Do Americans REALLY score more positively than Europeans?

In a previous blog, I wrote that Europeans were more stingy than Americans when it came to customer feedback. Or words to that effect.

Since then, people have been asking if this is REALLY true, and where is the evidence for this claim.

Well, yes it IS true and while I’m not an expert in the area, I do know somebody who is: Professor Anne-Wil Harzing, Research Professor and Research Development

Advisor at ESCP Europe.

In 2006, Professor Anne-Wil Harzing conducted an analysis of different response styles across 26 different countries.

We recently sat down with Anne-Wil Harzing to discuss these differences.

 

 

John: Professor Harzing, if I look at our own clients – which are mainly headquartered in Europe, USA and Australia – their customers can be based anywhere in the world. When we often report results back by country, we often identify differences from country to country in Customer Relationship Quality (CRQ) or Net Promoter Score (NPS). How should we interpret those differences?

Anne-Wil: Good question – let me answer that in two ways. First, there are characteristics at a country level such as power distance, collectivism, uncertainty avoidance and extraversion which all have a major influence on the way people respond to questionnaires and surveys. This is particularly true when you use Likert scales – you know, the 1-7 scales that you use, or the 0-10 scale that’s used in Net Promoter Score surveys. Second, there are differences based on whether the respondent is replying to a questionnaire in his or her native tongue. Also, English language competence is positively related to extreme response styles and negative related to middle response styles.

John: Can you explain the difference response styles?

Anne-Wil: The main styles that people talk about are Acquiescent Response Style (ARS) where respondents are more likely to agree or give a positive response to a question, and Extreme Response Style (ERS) where the response is more likely to be highly positive or highly negative than Middle Response Style (MRS) where there is a greater tendency to go for an ‘average’ response. High ARS implies better/higher scores while ERS gives you more varied or extreme (and possibly higher) scores than MRS.

John: Can you give us a few examples of those country differences?

Anne-Wil: Sure. Respondents from Spanish-speaking countries show higher ERS and ARS while Japanese and Chinese respondents tend to be far less extreme in their response styles. Across Europe, the Greeks stand out as the highest levels of acquiescence and ERS. Countries across Northern and Western Europe – where many of Deep-Insight’s clients are based – tend to exhibit fairly similar response patterns.

John: And Americans?

Anne-Wil: High ERS and high ARS – you’ll generally get a more positive response from an American audience than from a Western or Northern European audience.

John: That’s very much in line with our own findings. We also see it in a lot of discussions around Net Promoter Scores (NPS). On some American websites, you will read that the average NPS for B2B companies is between 25% and 30%, yet our experience at Deep-Insight is that the average NPS score is closer to 10% and this may well be related to the fact that the majority of our customers (or more important, their clients) are European or Australian, rather than American.

Anne-Wil: It just goes to show that you need to take great care when interpreting cross-country scores. When people complete a survey, their answers should be based on the substantive meaning of the questions. However, we know that people’s responses are also influenced by their response style, so differences between a company’s geographically-based divisions might simply reflect differences in the way clients respond to surveys, rather than picking up real differences in the ways those divisions are going to market.

 

Our own research – although more anecdotal than Professor Harzing’s – backs up her results. Apart from the higher NPS scores I mentioned in the discussion, I also see Americans give higher Customer Relationship Quality (CRQ) scores than Europeans. We pick this up on the standard deviation figures from our results as well. This often results in fewer “Rationals” in the customer base of American clients. (Rationals are good, but not extremely loyal, customers who typically make up 50% of a typical customer base for any of our clients.) In contrast, American clients tend to have more “Ambassadors” and sometime more “Opponents”, which reflects the ERS and ARS styles that Professor Harzing describes.

In her paper, Harzing concludes that:

“Regardless of what remedy is used to eliminate or alleviate response bias, the first step towards finding a solution is acknowledging that response bias can be a serious threat to valid comparisons across countries. We hope this article has provided a step in that direction and that in future response bias will receive the attention it deserves from researchers in the area of international and cross cultural management.”

Good advice!

* 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

Why are Trust and Commitment so Important in B2B?

Commitment and Trust

“Commitment and trust, rather than power and dependence, are now central to discussions of business relationships. Researchers and practitioners have come to view most interactions between business parties as events that occur over the course of a relationship between two or more partners.”

The funny thing about business-to-business (B2B) is that it’s less about business and more about relationships. In fact, B2B is really P2P: person-to-person.

People buy from people. In large organisations, the decision to go with one particular service provider over another is often down to the answer to one simple question: “Do I really want to work with this person?”

And the answer to that question is usually based on the perception of whether the individual can be trusted or not.
 

How Important is Price?

Even in business situations where a large contract is put out to tender and a clear set of evaluation criteria is prepared to help guide the choice of service provider, the decision is often made on softer and often unwritten criteria. Sometimes decisions are made on the basis of price. Sometimes they are made on the basis of functionality. But when it comes to making the final choice to award the contract, subtle psychological elements come into play.

“OK, I know these guys seem to have the [INSERT: ‘best product’, ‘lowest price’, ‘most innovative solution’]. But what if it all goes wrong? Will they sort out the issues or will they leave me in the lurch? Will I lose my job?”

Fundamentally, we like to buy from people we think are honest, who treat us fairly and who act with integrity. In other words, we buy from people we trust. Price is a secondary consideration.
 

Morgan and Hunt

The Commitment-Trust Theory

Two American academics figured this out along time ago. In 1994, Robert Morgan and Shelby Hunt wrote a seminal paper on what really drives a long-term relationship between two business partners. The Commitment-Trust Theory of Relationship Marketingquickly became a hit, not just in academic circles, but among senior business executives who were trying to identify why people were likely to do business with you.

Essentially, what Morgan and Hunt realised all those years ago is that long-term business relationships are built on a mutual and cooperative working relationship between two partner firms. If you want to foster and nurture such a relationship, focus on Trust and Commitment. That’s why we built Trust and Commitment into our Customer Relationship Quality (CRQ) methodology.

Trusted Relationships = Consistently Good Service

At Deep-Insight, I spend a lot of my time trying to help our clients figure out how to build strong trusted relationships with their B2B (Business-to-Business) customers. Trust is all about honesty, fairness and acting with integrity. It’s one of the most basic elements of human interaction. And perhaps the most basic element of good account management. As they say:

“People buy from People” and
“You don’t buy from a person you don’t trust”

B2B is all about establishing strong people-to-people relationships. Trusted, committed relationships. And yet, here’s an interesting statistic. When we look at the correlations* between the various drivers of customer retention in our Customer Relationship Quality (CRQ™) methodology, guess what the strongest correlation is?

It’s between Service Performance and Trust.

When I first noticed this correlation, I was somewhat puzzled. It didn’t surprise me that Trust was strongly correlated with Service Performance. But why is it the strongest link of any of the elements in our model? Why does the level of service have such a strong impact on the degree of trust between the client and a service provider?

The answer is actually straightforward, when you think about it in real life. Many – no, most – of our clients operate complex businesses where their interaction with customers is based on a complex (and sometimes bewildering) array of services. Even manufacturing companies are heavily service-orientated these days. As an account manager or account director, you might like to spend your time having meaningful conversations with senior executives about where their business is going and how you can help, but the reality of day-to-day interaction is often explaining why that critical piece of machinery has not been delivered on time, or why the network that manages their business has fallen over again.

When the basic delivery of service is a constant issue and source of frustration for customers, account managers find the trust built up with key client contacts erodes quickly. Responses like “I’ll sort that out for you” are fine, as long as the service issue really is sorted out. But ongoing service problems can be notoriously problematic, particularly when processes or technology need to be changed in order to fix what’s broken. It’s frustrating for the client and it’s frustrating for the account manager but, most important of all, it’s damaging to the long-term relationship and ultimately the revenue stream from that customer.

Trusted relationships are based on consistently good service delivery. That’s what the data says. And that’s why getting the service right (and right first time) is so critical.

Correlations based on tens of thousands of customer responses over more than a decade. Service – Trust R-Squared = 0.74