Are you going to NPS me? Yes, I am!

This is the topic of a talk I’m giving this week at a 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, and should be discarded by organisations that espouse customer advocacy. To be honest, Dave’s position is probably 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. 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: “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 and then 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, it has also attracted some heavy criticism – in particular from one researcher called Tim Keiningham who 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.

But here’s the thing: our customers didn’t. 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, particularly 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.

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, and for those who 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. It transpired that while a low ‘Likelihood To Recommend’ was not the BEST predictor of customer defection, it was actually a pretty good one. 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 may have come a little late to the party – we only incorporated the Net Promoter Score into our customer methodology in early-2014 – but we have found the combination of NPS and our own CRQ metrics works really well for our clients.

Now let’s go back to the cartoon at the top of the blog (and thank you Tom Fishburne for allowing us to use it). Surely if there’s 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.

 

Help! What Do I do with my Stalkers and Opponents?

If you’re a typical B2B company, the chances are that you have good or excellent relationships with the majority of your clients. But there may be some clients where your relationship is not as strong. One of the things we do at Deep-Insight is to categorise your key accounts, based on the strength of the relationship they have with you, and the extent to which they will act as advocates for your firm. Here are the five categories we use:

Ambassadors CRQ Assessment

The best, most loyal, category of client is the Ambassador. Ambassadors are the most valuable customers in the portfolio, because they identify with the company and have a unique relationship with it. They are so sure they have made the right choice that they recommend the company to others. Price is not an important consideration for them because of the quality of the relationship with the company. Typically, a third of your clients are Ambassadors.

Rationals HIGH CRQ Assessment Rationals LOW CRQ Assessment

The next category of client are known as Rationals. They rate the quality of the relationship positively, but do not see anything unique in the relationship. They will take their time to assess other alternative sources of supply and can become unstable in their relationship with the company, if alternative offers exist. Typically, half of your key B2B accounts fit into this category and generally they are good clients albeit not as loyal as Ambassadors.

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 will fit into the following three categories:

Ambivalents CRQ Assessment

Ambivalents have often a “love/hate” relationship with the company. In some instances, they love the way you solve their problems, but hate the way you treat them. More often, you kill them with kindness but you fail to solve their business issues. You may think the relationship is good but you have failed to put yourself in their shoes, understand their problems and come up with a solution that helps move their business forward.

Stalkers CRQ Assessment

Stalkers are often only interested in price. Sometimes they can be large corporate accounts that continuously look for special offers and discounts. Other times, they are smaller accounts that view your services as extremely expensive for the value they receive. Stalkers do not see any uniqueness in the relationship but often have very high service requirements. They play different competitors against each other and do not generate a positive value for the portfolio.

Opponents CRQ Assessment

Opponents have the poorest relationships with you. They are deeply dissatisfied and often highly frustrated by what they see as extremely poor service. Opponents have a negative relationship with the company and generate negative value. Opponents can sometimes be won back into the fold, if the reason for their dissatisfaction is identified and addressed properly, but in many cases the relationship has broken down irretrievably and they can not be won back.

So what do you do with these poorer-value relationships, particularly Stalkers and Opponents?

1. Decide if you want to keep them or fire them

It may sound strange to talk about ‘firing’ clients but sometimes we have clients that we can’t service effectively or profitably. Sometimes, their expectations are too high, or the fit between their needs and your product/service offering 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 can free up sales and account management time for more profitable activities such as cross-selling and upselling to Ambassadors, or converting a few more Rationals into Ambassadors.

2. If the answer is YES, find a ‘beautiful exit’ the relationship

Clients who are Stalkers or 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 your other clients as they spread a negative message about your capabilities and your 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 the 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 NO, put a proper recovery plan in place

Many of Deep-Insight’s clients have a system whereby they 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 but if they are to be successful, they also need 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 in order for the relationship to be brought 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 to work.”

The starting point for these decisions is an accurate and objective view of which category each of your major accounts fits into. Once you know that, you can start asking the tough questions, and taking the appropriate action.

5 Things To Remember To Get Your Completion Rates Up

One of the questions we get asked a lot is: “What sort of completion rates do you guys normally get on an assessment?”

Well, the answer is that it depends on what sort of assessment you’re talking about – we provide feedback on relationships with customers, channel partners and suppliers, and the completion rates differ from one type of assessment to the next:

-For employee assessments, our typical completion rate is in excess of 90%.

-For corporate customer and channel partner assessments, it’s typically 35-40%.

-For supplier assessments, the average completion rate are somewhere in the middle: 60-70%.

The next question we get asked is “Is it really that high?”

Well, we mainly get asked that question in connection with customer assessments, as some of our clients think 35-40% sounds impressive. This is particularly the case when people compare our figures to the ones you might get on a typical consumer surveys, where sometimes as few as 2% of consumers will bother to complete a questionnaire (Petchenik & Watermolen, 2011).

Remember that we are talking about existing, often long-standing, business-to-business (B2B) relationships – that’s what we do at Deep-Insight. We’re not a consumer research company. In fact, we’re not even a market research company, although we often are compared to firms like TNS or Gallup. We’re different. We look at – and assess – the quality of the relationships that large companies have with their biggest B2B clients. And if you think about it, why would good customers NOT want to provide feedback on their relationship with you, particularly if their account manager has convinced them that it’s an important part of their ongoing customer feedback process, and that their input is genuinely used to help improve the service given not just to them but to all clients?

The 5 pieces of advice I give to our clients are:

1. Spend Time Getting A Good Contact List Ready.

Most of our clients tell us they can pull together a list of key client contacts in a week. Two at the most. Our experience tells us that it takes at least 4-6 weeks to come up with a really good clean list of customer contacts who have a strong view of their relationship with our client. If the list isn’t compiled properly, we end up polling the views of people who really don’t have a strong view on the company, and who won’t be interested in responding.

2. Pre-Sell The Assessment To Customers.

One of our clients has been achieving customer completion rates in excess of 70% on a consistent basis for the past number of years. It does this because the CEO – together with the account managers – has managed to convince his key accounts that the 10-15 minutes they invest in providing feedback WILL result in a better service. “Tell me what’s wrong, and I promise we’ll do our best to fix it.”

3. Make Sure to Contact Customers While The Assessment Is Live.

We normally hold our assessments open for two weeks and we know from experience that if account managers have been properly briefed to mention the assessment in every conversation they have with a client during those two weeks, the completion rates will improve dramatically.

4. Manage The Campaign Smartly.

This is not rocket science, but you would be amazed at the number of companies that want to run assessments over school holiday periods, or during particular times of the year that may coincide with the most most busy time of the year for their customers. Plan your launch dates in advance, and think about the timing for issuing reminders. We usually recommend launching a customer assessment on a Tuesday morning, with the final reminder going out on the Tuesday two weeks later. That means that even if somebody is out of the office for two weeks, they’ll still have an opportunity to provide feedback.

5. Don’t Panic At The End of Week 1.

We normally see a flurry of activity during the first six or eight hours of a B2B campaign and typically the completion rate after Day 1 is about 8%. At the end of the first week (before we send out a first reminder) it’s often the case that the response rate hasn’t broken through the 10% barrier. This is not unusual. Completion rates will increase and a message in the final reminder that “This assessment is closing today” usually elicits a final flurry of responses!

As I said, a lot of this isn’t rocket science but it does require a bit of advance planning. If you do put the effort in up-front, you’ll see it rewarded in significantly higher completion rates.