Susan and Bill have Relationship Problems!

The Susan & Bill Trilogy

When we launched NPS in early-2014, we created a storyline around two fictitious characters called Bill (a thoughtful but somewhat introverted Marketing Director) and Susan (a more aggressive low-attention-span Sales Director). They may be fictitious but they bear more than a passing resemblance to some sales and marketing directors we have met in client organisations in the past.

Episode 1 finds Susan and Bill having relationship problems. Well, their problems are primarily related to understanding the relationship their company had with its main corporate clients but there is also some evidence of tension between Susan and Bill themselves – the sort of natural tension that exists between Sales and Marketing in any large organisation.

EPISODE 1: Susan and Bill have Relationship Problems!

Susan. Sales Director.

“I want some real customer feedback that helps my sales managers manage their key accounts for the long-term. All Marketing are interested in is some box-ticking exercise for the folks in HQ.”

Bill. Marketing Director.

“I need to provide HQ with Net Promoter Score (NPS®) metrics. It’s our corporate policy. For some reason, Sales just don’t seem to get it. NPS is a useful tool if they would only figure out how to use it properly.”

Net Promoter Score (NPS) is a simple easy-to-use metric for measuring customer loyalty. Many large, well-known companies now use it as a key business metric. The concept behind NPS is simple: loyal customers are more willing to recommend you to a friend or colleague. To find out how loyal your customer base is, measure their willingness to recommend; the higher your NPS score (% willing to recommend less % not willing to recommend), the more loyal your customer base is.

The problem is that while NPS is easy to calculate, many sales directors find it hard to turn the answer to a single question “Would you recommend Company XYZ to a friend or colleague?” into a clear set of actions that can be used to improve a complex web of relationships in a large corporate account – or across your full customer portfolio.

Does NPS work for B2B Organisations?

Yes!

NPS provides a good starting point for understanding complex B2B relationships but it must be supplemented by other metrics that help account managers take action at an INDIVIDUAL account level, as well as helping senior executives focus on a small number of strategic initiatives across ALL accounts.

Deep-Insight already has a unique B2B methodology – Customer Relationship Quality (CRQ™) – that helps Sales Directors identify which of their major accounts are its greatest Ambassadors, and which on the point of defection (Ambivalents, Stalkers and Opponents).

More important, the CRQ methodology identifies – for each account manager – what needs to be done to transform an Opponent to an Ambivalent, and a Rational to an Ambassador.

NPS combines the power of our CRQ methodology with the internationally-recognised NPS benchmark. NPS tells you if you have a problem, CRQ tells you what the problem is and how to address it.

Back to Susan and Bill

Bill needs NPS data in a comparable format to data from other parts of the organisation, with feedback on brand, image, product and pricing. With NPS, Bill gets his NPS data in exactly the way he needs it. That keeps Bill and his Marketing team happy.

On the other hand, Susan gets detailed account-level customer relationship feedback for her sales teams, and by looking at levels of trust and commitment, Susan can avoid any surprises when contracts come up for renewal. That keeps Susan and her Sales team happy.

Join us next week for Episode 2.

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

Our Biggest Customer Is A Bully. Help!

In this month’s edition of Management Today there is an interesting article about bullying. No, not online bullying or workplace bullying, but B2Bullying.

B2Bullying is what happens when a (typically large) buyer makes continued unreasonable demands on a (typically small) supplier. In many cases, the buyer represents a significant proportion of the supplier’s business.

Here’s the scenario:

“Our biggest customer is a bully. It never pays us on time – every piece of work we do for it has to be followed by a flurry of emails and phone calls demanding payment – and the boss of the company is rude and arrogant. If I had my way, I’d tell them to shove it, but the work we do for them represents 35% of our sales. Help!”

Jeremy Bullmore, former chairman of J Walter Thompson, is the agony aunt who dispenses sound management advice about how to handle such a client.

Jeremy’s response (you can read it here) is solid and pragmatic, but it begs the wider question about what a typical or even excellent buyer-supplier relationship should look like.

Here’s our take on the subject.

In the business-to-business (B2B) world, long-term relationships are built on a foundation of mutual trust and cooperation. Academics talk about exchange theory (think of an exchange between two equal partners rather than a traditional buyer-seller model) and equity theory (the exchange has to be seen to be fair and equitable by both parties involved in the transaction. Indeed, a long-term relationship is based on a series of such fair and equitable exchanges.

That’s not to say that from time to time one or other party gets the short end of the stick on a particular transaction, but in the long run, it evens out and both parties feel pretty comfortable with a bit of give and take. You scratch my back and I’ll scratch yours. Or maybe more accurate: “You need to help me out this time but don’t worry, I’ll make it up to you.”

Upon such transactions are long-term relationships made. But if one party (often the larger party and typically the buyer) starts to B2Bully his way or continues to usurp his position of power, the relationship is doomed and will eventually fizzle out. What Jeremy is saying in his response – if you read between the lines – is that this is a one-sided arrangement and not a true partnership and that the supplier either lay down some ultimatums to the buyer if in a position to do so. If not, grin and bear it for the moment while working towards a dissolution of the so-called partnership when the timing is right.

On the other hand, an excellent buyer-supplier relationship is on that will stand the test of time and will be based on those principles of exchange and equity. You’ll recognise the signs. The parties in the relationship trust each other implicitly and are committed to helping each other. They collaborate on joint initiatives. They innovate together. They don’t wait for RFPs to be issued – they bring ideas to each other. They have an emotional bond that makes it extremely difficult for a competitor to get a look-in.

So, what’s the quality of your relationship with your top clients? If you’re unsure, why not contact us today and we’ll check out your Customer Relationship Quality (CRQ) for you.

Peter Lavers is Deep-Insight’s UK MD.

Why are Trust and Commitment so Important in B2B?

“Commitment and trust, rather than (or at least in addition to) 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.

What I mean by that is that 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.

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 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 will treat us fairly and who will act with integrity. In other words, people we trust.

Two American scholars figured this out two decades 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, and that to foster and nurture such a relationship, Trust and Commitment are the two critical elements to focus on.