customer feedback is negative or requires fundamental change, only the executive team can decide on the appropriate actions.
– Account Managers. These are the people who need to ‘own’ the results at account level. They are also the people you need to set up and run the account feedback sessions (see below).
Make sure to get the senior executives to read all the verbatim comments and see if their summary of the top issues agrees with the Deep-Insight analysis (they will understand the context better than we can). The most effective way of increasing Customer Relationship Quality (CRQ) and NPS scores is to have the programme driven by the executive team. Without the drive and passion at this level, the programme will fail.
2. DISCUSS THE RESULTS WITH YOUR CLIENTS.
Typically this happens in two stages:
– Stage 1. Within 2 weeks of the assessment results being delivered, you should get a general communication to all customers that you invited to give feedback. This should include a general ‘Thank You’ message for participating in the assessment (OK, not everybody completed it – our completion rates are typically 35-40% – but let’s not be mean!) as well as a message that their account manager will be in touch to arrange a feedback session to discuss the results (the overall results plus the specific results for their account)
– Stage 2. Within 8 weeks (or whatever target you set – but you must set a target), the account managers should have completed face-to-face meetings with all key customers. Ideally, they will have used that discussion to create a ‘Joint Action Plan’ setting out what both parties need to do, in order to address any issues unearthed in the assessment. Remember that the actions are on both sides – the account manager may need the client to change certain things as well.
3. FEED THE RESULTS INTO THE ANNUAL BONUS SCHEME.
If you haven’t done so already, think about incorporating the CRQ or NPS scores into account managers’ annual targets and bonus plans. If you have done so already, pay out the bonuses! This is probably the second most important driver of success in any customer experience programme. What gets measured and rewarded, gets done.
4. PLAN THE ACTIONS.
Again, do this at two levels:
– At corporate level. These are typically the key themes mentioned in the verbatim comments. Choose one or two big initiatives to work on during 2015. Keep it focused – any more than one or two initiatives will result in a dilution of effort.
– At client level. Each client will have its own specific set of issues including some ‘quick wins’ that can be addressed immediately.
5. MOST IMPORTANT, MONITOR PROGRESS.
If the results are poor, consider an interim assessment in 6 months (we call this a ‘Healthcheck’) but definitely repeat the feedback assessment after 12 months. If you don’t do this, you won’t know if you have achieved success.
None of the above five items are rocket science, but it strikes me as odd that some clients fail to take these actions. I know from 10 years of delivering Deep-Insight customer feedback to clients in the UK and the Netherlands, I know that these actions will result in better customer experience and improved feedback scores.
This is the topic of a talk I’m giving this week at a customer loyalty conference in Melbourne. It is in response to another talk entitled “Are you going to NPS me? No I’m not” in which Dr Dave Stewart of Marketing Decision Analysis will be presenting the case that Net Promoter is a deeply flawed concept. Dave will say that NPS should be discarded by organisations that espouse customer advocacy. To be honest, Dave’s position is close to what I thought of the Net Promoter Score concept when it was first introduced by a pretty smart academic and business consultant called Fred Reichheld back in 2003.
Net Promoter Score
Reichheld’s basic premise was that you only need to ask one question in order to understand if a customer is going to stay loyal to you or not. The question is: “How likely are you to recommend us to a friend or colleague?” Fred, being the excellent marketeer that he is, proclaimed the benefits of this Net Promoter Score (NPS) concept in respected publications like the Harvard Business Review. He then promoted it in his own book The Ultimate Question which came out in 2006, shortly after I took on the CEO role here at Deep-Insight. Since then, NPS has became very popular as a customer loyalty metric.
However, NPS has also attracted some heavy criticism. Tim Keiningham gave NPS a particularly scathing review saying that he and his research team could find no evidence for the claims made by Reichheld. (It should be said that Keiningham worked for the market research company Ipsos so his views may not be completely unbiased.)
At that time, my own view was that NPS was probably too simplistic a metric for business-to-business (B2B) companies. I also felt that Deep-Insight’s own customer methodology – which also included a ‘would you recommend’ question – was a much better fit for complex business relationships. And if I’m honest, there was an element of ‘Not Invented Here’ going on in our own organisation as well.
So we decided to ignore NPS.
The Rise of NPS
But here’s the thing: our customers didn’t ignore it. When we ran customer feedback programmes for customers like Reed Elsevier and Atos in the UK, ABN AMRO in the Netherlands, Santander in Poland, and the Toll Group in Australia, they would all ask: “Can you add in the NPS question for us – we have to report the numbers back to headquarters?” Of course, being the good marketeers that we were, we duly obliged. However, we always gave the results back in a separate spreadsheet, so that it wouldn’t contaminate our own reports and our own wonderful methodology!
Roll the clock forward to 2013. NPS still hadn’t gone away. In fact it had become even more popular. It was particularly popular with large international companies where a simple understandable metric was needed to compare results across different divisions and geographical areas. And when I finally looked into it, I discovered that Deep-Insight had actually been gathering NPS data from customers across 86 different countries since 2006.
Is NPS a good predictor of loyalty?
Around the same time we also did some research into our own database to find out what really drove loyalty and profitability in our clients. Now this is not an easy thing to do, as many of you who have tried will know. But where we had several years of customer feedback data, it was relatively straightforward to analyse how many of our clients’ B2B customers were still with them. If they have deliberately defected, we investigated if that defection could have been predicted by a poor Net Promoter Score, or by any of the metrics in our own CRQ methodology.
I have to say that the results were quite interesting. A low ‘Likelihood To Recommend’ was not the BEST predictor of customer defection. However it was actually a pretty good predictor. Deep-Insight’s overall Customer Relationship Quality (CRQ) metric was a slightly better predictor.
A poor Commitment score – one of the key components of CRQ – was the best predictor of whether a B2B client was going to defect to the competition or not.
So there we had it: NPS did actually work.
It worked not because it’s the BEST predictor of whether a client was going to defect, but because it’s a GOOD predictor, coupled with the fact that NPS has been embraced by some of the world’s leading organisations as an easy-to-use and internationally-accepted customer benchmark.
At Deep-Insight, we came a little late to the party. We only incorporated Net Promoter Score into our customer methodology in early-2014. Today we find that the combination of NPS and our own CRQ metrics works really well for our clients.
The future for NPS
Now let’s go back to the cartoon at the top of the blog (and thank you to the wonderful Tom Fishburne for allowing us to use it). If there is a statistically purer methodology than NPS, why not use that instead?
The answer is simple: most senior executives aren’t interested in re-inventing the wheel. They are much more interested in taking the feedback from their clients and acting on it, so that they can protect and enhance the revenues they get from those clients.
So for those B2B executives who are wondering if NPS is the right customer metric for them or not, I would suggest that you’re asking the wrong question. What good CEOs and Sales Directors are asking these days is:
“If my Net Promoter Score is low or if I have a lot of Opponents and Stalkers as clients, what do I do?”
In fact, the really successful CEOs and Sales Directors are spending the time thinking about the challenges of putting a really effective customer experience (CX) programme in place, rather than worrying about the purity of the metrics. That’s what you should be doing too.
If you’re a typical B2B company, the chances are that you have good or excellent relationships with the majority of your clients. But you will also have clients where your relationship is not as strong. At Deep-Insight we help you understand these client relationships by segmenting them based on the strength of their relationship with you.
Here are the five categories we use:
Customer Relationship Quality – the Strongest Relationships
The most loyal client category is the Ambassador segment. Ambassadors are your most valuable customers. They have a unique relationship with you and will recommend you to others. They are also prepared to pay a premium for your products or services – price is not an important consideration for them because of the quality of the relationship. Typically, a third of your clients are Ambassadors.
The next segment of clients are known as Rationals. They rate you positively but do not see anything unique in the relationship. Rationals will take their time to assess alternative sources of supply and the relationship can become unstable if good alternative offers exist. Typically, half of your key B2B accounts fit into this category. Generally they are good clients albeit not as loyal as Ambassadors.
The Weakest Relationships
But wait! That doesn’t add up to 100%. What’s the story with the others?
Well, the answer is that in all B2B account portfolios, there are clients that don’t love you that much. We typically find that 10-20% of accounts have poorer relationships with you and fit into one of the following three categories:
Ambivalents often have a “love/hate” relationship with you. In some instances, they love the way you solve their problems but hate the way you treat them. More often, you are killing them with kindness but failing to solve their business issues. You may think the relationship is strong but you don’t really understand their issues and can’t propose business solutions to move their business forward.
Stalkers are often only interested in price. Sometimes they can be large corporate accounts looking for special offers and discounts. Other times, they are smaller accounts that view your services as poor value for money. Stalkers see nothing unique in the relationship and often have very high service requirements. They play different competitors against each other and do not generate a positive value for your portfolio.
Opponents have the poorest relationships with you. They are deeply dissatisfied and often highly frustrated by what they see as consistently poor service. Opponents have a negative relationship with the company and generate negative value. They can sometimes be won back if the reason for their dissatisfaction is identified and addressed but, in many cases, the relationship has broken down irretrievably and they can not be won back.
Managing Ambassadors
Before we look at how to manage Stalkers and Opponents – the main point of this blog – one quick point about how to manage Ambassadors. Ambassadors are willing to recommend you. So ask them for testimonials. Trustmary is a Finnish company that helps clients do exactly that using Net Promoter Score as the key metric for identifying Ambassadors.
Don’t be afraid to ask Ambassadors for testimonials or for introductions into other businesses. They want to help you. So just do it.
Managing Stalkers and Opponents
So what to do with these poorer-value relationships, particularly Stalkers and Opponents?
Three things:
1. Decide if you want to keep them or fire them
It may sound strange to talk about ‘firing’ clients but sometimes there are clients that can not be serviced effectively or profitably. Sometimes their expectations are too high, or the fit between their needs and your products or services is limited. In such cases, it’s valid to ask the question “Would we both be better off if we ended the relationship?” The big advantage about firing customers is that it frees up sales and account management time. This time can be used for more profitable activities such as cross-selling and upselling to Ambassadors, or for converting Rationals into Ambassadors.
2. If the answer is FIRE THEM, find a ‘beautiful exit’
Stalkers and Opponents have a corrosive influence on your company. They sap energy and consume resources that can be better used elsewhere. They also have a corrosive influence on other clients as they spread a negative message about your capabilities and services. Have that tough conversation with the client before the situation deteriorates, and help them move to a competitor. Do it cleanly and professionally. Find what Finnish Business Professor Kimmo Alajoutsijarvi refers to as a Beautiful Exit to the relationship – a disengagement that “minimises damage to the disengager, the other party, and the connected business network.”
3. If the answer is KEEP THEM, put a proper recovery plan in place
Many of Deep-Insight’s clients will put a Service Improvement Plan (SIP) in place for poor-scoring accounts, typically Opponents or Stalkers. These SIPs involve a significant increase in service support to that client. They also require an open and honest conversation between the Account Director and the most senior people in the client organisation. In large complex B2B client relationships, changes in behaviour are typically required on both sides to bring the relationship back on an even keel again. Don’t be afraid of saying to your client: “We’re committed to making improvements on our side, but we need you to do X and Y for this relationship to work.”(more…)
