What is a ‘Good’ Employee Net Promoter Score?

Last year, I wrote a blog post entitled What is a ‘Good’ B2B Net Promoter Score? which turned out to be surprisingly popular. I’m guessing that was because there’s a lot of nonsense posted on the Internet about companies achieving a NPS (net promoter score) 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 clients used to get upset when I would tell them that their NPS was only marginally positive or – ever worse – negative.

The two simple messages in that blog post were:

“Be careful about how you interpret NPS figures” and

“A Net Promoter Score of around +10% is the average for European B2B firms.”

In that blog, I was discussing NPS as a measure of customer advocacy but 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, you can 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 = % of Promoters minus % 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 different cultural perspective.

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, where score 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’.

So what is the magic number?

We have been measuring NPS and eNPS since 2006, mainly for European and Australian companies, and the average Employee Net Promoter Score 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 Percent!

Put it another way: achieving a positive Employee Net Promoter Score is a solid achievement for most European firms, and only very rarely have we seen eNPS results in excess of +20%.

So there you have it. If your company, or department, 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.

 
Does NPS Work for B2B Companies
 

* 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

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?

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 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

Ambassadors CRQ Assessment

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.
 

Rationals HIGH CRQ Assessment Rationals LOW CRQ Assessment

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 CRQ Assessment

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 CRQ Assessment

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 CRQ Assessment

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 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.”
 

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.

Contact us if you want to find out how many Opponents and Stalkers you have!