How Do You Measure B2B Customer Experience?

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How Do You Measure B2B Customer Experience?

B2B Customer Experience

A lot of words have been penned on the topic of customer experience (CX) in recent years. But here’s the thing. Most of what’s written relates to CONSUMER experience.

There really is very little out there about CX purely written from a business-to-business (B2B) perspective. That’s really surprising when you consider that B2B commerce is significantly larger than its business-to-consumer (B2C) counterpart.

So let’s try to redress that with this blog. Let’s explore how CX is, and should be, measured in B2B companies. 

The answer to the first question is easy. Most large B2B companies use Net Promoter Score these days. The second question – how should CX be measured – is harder to answer. There are other measurement systems out there so is NPS really the best metric? Does it even work in a B2B context? 

What is Customer Experience anyway?

Before we answer these questions, I need to provide a little bit of context to how we got to where we are today. The reason is that the term ‘Customer Experience’ is actually a very recent term. As the Box below shows, the term was first coined in 1999.

‘Customer Experience’ was called something else for most of the last century. In fact, CX was called a lot of different things over the last 100 years. 

Professor Saba Fatma traces the term Customer Experience back to a 1999 book by Joe Pine and James Gilmore called The Experience Economy: Work Is Theatre and Every Business a Stage.

The book itself starts with a wonderful example of how the value in a cup of coffee is in the experience, rather than the quality of the underlying commodity (in this case, the humble coffee bean).

This example above is from the consumer, or B2C, world but the concept is equally applicable to the B2B world. Experiences are subjective. They tap into the emotional as well as the rational side of the brain.

Price of Coffee How Should You Measure B2B Customer Experience?

A Brief History of CX in the 20th Century

So if CX is a term that only came into common usage at the turn of the 21th century, what was it known as before then? Time for a short history lesson.

A hundred years ago, there were practically no formal customer-related performance measures in existence. That’s not to say manufacturing companies didn’t think about the customer. And it was all manufacturing back then. The services economy didn’t really take off until much later. In fact, it was only after the end of the Second World War that services became the dominant component of western economies. The graphic below shows that in the UK, the services sector hit 50% in 1950. Today, it’s closer to 80%.

UK Economy How Should You Measure B2B Customer Experience?

Back in the 1950s, it made sense to focus on product quality. By then, management gurus like W. Edwards Deming, Joseph Juran, and Philip Crosby were rolling out a series of techniques and approaches for Total Quality Management, or TQM. That’s what customer experience was all about in those days.

By the 1960s, management theory had become a little more sophisticated. People started thinking not just about the quality of the product being manufactured, but also about whether the customer was satisfied with the product. Did it meet expectations? Did it exceed expectations? This is when Customer Satisfaction, or CSat, measurement started to take off.

It’s strange to think that this was the first time that management gurus started thinking explicitly about the customer. 

By the 1980s, most economies in the world were dominated by services rather than by manufacturing. Service Quality became a fashionable, if fuzzy, topic led by American academics like Valerie Zeithaml and Leonard Berry. They proposed measuring concepts like reliability, responsiveness and customer care.

It wasn’t until the 1990s that people like Fred Reichheld (the guy who later came up with the concept of Net Promoter Score) really started thinking about the value of a customer over the lifetime of that person buying from a company, rather than just the value of the individual transaction. Customer Loyalty became the new buzzphrase. Reichheld’s book The Loyalty Effect is still one of the most sought-after management books of the last 30 years.

Also in the 1990s, another couple of American academics Morgan and Hunt came up with their views on the critical role of Trust and Commitment in business relationships. I’ve written about Morgan and Hunt before, in this blog.

Standing on the Shoulders of Giants

While CX is only a little over 20 years old as a concept, it is in fact built on a series of measures going back as far as the 1950s. Here’s the important thing. All of the concepts and measures in the following table are STILL relevant today. Fred Reichheld’s Net Promoter Score may be the most commonly used metric at the moment, but it’s not the only one. It’s not even the best one. But, in its favour, it is a simple concept to understand and equally simple for leadership teams and boards to implement. 

ERA

MEASUREMENT

1950s & 1960s

Total Quality Management (TQM)

1970s

Customer Satisfaction (CSat)

1980s

Service Quality

1990s

Customer Loyalty

Trust & Commitment

2000s

Customer Experience (CX)

Customer Experience Management (CEM)

Net Promoter Score (NPS)

When CX met NPS in the early 21st century, it seemed a marriage made in heaven. If the customer experience was excellent, we could measure just how good it was by asking a very simple question: “Would you recommend it?” NPS turned out to be a really straightforward way to measure consumer experience.

But is NPS a good metric to measure B2B customer experience? After all, the business world has had nearly a century of research into product quality, satisfaction, service quality, customer loyalty and business relationships. Should all these metrics be cast aside in favour of NPS?

As Isaac Newton famously said to a letter to Robert Hooke in 1675: “if I have seen further, it is by standing on the shoulders of giants.” CX professionals need to do the same when they consider what metrics to use in the B2B world. By all means, use NPS as a key metric. But also look back to the giants of the 20th century for inspiration.

Measuring B2B Customer Experience – is NPS Enough?

In short, No! 

Fred Reichheld’s Net Promoter Score may be a great metric for measuring advocacy and is well suited to consumer environments and brands. Don’t get me wrong – it also has applicability in B2B environments even though I haven’t always been a fan.

The great strength of NPS – its sheer simplicity – also turns out to be its main failing.

Everybody understands intuitively the concepts of ‘Promoters’ and ‘Detractors’. They also grasp the ‘net’ concept. In other words:

          NPS = % Promoters minus % Detractors

Boards and leadership team love the fact that it works on all types and sizes of customers. It’s easy to administer as it’s a single question. But therein lies the problem. It’s a single question. It’s very one-dimensional. It ignores all the giants of the 20th century and the work they did to understand what customer experience really involves, and how best to measure it.

NPS tells you whether you have a problem or not. It doesn’t give you the deep insights you need in complex B2B environments about the nature of the underlying problems. Or how to fix them.

Customer Relationship Quality (CRQ)

The answer to the question at the top of this blog – how should you measure B2B customer experience – is to combine the best of all worlds. To stand on the shoulders of the giants of the 20th century. And to do so in a pragmatic way.

The Net Promoter question is worth asking, but in conjunction with a handful of other questions that are built on a foundation of nearly a century of good research. The result is a methodology that we call CRQ – Customer Relationship Quality – which covers six building blocks:

The approach we take at Deep-Insight is to stand on the shoulders of giants such as Deming, Juran and Crosby way back in the 1950s. I’ll come back to this topic again in the near future as I believe one of the most fundamental building blocks on customer experience for any B2B organisation is consistently good service delivery. Our own research shows that service delivery is the most important driver of long-term trusted relationships.

If you’re interested in finding out a bit more about customer experience and how to measure B2B customer experience, download our white paper by clicking on the image below.

Alternatively, give us a call to have a chat.

Does NPS Work for B2B Companies

You Said, We Listened

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Last month, we asked our clients what they thought of us. We do this every year and take our Customer Relationship Quality (CRQ) feedback seriously. We try to follow the advice we give to our own clients: give your customers the opportunity to tell you what they think. Listen to what they say. Then act on their feedback.

As we did last year, we cast the net for our 2022 CRQ assessment quite wide. We didn’t just limit the survey to a handful of key decision makers in current clients. We included many operational and administrative contacts. Their views are equally important. We also asked dormant customers what they thought of us.

Last year, you said…

The main message that you gave us last year – actually for the last two years – was that you needed more than just a survey provider. In practice, that meant providing more assistance AFTER your customers gave their feedback. You needed a partner that could help you deliver meaningful change across your whole organisation. You also wanted us to be more flexible and supportive.

We listened, and here are three of the things we did in response to your feedback.

1. Deliver more than just a survey

We have always strived to be more than just a survey company. Our mission is to help companies become truly customer-centric. Getting customer and employee feedback is part of that process, but there’s much more to it than launching a survey. That’s why we completely redesigned the way we work with clients, based on what you said to us.

Today we spend a lot more time with leadership teams and sales or account teams both BEFORE we think about asking our customer’s clients for their views as well as AFTER they give their feedback. The BEFORE piece is critical and must be done properly. If you don’t invest the time up-front, your CX (or EX) programme will not deliver the results that Management and the Board expect from it. More than likely, it will end in failure. It’s as simple as that.

2. Assist with Customer Relationship Quality ‘Healthchecks’

Last year we conducted CRQ ‘Healthchecks’ for clients in the UK and Ireland. The objective of a ‘Healthcheck’ is to benchmark how good a company’s Customer Experience or Customer Satisfaction programme is. That doesn’t just mean assessing if the right questions are being asked of the right people. It’s a more fundamental look at whether all the right components are in place to deliver genuine and meaningful benefits. We do this under four headings:

1. LEADERSHIP. The most important quadrant. Good Customer Excellence (CX) programmes are ALWAYS led from the top
2. STRATEGY. Good CX programmes link customer, product, operational and organisational strategy explicitly to customer needs
3. EXECUTION. Success requires properly resourced teams that are brilliant at executing the Strategy
4. CULTURE. Finally, Customer Excellence must become integral to the DNA of the organisation: “it’s how we do things around here”

All four quadrants are necessary for a successful CX programme. The ‘Hard Side’ quadrants of Strategy and Execution are all about metrics and processes. ‘Hard Side’ activities lend themselves to key performance indicators (KPIs) and while the activities in these two quadrants are important and easily measurable, the quadrants of Leadership and Culture are actually more critical.

In our experience, Leadership is the most important quadrant while Culture is the most challenging. And yet, here’s the strange thing: in most CX programmes the ‘Soft Side’ is often overlooked and almost always under-resourced.

3. Run Customer Centricity ‘Masterclasses’ for managers and leadership teams

One of the key ‘Soft Side’ challenges is making sure your entire organisation is on board with your CX (or CSat or NPS or Customer Relationship Quality) programme. Over the past 12 months, we have partnered with the world-leading HEC Business School in Paris.

That collaboration has helped us develop and deliver a ‘Masterclass’ to educate leadership teams, managers and partners about the importance and benefits of putting the customer at the heart of everything they do. The ‘Masterclass’ also helps employees understand the crucial role they play in making their companies customer-centric.

Already, these ‘Masterclasses’ have been delivered both virtually (for COVID reasons) and face-to-face to clients in Europe, Asia and the Americas.

How did we score this year?

Having made the investments over the past two years, we were very curious to get your reaction. In short, you were very generous in your responses this year.

This year we achieved a Net Promoter Score of +66 and a Customer Relationship Quality (CRQ) score of 6.1 out of 7.

This is the highest NPS result we have ever achieved to date and the third time we have scored over +50. Our CRQ score is also the highest we have ever achieved and we are honoured to be thought of so highly by you, our valued clients.

Result: new client wins

I honestly believe that it’s because of the trust that our clients place in Deep-Insight that we have been able to announce some great new wins in recent months.

We have a 10+ year relationship with Atos but primarily in the UK & Ireland. Earlier this year, we extended that relationship to Germany and over the next three years we will be partnering with Atos on one of their most important and strategic global accounts.

One of our largest accounts in Australia was the logistics company Toll Group. Last year our key contact at Toll moved to Scotts Refrigerated Logistics and we recently signed a new 3-year contract to help ScottsRL become one of the most customer-centric companies in Australia.

Vreugdenhil Dairy Foods is a Dutch milk powder manufacturer that operates in Barneveld, Scharsterbrug, Gorinchem and Madrid. Its 500 staff process 1.4 billion kilograms of milk each year. Over the next three years, we will be working with the Vreugdenhil leadership team to turn a company that creates great food products into a truly customer-centric organisation.

Agenda for 2022

While we’re really proud of these Customer Relationship Quality (CRQ) and NPS scores, there is more to do.

For starters, we got feedback from 48% of the people we asked to participate. While that’s not bad, we do see some room for improvement. Last year our response rate was 55%. We know that some of our clients achieve rates of 70% or more. We will be working hard to improve on this figure next year.

Second, the main feedback we received this year is that our new consulting services are great BUT not enough. Our clients are looking for Deep-Insight to provide even more support. The two customer quotes below confirm to me that we need to support clients on a year-round basis.

“Would like to see greater insight on how we can really make a difference for our customers. How do we truly address those recurring themes that come up each year? It would be great to get insight on how we can do this better – beyond the data”

“I would question to what degree on a continual basis Deep-Insight provides interaction and insight as a partner to the business. Also, to what extent there are follow-up meetings post results as you as experts help inform our response and strategy.”

 

Third, the feedback process is not finished yet. We need to ‘close the loop’ with all clients and discuss their specific feedback. We will be in touch shortly and will be looking specifically for more insights into any additional support needs they may have.

I need to finish off by thanking Fiona Lynch for planning, organising and running this year’s client assessment. Fiona joined us earlier this year from Atos where she was part of a global service delivery team. It’s great to have her on board.

So, well done Fiona, and thank you to all of our clients. We really do value your feedback.

John O’Connor
CEO, Deep-Insight

Service Recovery Paradox – Fact or Myth?

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This blog is about a well-known business concept called the Service Recovery Paradox (SRP).

What’s SRP? It’s a pretty simple theory. A good recovery following a service failure can turn angry, frustrated customers into loyal ones. Service managers have known about this paradox for years.

The concept was first discussed in a popular Harvard Business Review article as far back as 1990. The authors – Christopher Hart, James Heskett and Earl Sasser – are all extremely well-respected academics and business practitioners.

But are they right? Let’s take a closer look.

The Profitable Art of Service Recovery

Service Recovery at Slack

Why don’t we start with an example.

Ever heard of the American tech company Slack? Several years ago, Slack had a major service failure:

Tuesday, November 23, 2015 started out like any other day at work for James Crenson. Coffee, check email, prep documents for weekly meeting, solicit input from co-workers on slack. Um, Slack?

Outage

At 8:50am, popular workplace messaging service Slack suffered a massive outage, leaving over a million users around the world unable to send or receive messages and files for almost three hours in the middle of the workday. Angry users took to twitter and other social messaging sites to complain about the inconvenience. The situation had the potential to explode, but Slack was ready.

The team messaging tool had a solid plan in place for mass outages. A well-coordinated group effort handled support issues including a comprehensive social media blitz to contain the negative customer experience (CX). Over the few hours that the service was down, the official @SlackHQ account tweeted over 2,300 times with humorous, thoughtful, and most importantly, personalized – responses to customers complaining about the service outage.

Response

Not only did the all-out response wow users, but @SlackHQ gained over 3,300 followers – 7x more than average – on a day that could have gone down as the worst in company history. Slack was able to quickly contain the damage, took complete responsibility, kept its customers well informed and handled a stressful situation with humor and efficiency.

Throughout this process, Slack deepened the trust of existing customers by demonstrating that the company was prepared in times of crisis. Its expert handling of a negative situation enhanced its relationships with existing customers, boosted the brand’s reputation and even served as a springboard for an expanded customer base.

This is an exceptional demonstration of the value of the phenomena known as the “service recovery paradox.”

The graphic below explains the Service Recovery Paradox.

Loyalty generally increases over time when service is delivered consistently well. It falls rapidly if there is a service failure but loyalty increases again when service is restored and the service recovery is handled well. In fact, loyalty becomes greater than if no failure had occurred in the first place. That’s the paradox.
Service Recovery Paradox

Fact or Myth?

The Service Recovery Paradox is generally accepted as fact. But where is the evidence for it?

Some years ago, Celso Matos decided to find out. He and a couple of colleagues from the Federal University of Rio Grande do Sul in Brazil conducted a ‘meta-analysis’ of all academic articles that discussed SRP. In total, they found 24 documented examples of recoveries following service failures. 19 of the 24 examined the impact of service recovery on satisfaction; 12 examined the impact on repurchase intentions; six looked at word of mouth (advocacy).

Their results were very interesting and not encouraging for companies with a poor service ethos.

Matos concluded that “satisfaction increases after a high service-recovery effort” but that “repurchase intentions are not increased by a high service-recovery performance.”

Service Recovery does NOT lead to greater loyalty

Matos and his colleagues explain that “customers are willing to make a positive evaluation of a firm providing a high recovery effort, but they are not likely to repatronize this firm”. They go on try to explain why this might be the case.

One explanation is that satisfied customers are not necessarily loyal. We know this from our own analysis at Deep-Insight. Another explanation is that people will give you a lot of credit for pulling out all the stops to recover a bad situation after a bad service failure. However, they will still doubt your ability to ensure no similar service failures occurs again. That’s pretty important when your 12-month or 10-year contract is coming up for renewal. They might give you good customer satisfaction (CSat) scores, but will they sign up for another contract?

In general, satisfaction levels do recover if a Service Improvement Plan (SIP) is put in place but loyalty does not. This does not mean the Slack example discussed above is not true. It just means that you need to go to extraordinary lengths to win back the trust and loyalty of clients when they experience a service failure.

The Relationship between Service and Trust

Some years ago I wrote a blog called Trusted Relationships = Consistently Good Service. It was based on our analysis of tens of thousands of customer feedback results from Deep-Insight’s database gathered over a period of 15 years. The analysis showed that of all the elements in our Customer Relationship Quality (CRQ™) methodology, Service Performance was most strongly correlated with Trust.

It stands to reason, if you think about it. What happens when you deliver a consistently good service to a client? Their levels of trust in you and commitment to your company increase. Fail to deliver the service consistently, and their trust erodes quickly. Consistently fail to deliver, and both trust and commitment levels can disappear completely. Trust and commitment also take a very long time to rebuild.

‘Quality is Free’ so make sure to get it ‘Right First Time’

There’s a really important lesson here. Service failures are the sworn enemies of long-term profitable relationships. That’s why it’s worth investing time and effort to minimise the chances of a service failure ever happening in the first place. You may never succeed completely but it will be worth the investment. In fact, it won’t cost you anything.

This is where the old Total Quality Management (TQM) principles come into play. In 1979, Philip Crosby wrote a seminar book called Quality Is Free. His basis message was that it costs absolutely nothing to build quality into products and services. If anything, you’ll make money by reducing the cost of re-work and failed business relationships.

Quality really is free, so if you’re in the service business, make sure to get it right first time.

If you operate in the B2B world, ask yourself the question: “Is CSat the right thing to be measuring in the first place?” Maybe you should be measuring something different.

UPDATE: 27 APRIL 2023

We have just written a follow-on article on the Service Recovery Paradox in B2B companies. Click here to read.

If Trust is so important, why do so few companies measure it?

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Most people understand implicitly that good Business to Business (B2B) relationships are built on a strong foundation of trust. But if Trust is so important, why do so few companies measure it? It’s a question that has always intrigued me. I must admit that I’m still struggling to find the answer.

The fact is that CEOs keep tabs on all sorts of KPIs. For operational performance, there are lots of service level agreements (SLAs) and other three letter acronyms (TLAs). Logistics companies even have five letter acronyms like DIFOT – Delivery In Full On Time. For financial performance, the CFO has an eye-watering array of metrics. For customer performance, there is customer satisfaction (CSat) and Net Promoter Score (NPS).

But rarely, if ever, is there a metric for Trust that is discussed by the leadership team or reported to shareholders.
 

How Important is Trust?

A couple of weeks ago, I ran a short poll on LinkedIn, asking people what they thought was the most important element of a strong B2B relationship. It wasn’t a trick question as we believe at Deep-Insight (based on pretty good academic research) that the three key pillars of a great B2B relationship are Trust, Commitment and Satisfaction.

I wasn’t surprised by the winner but I was intrigued by the margin. It appears that Trust really is seen as the cornerstone of a strong B2B relationship.

Trust Commitment Satisfaction
 

Trust, Commitment and Satisfaction

How are they all related? Here’s how we explain it.

If you take a purely commercial view of any business relationship – and you shouldn’t – it’s all about the revenues you can generate from that relationship over the long term. I know that’s a bit mercenary but that’s how some people view things. The greatest predictor of a long-term relationship is Commitment and it’s important that you measure your clients’ commitment to you. We ask that question quite bluntly to our clients’ customers: “Are you committed to a long-term relationship with [Name of Client]?”

It turns out that the answer to this question has the highest correlation with the likelihood of the company buying from our client again in the future. The opposite is also true. A poor score is the best predictor that the customer will defect to the competition.

But remember: commitment to a long-term relationship is only the outcome of other factors. Two of the most important factors are Trust and Satisfaction. Trust is all about fairness, honesty and acting with integrity. It’s a reflection on what clients think of your brand but, more important, it’s their perception of how trustworthy your people are as well.

Satisfaction, on the other hand, is a measure of how well you meet (or exceed) a client’s expectations. It’s more transactional than Trust, and also more volatile. For example, you can be satisfied with your IT service provider today, but deeply unhappy tomorrow when the network crashes and your factories or stores can’t operate. When the IT service provider pulls out all the stops and fixes the problem in double-quick time, you’re both relieved and satisfied again. Satisfaction scores can fluctuate wildly. Trust scores? Not so much.

 

Trust at Serco

One of our clients that takes Trust seriously is Serco. It’s one of Serco’s four stated values: Trust, Care, Innovation and Pride.

Trust at Serco

Serco is quite clear about both what Trust is, and what it is not. Here are the behaviours it expects from its people:

  • Do what they say they will, try their best and see things through
  • Consistently provide the highest standards of customer service
  • Have a can-do, will-do attitude
  • Are open and honest
  • Communicate truthfully, clearly and concisely
  • Aim to always do the right thing and never compromise our values
  • Think through the consequences of their decisions
  • Speak out when they see something wrong
  • Understand who our customers are, listen to them and act upon their feedback
  • Challenge assumptions in an appropriate way
  • Acknowledge when they make mistakes and take responsibility for correcting them

    •  

    Similarly, Serco believes Trust is not demonstrated if employees or the leadership:

  • Make promises that we cannot keep
  • Rush to provide solutions before listening to others’ needs and opinions
  • Fail to keep customers and colleagues informed
  • Are not straightforward and transparent
  • Allow disrespectful or discriminatory behaviour
  • Knowingly use Serco’s resources for personal gain
  • Break our Code of Conduct or the law
  • Falsify or misrepresent information
  • Ignore and don’t speak up when we see something wrong
  • Choose to ignore adverse criticism
  • Blame others for mistakes we have made or things we have missed
  • Shift our responsibilities to others

    •  

    Why do so few companies measure Trust?

    How many companies measure have identified Trust as a core company value and measure it in a systematic way? The short answer is that very few B2B companies measure Trust at all. Serco is one of the few that even identifies it publicly as a core value. Isn’t that strange? Business magazines and articles are full of ideas and tips for becoming trusted advisors. A lot of CEOs and company boards talk about “trusted relationships” with clients in their annual reports to shareholders.

    Trusted Relationships

    Interestingly, the same CEOs and boards talk about trusted relationships but then quote the company’s Net Promoter Score (NPS). Now don’t get me wrong. There’s nothing wrong with NPS but it’s not a measure of Trust. It’s a measure of Advocacy. Yes, the two are related but it you’re going to talk to shareholders and clients about “Trusted Relationships” or “Acting as Trusted Advisors” then you really should go and measure your performance directly.

    Sometimes NPS isn’t enough. It’s a good metric – simple and easy to understand. But it’s one-dimensional. If you really want to understand how trusted a relationship you have with your clients, you need to measure Trust as well as NPS of CSat (Customer Satisfaction). As a CEO or Sales Director, you need to understand if your key clients are Ambassadors who trust you implicitly, or Stalkers and Opponents who want to get out of the relationship because levels of Trust (and Commitment and Satisfaction) are so low.

    If you want to know more about measuring Trust, have a read of this blog.

    Alternatively, get in touch with us today.