What Does Net Promoter Score Actually Measure?

Posted on January 18, 2023 at 12:49 pm.

What Does Net Promoter Score Actually Measure?

Interview with Professor Nick Lee

Some weeks ago, I met Nick Lee, Professor of Marketing at Warwick Business School to discuss his views about Net Promoter Score (NPS). I specifically wanted to get Nick’s views on NPS as a measurement tool. Does it work? Is it linked to sales growth? What does Net Promoter Score even measure?

Nick has an impressive background. In fact, The Academy of Marketing has already honored him with Life Membership in recognition of his outstanding lifetime research achievements and contribution to marketing scholarship. He is currently the Editor-in-Chief of the Journal of Personal Selling and Sales Management (JPSSM), which is the premier journal for research in professional selling. He is the first UK academic to hold this position, and only the second ever from outside the US. Nick was also the Editor in Chief of the European Journal of Marketing from 2008-2018.

Nick is more than just an academic. He holds strategic advisor positions for a number of innovative sales and leadership development companies, and he was part of the All Party Parliamentary Group inquiry into professional sales in 2019. His work has been featured in The Times, the Financial Times and Forbes, and he has appeared on BBC Radio 4, BBC Radio 5Live, and BBC Breakfast television.

Net Promoter Score: 20th Birthday

What prompted me to interview Nick Lee was a recent academic paper he was involved in called “The use of Net Promoter Score (NPS) to predict sales growth” which was published in the Journal of the Academy of Marketing Sciences (JAMS) in 2022.

Our discussion was very timely as Net Promoter Score is a metric that was invented by Fred Reichheld, a partner at Bain & Company, 20 years ago this year.

Over the past two decades, NPS has divided opinions. While it has been embraced enthusiastically by many businesses, it has been shunned by others. The academic world has questioned what Net Promoter Score actually measures.

I think you’ll find Nick’s comments on Net Promoter Score and what it really measures quite fascinating because he doesn’t hold back from his criticism of NPS but also points out that the flaws don’t invalidate its usefulness as a measurement system, as long as it’s used in the right way: tracking changes over time, rather than simply chasing a number.

The Interview

John:

Good morning Nick. To start, could I ask you to tell me a little about your own academic background. What was your first interest in the field of marketing?

Nick:

Well, I began my academic career as a doctoral student in marketing strategy. It seemed to me that the connection between sales and psychology was quite important. And there was a lot of work in management that was related to psychology, but very little of that research had been focused on the sales force.

A lot of sales research is actually about things like incentive structures and territory design. I call that ‘technical management’ but what I was more interested in was not so much the decisions that managers made, but how they implemented those decisions. Sales management is more about psychology than a mathematical or technical thing. More recently, we’ve seen how digital transformation has led to a a merging of the ‘technical’ things with the more psychological things, and that’s really the space I operate in now.

Is NPS a Fundamentally Flawed Metric?

John:

So let’s talk about the psychology of Net Promoter Score. It’s clearly a sales and marketing concept. It’s also a performance metric. When did you start getting involved with Net Promoter Score and is it a good sales and marketing measurement tool?

Nick:

My interest in NPS really came from Sven Bähre and that paper we wrote called The use of Net Promoter Score (NPS) to predict sales growth. Sven drove that project while my role was to use that project to address something that was important to the marketing literature. And I think it is very interesting that academia’s gone down one road with Net Promoter Score, the very simple road which says “NPS is useless and a load of rubbish”.

At the same time, business practice has completely ignored that academic view. Net Promoter Score has become the dominant customer metric in business. It feels like someone has to be right and someone has to be wrong here. But the interesting thing is it turns out that both sides are right. They’re just talking about different things. And that’s what fascinated me.

John:

So tell me about those different things. When I looked at Net Promoter Score many years ago, a guy called Tim Keiningham – one of the people you refer to in your paper – was very critical about NPS as a metric. At the time he worked at Ipsos so I wondered if he was bringing his own biases to the table. But at the same time, he was saying that the data did not show any link between NPS and sales growth.

Nick:

Oh, that’s interesting about Keiningham, I didn’t know that he was at Ipsos then. So there are a couple of issues that lead to this disconnect. One is that we generally don’t like it when a publication like the Harvard Business Review tells us there’s a single number that every company needs to look at. That automatically gets people’s interest and it actually didn’t make sense to me.

The other issue is, and I have every sympathy with this view, is that Net Promoter Score doesn’t really measure what it claims it measures. There are so many potential flaws in the idea that this one number could be a valid measurement of anything real. I spend a lot of time trying to develop measures around attitudes and psychological concepts. And this is a classic example of a metric that doesn’t seem to actually ‘measure’ anything. So on that basis, it is quite flawed.

When you add in the idea that you have to subtract the bottom scores (Detractors) from the top scores (Promoters), you're torturing the measure to within an inch of its life.

What does NPS Actually Measure?

John:

Surely Net Promoter Score is a measure of advocacy, if nothing else?

Nick:

To some extent it taps into advocacy, sure. However, it’s a number in response to a single question that doesn’t take account of all kinds of other factors that might be relevant. And then you have this weird calculation for subtracting ‘Detractors’ from ‘Promoters’. As a mathematical construct, that’s not great. But the real issue is that advocacy is a much more complicated idea and can’t really be accurately captured by a response to a single question.

So there’s no real evidence that that answer to the NPS question is a reliable measure of advocacy. And then when you add in the idea that you have to subtract the bottom scores (Detractors) from the top scores (Promoters), you’re torturing the measure to within an inch of its life. At that point, it ceases to become a measure anymore, even if it was at the beginning. It becomes a number which is divorced from the underlying concept.

John:

I’m with you. But does that invalidate it completely as a measure?

Nick:

Well, here we get to the bigger question: rather than “is NPS a measure”, we need to ask “is NPS actually useful?” In academia. we’ve said nothing about NPS for the last 20 years apart from “it’s crap”. But when I see a whole bunch of senior executives in large companies saying “well, I’m finding a use in it”, then academia needs to look at that.

What’s my conclusion? I think that is a problem for academia insofar as we tend to talk past each other in a lot of areas. We have to provide some insight into what practitioners are doing in this field. Of course, it’s our sole driving force as a discipline to find out what practice is doing and we study that. But at the same time, it is worth studying if the entire business community is using something that 20 years ago we in academia said was wrong.

John:

Have you come to any conclusions as to why senior leaders use Net Promoter Score, or how they can use it more effectively?

How Should NPS be Used?

Nick:

One reason why it’s used so much is partly a self-fulfilling prophecy. It’s used because everyone uses it and therefore nobody wants to not have that information. That’s an important factor.

But then the other aspect is that it’s used because it’s simple. It’s easy to collect and it’s simple to use. Whether it’s easy to interpret is actually a more challenging question. I don’t think it is that easy to interpret. For starters, what does the NPS number actually mean at any given point in time?

Now when you start tracking NPS over time, those questions fall away because what you’re looking at is trend data. What was it last year? Is it up or is it down? You have to operationalise NPS in the right way – by tracking the change in NPS score from one period to the next, not the absolute score. That’s important.

Net Promoter Score is also influenced by a lot of transient factors. For example, it’s very easy to manipulate and there’s a big selection bias. Who is asked to complete the NPS survey? Also, every surveyor cannot help but lead the customer on towards a higher NPS score. So at any given point in time, the net promoter score doesn’t mean much because of that selection bias. But if you assume that those forces are broadly the same over time, you can extract that little bit of signal from that noise with the time series a little bit more effectively than at a single point in time.

John:

I’m with you. But in our experience, the level of bias can increase over time. So you need to have a governance structure to ensure consistency. Or indeed, you may need to break the system apart and start again if the ‘gaming’ gets too deeply ingrained.

We should track trends, not individual time points. And the more data we have, the better. More bad data isn't better than less good data. But more flawed data is probably better than less flawed data.

Nick:

Yeah, I think you’ve got it right there. It is important not to be naïve that over time there might be an ‘instrument effect’ or a ‘history effect’ where people learn how to better game the system. I think with something like Net Promoter Score, that’s less of a thing because it’s pretty easy to know how to game the system straight away. And the only thing you can do really is try to say to your customers: “this is really important to me, can you please leave me a good score?” And there’s only so convincing you can be there. It’s not like you’re going to get better at doing that after a certain point in time. So I would be less worried about that.

But of course there are always ways to game the system. But the point is we should track trends and not individual time points. And the more data we have the better. Of course more bad data isn’t better than less good data. But more flawed data is probably better than less flawed data. So given we assume the data is flawed all the time, the most important thing is to know how that data is flawed. And while you can never perfectly extract the signal from the noise, the signal is there if you have enough data points gathered over a sufficiently long period of time.

Where Do We Go From Here?

John:

So where do we go from here, and where should academics be focusing their efforts?

Nick:

A few things for us to work on. First is international comparability. Big multinationals use Net Promoter Score across their different national areas. And I would imagine they’re comparing EMEA with America with Australasia. Is NPS really able to support that comparison? That’s a challenge so that’s the first thing I would look at.

Second is to move away from a single question. We really need multiple measures in order to compare them statistically across different cultures. So Net Promoter Score is one item. You would like it to be three or four items. And then you could compare those items across countries.

A third area is to get a wider industry perspective. We looked at NPS in a branded consumer goods context: sportswear. Is it equally useful across all kinds of different industry sectors? Particularly if you look at the service sector and front line services, which are linked to business to business (B2B) personal selling. Is NPS a useful metric for these interpersonal interactions? How well does it work in a B2B setting?

John:

Nick, I really appreciate your time today. I’m looking forward to seeing more research into Net Promoter Score. From a selfish perspective, I’d particularly like to see some B2B research done as there’s very little out there that I can find on the topic. Thanks again, Nick.

How Do You Measure B2B Customer Experience?

Posted on November 16, 2022 at 1:40 pm.

Written by John O'Connor

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.

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%.

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.

You Said, We Listened

Posted on May 5, 2022 at 5:05 pm.

Written by John O'Connor

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

The CX Factor

Posted on November 29, 2021 at 12:28 pm.

Written by John O'Connor

This blog is a shortened version of The CX Factor which originally appeared in the October 2021 edition of Modern Lawyer. Modern Lawyer is published by Globe Law and Business.

Download the article, including the case studies with Baker McKenzie, DWF, Shoosmiths and Travers Smith by clicking on the image below.

* * * * * * * * * * * * * * * * * * *

SUMMARY

There’s a lot of talk at law firms about client relationships. For many clients these can still seem hollow words based on one-way relationships.

Robert Millard and John O’Connor explore how firms that are trying to embrace true client centricity are setting themselves apart.

* * * * * * * * * * * * * * * * * * *

The CX Factor

Much has been written over the years about how diﬃcult it is for clients to diﬀerentiate between one law ﬁrm and the next. From a client perspective, law ﬁrms all look remarkably similar. Trust, reputation and brand generally play an unusually important role in buying professional services.

Appearing in directories such as Chambers & Partners, Legal 500 and International Financial Law Review are also important as are word-of-mouth recommendations. These are recognised to be among the most compelling means of winning new clients.

But what keeps clients loyal? What drives client relationship longevity? Except for the most complex or unique of matters, a range of ﬁrms exist from which clients can choose. Those ﬁrms are all staﬀed by highly competent, capable lawyers.

Making the Transition from Client Listening to Customer-Centricity

Within ranges, all charge roughly similar fees for similar matters. All are highly attentive to service quality. Most engage in at least some form of client listening. They claim to mould their services and service delivery channels around the needs of clients. But have they?

In our opinion, few have transitioned from client listening to becoming truly customer-centric.

This article is aimed at helping law ﬁrms to make that transition. The content is based on client- centricity work that John O’Connor has done with many large corporates and ﬁnancial institutions, including DWF Group plc. It is also based on Robert Millard’s unparalleled understanding of modern law ﬁrms.

It was informed by interviews with Baker McKenzie LLP (Ana-Maria Norbury and Deanna Gilbert), DWF Group plc (Zelinda Bennett), Shoosmiths LLP (Peter Duﬀ and Gaius Powell) and Travers Smith LLP (Julie Stott and Charlie Rogers) about their CX journeys. All of these were exceedingly generous with their time and insights. We thank them most sincerely.

Clients’ Demands are Shifting

Across many industry sectors and geographies, customers are shifting the ways in which they choose suppliers and service providers. Current research in the United States shows that the percentage of clients recommending law ﬁrms is at an all-time high of 69%. That’s up from 49% in 2020 and from 47% in 2019.

This increase is remarkable. But those results are not from superb skill in solving legal problems alone – the focus on service quality has given way to one of client experience (CX). For all but the most complex and diﬃcult of services, service quality is no longer a source of sustained competitive advantage. It is a prerequisite to be even considered.

Clients now demand that their experience with the ﬁrm advising them be hassle free, transparent and even emotionally uplifting. They also expect law ﬁrms to look further than the legal advice. They expect them to help solve business problems.

Law ﬁrms are changing their business models in line with these shifting client requirements. But too slowly, in our view. The time has come to accelerate. Bluntly, modern law ﬁrms must move from client listening to more detailed conversations, and act decisively on what they discover.

No UK law ﬁrm has what a leading corporate or ﬁnancial service client would acknowledge to be a world-class CX programme, or true customer-centricity. Pockets of excellence do exist though, and some of these can be seen in the case studies at the end of this article.

CX is Different to Service Quality

The concept of ‘quality’ emerged from the total quality management (TQM) movement of the 1950s. In the early days, the focus was on product quality. The emphasis moved in the 70s and 80s to service quality as economies in the western world became more services-based economies. ‘Client satisfaction’ became a prominent metric.

Client experience (CX) is diﬀerent. It means that a ﬁrm’s core focus is on its entire relationship with its clients – not just on satisfaction. Contemporary research shows that CX is generated through a long process of interaction between a ﬁrm and its clients, across multiple channels and through generating both functional and emotional eﬀects.

To achieve this requires ‘client-centricity’ which, in simple terms, means putting clients at the very heart of the ﬁrm. This transcends quality, to mean all the ﬁrm’s lawyers and business services professionals viewing every aspect of the ﬁrm from the client perspective. In this article, we use the terms ‘client centricity’ and ‘CX’ interchangeably.

For clients, quality assurance is diﬃcult in legal and other professional services. Lawyers and other professionals frequently have more knowledge of the topic in hand than do their clients. This creates a ‘power asymmetry’. Work product is frequently co-created with clients, or at least based heavily on client inputs. Consistently poor performance leads inevitably to reputational damage, sanctions for professional negligence and, ultimately, failure.

The Intangibilty of CX in the Legal World

That much is clear. How, though, does a client assess whether services rendered in a speciﬁc matter were merely ‘good’, or ‘excellent’?

It turns out that it is far easier for clients to assess how they feel about the services and about their experience, than the objective quality of the service received. Clients must trust the professionals that they instruct to be technically competent and diligent. Such trust is not necessary to assess their reaction to their experience – their ‘gut-reaction’ – to dealing with the ﬁrm and the way in which the ﬁrm deals with them.

At an event held at White & Case’s oﬃces in London some time ago, the former chairman of Allen & Overy (A&O), David Morley spoke of a very complex, challenging transaction where A&O was pitching for the legal advisory work against the usual range of premium London law ﬁrms. A&O won the engagement and, he said, he was later told by the client’s general counsel that the reason for that was that they felt that when, late at night in the midst of the deal when pressures were immense, they believed that A&O’s lawyers would be the easiest to deal with.

This is an excellent example of how intangible CX can be.

Professional Services are Different

Professional services have always been recognised as being distinct from products, and from other types of services. More than two decades ago, professional services were deﬁned as:

highly knowledge intensive, delivered by highly educated people, frequently linked to cutting-edge knowledge;
involving a high degree of customisation;
involving a high degree of discretionary eﬀort and personal judgement on the part of the professional creating and delivering the service;
requiring substantial interaction with the client; and
being delivered within constraints of professional norms of conduct, including setting client needs above proﬁt and respecting the limits of professional expertise.

For much of the past century, this has been an accurate description of the services delivered to clients by lawyers. Ask any lawyer if they are concerned about their clients, and the quality of services that they deliver to them, and the answer will almost always be: “of course I do!” And that response would be sincere and truthful – to the extent even that the question might be regarded as facile.

Commoditisation

Yet the statistics for clients defecting to rival ﬁrms in recent years have been alarming. Legal services are also changing. On the one hand, the complexity of legal issues increases continually and exponentially.

On the other, it is becoming diﬃcult to justify including the more process-driven ‘commoditised’ services under the umbrella of professional services. This does not mean that law ﬁrms need to discard these services. They form an important part of the business of many law ﬁrms.

The term for services that are not ‘professional’ is not ‘unprofessional’. It’s ‘technical’. The fact is that clients view technical legal services through a diﬀerent lens, and the proﬁt drivers of these services are diﬀerent to those of professional services. The ﬁrm’s business model needs to be more granular if the tensions between these client expectations and proﬁt drivers are to be managed.

As the ‘4th Industrial Revolution’ unfolds, more of the services now delivered by people will be better delivered by technology. Some lawyers will focus on using ever-more complex technological tools to advise clients on meeting their own increasingly diﬃcult, complex needs. The business of law is also being disrupted by emerging digital technologies and the geo-economic impacts that they spawn. Some firms will build highly proﬁtable legal service platforms (LegalZoom being a good current example) to focus on more mainstream legal needs. Best CX practice will evolve diﬀerently for each.

These tensions can and must be managed. CX has proved a valuable tool for banks, retail organisations, airlines and others to improve levels of customer satisfaction. It is now gaining rapid traction with law ﬁrms and might even be a new frontier on which law ﬁrms are competing. Many ﬁrms, however, appear to be struggling to separate the concept from similar ones such as ‘service quality’ and ‘client relationships’ and ‘client listening’.

What to Measure?

Metrics are obviously crucial. One of the best-known CX metrics is Net Promoter Score (NPS), created by Fred Reichheld based on his work at the consulting company Bain & Co. In his book The Loyalty Effect, Reichheld stated that clients should be valued according to the net present value (NPV) of the future revenues to be earned from them. This has given rise to the notion of client lifetime value (CLV).

NPS is based on the proven premise that client relationship longevity can be predicted by a client’s response to a single question: “how likely would you be to recommend our ﬁrm to a friend or colleague?”

Reichheld’s research showed that surprisingly high NPS scores are required to indicate long-term client loyalty. The NPS of a ﬁrm overall is calculated by subtracting the percentage of clients who allocated a score of 6 or less (Detractors) from the percentage who allocated a score of 9 or 10 (Promoters).

NPS scores can theoretically range from –100 to +100. An average NPS for a European B2B company is around +10 while an average score for European professional services ﬁrms is around +30.

But is NPS the best metric for law ﬁrms? We mentioned earlier how A&O won an engagement based on the general counsel’s level of Trust in the ﬁrm’s ability to deliver when the going got tough. Few companies measure trust explicitly – yet it is the fundamental building block of any client relationship.

Customer Relationship Quality (CRQ)

An alternative to NPS is to view the client relationship more holistically. Client relationship quality can be visualised as a pyramid comprised of three diﬀerent levels (see Figure 1).

Figure 1. The Customer Relationship Quality (CRQ) model

Three levels of Customer Relationship Quality

The ﬁrst and most fundamental is the Relationship level. Do your clients trust you, are they committed to a long-term relationship with you, and are they satisﬁed with that relationship?

The second is the Uniqueness level. Do your clients view the experience of working with you, and the solutions you oﬀer, as truly diﬀerentiated and unique?

At the top of the pyramid is the Service level. Are you seen as reliable, responsive and caring?

If law ﬁrms score well on all six elements of customer relationship quality (CRQ), their clients will act as ambassadors, generating a high NPS.

NPS and CRQ scores are highly correlated. Law ﬁrms should track their NPS but in order to understand what that is really telling you – and what you have to do to improve that score – law ﬁrms also need to measure and understand all six elements of the CRQ model.

Turning ‘Client Listening’ into an Effective CX Programme

Client listening is obviously more than just the score and the verbatim feedback that is captured. A fully-ﬂedged CX programme is also far more than a client listening survey. It includes what we refer to as ‘hard side’ and ‘soft side’ activities (see Figure 2).

Figure 2. Deep-Insight CX framework

The four quadrants are:

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

The hard side activities of Strategy and Execution are important. These include setting up the CX programme, determining what to measure, executing the survey process, and using the client feedback to update company strategy. However, one of the key lessons from interviews with corporate leaders is that successful CX programmes require heavy investment in ‘soft side’ activities if they are to generate real long-lasting results. This means spending signiﬁcant amounts of time with law partners and client teams planning for success.

All four quadrants are necessary for a successful CX programme. Many law ﬁrms start at the execution quadrant and are often disappointed when their client-listening programme produces no meaningful result or change. In our experience, the soft side is often overlooked and almost always under-resourced. Leadership is the most important quadrant while culture is the most challenging.

Step 1. Drive change from the leadership level

Client relationship longevity is a crucial building block of the ﬁrm’s client value proposition (CVP). It deserves the attention of the ﬁrm’s most senior leaders. Without active and highly visible senior leadership support, a ﬁrm is unlikely to achieve the CX results that they need to build sustained competitive advantage. It is crucial that the ﬁrm’s leaders themselves be truly client-centric. The must:

Be genuinely passionate advocates for the ﬁrm’s clients and their interests;
Take personal ownership of enhancing client- centricity in the ﬁrm;
Have an intuitive understanding that client satisfaction drives ﬁnancial success;
Use client-centricity as a lever to eﬀect organisational change; and
Be relentless about execution.

This list might appear daunting, but it is crucial. Too often, a ﬁrm’s CX initiatives founder because the task is delegated to mid-level teams who have no more than lukewarm support from senior leadership. The result? They are unable to drive the degree of change that can really make a diﬀerence. The need for active and visible senior leadership support is evident in the comments of Peter Duﬀ, chairperson of Shoosmiths, in Case Study 1.

Step 2. Link Strategy Explicitly to Actual Client Needs

Once the leadership for the CX programme has been secured, the law ﬁrm must use the voice of the customer to drive all aspects of the ﬁrm’s strategy. This can, and often will, involve major organisational and operational change. It will also require changes to the ﬁrm’s business model (CVPs, resources and proﬁt model). O’Connor and Whitelaw devote an entire chapter of their book Customer at the Heart to the strategy of client-centricity.

In Case Study 2, Zelinda Bennett speaks of some of the major strategic changes that DWF Group have made in order to serve their global clients more eﬀectively. Reorganising the business into global divisions and acquiring an alternative legal services provider (ALSP) were bold and decisive actions taken precisely because DWF wanted to become more client-centric.

Strategy must involve all aspects of the law ﬁrm’s business. It includes HR (hiring, training and promoting the most client-centric lawyers) as well as ﬁnance (investing only in initiatives that will have a demonstrable impact on clients). It must pervade the entire organisation. Every department in the law ﬁrm must see its role through the lens of the client.

Step 3. Build a CX Execution Capability

Besides strong leadership, a successful CX initiative also requires an ‘execution’ capability to ensure that the voice of the client is both captured correctly and acted upon. Execution is more than setting up a client listening post. It involves turning the outputs from those client conversations and collaborative explorations into tangible actions that solve real client problems.

In today’s world, the client personnel involved in buying and consuming legal services extend far beyond the legal department. The client’s voice needs to extend beyond just the GC and her or his legal team. Law firms must think about the ‘inﬂuencers’ who are telling those decision makers that “We have to work with Firm X” or “Firm Y really aren’t delivering value for money – we should be looking elsewhere”.

One of the better examples of a good execution capability is Baker McKenzie’s Reinvent programme (Case Study 3). Reinvent started by using client listening to map existing client interactions with the law ﬁrm – ‘journey mapping’ as it’s often referred to – but then moved to the next logical level. Baker McKenzie started working with clients to re-engineer processes and even co-creating new services and solutions. The Reinvent programme was developed to establish the governance, skills and infrastructure required to support better client outcomes. This programme focuses both on re-engineering speciﬁc processes and services with clients, as well as a way to develop teams across the ﬁrm – empowering execution at a grassroots level. Such an approach is a highly eﬀective way to build engagement with the CX process and commitment to its success.

Step 4. Embed Client-Centricity into the DNA of the Organisation

Lawyers are consummate professionals. But are they truly client-centric? Most legal professionals entered the legal industry to practise law. They wanted to advise clients and to mitigate risk. They didn’t join to help CFOs and procurement professionals to cut costs. However, that’s what partners in law ﬁrms are being asked to do these days.

Embedding behaviour changes and aligning the ﬁrm’s culture with the ‘voice of the client’ takes patience, persistence and continuous eﬀort over a long time. Engagement with clients must be ongoing. Building and sustaining the momentum required to be true client-centric needs a constant stream of input from clients. It also requires constant conversations within the ﬁrm about what that input means, and how clients can be better served.

In Case Study 4, we look at Travers Smith’s ability to embed the culture of client-centricity into the DNA of the ﬁrm. Silos have been broken down. Close collaboration between lawyers and business services has been achieved. International clients are serviced almost seamlessly. The ﬁrm’s senior leadership takes a very active lead in this.

The reason why most law ﬁrms are lagging behind might be not that they are inattentive to clients (that is usually patently not the case). It is more likely to be that they simply do not have the systems and processes in place that are required to get input of the quality and detail that can drive continuous improvement. A properly designed CX programme delivers that. Over time, measurable results emerge both in terms of client loyalty (NPS and CRQ scores) and also, more importantly, economic performance.

Conclusion

Earlier, we said that many companies start with Execution. We strongly believe that the ﬁrst step in a successful CX programme is gaining the right Leadership commitment to putting the client at the heart of everything a law ﬁrm does.

Once that leadership is in place, it becomes easier to get the law ﬁrm’s strategy aligned to what clients actually need and the CX execution tasks become much easier. With leadership, strategy and execution in place, culture change automatically follows.

As David Morley’s earlier anecdote reveals, the primary impactors of CX emerge when things go wrong. Clients report four major areas where the law ﬁrms that advise them are inconsistent, namely: keeping them informed; dealing with unexpected changes; handling problems; and meeting scope. Feel free to work on these immediately, of course.

But if you want to achieve a step change, that starts at the top.

Should Customer Experience and NPS Surveys be Anonymous?

Posted on November 2, 2021 at 11:52 am.

Written by Rose Murphy

CX and NPS feedback – should it be anonymous?

Should Customer Experience and NPS Surveys be Anonymous? The simple answer is NO – anonymity is not required for a B2B CX or NPS programme.

But the answer is not that simple. Let’s start by defining what Confidential and Anonymous mean in the context of surveys. This may sound obvious, but I have been amazed at the number of times I have needed to discuss this:

ANONYMOUS: No person or application can associate the answers you give with any identifiable information about you
CONFIDENTIAL: Any identifiable information about you will be held confidentially, and stored in an appropriately secure manner
OPTIONAL CONFIDENTIALITY: Any identifiable information about you will be held confidentially, and stored in an appropriately secure manner unless you specify that you would like to be identified (in other words, you decide to waive your right to confidentiality)

So for the rest of this blog, I am not longer going to dwell on anonymity. It’s simply not needed.

Confidentiality – now that’s a different matter

In any setting, when a third party asks for your opinion about someone, confidentiality is important to ensure a really open and honest response. In personal relationships this goes without saying but in the B2B world this is also true. It’s especially true if your staff are doing what you need them to be doing – building strong and personal relationships with clients.

Of course, many of your customers will indeed give you an honest response regardless of whether it is confidential or not. But many won’t. Cultural differences will mean this statement is truer in some parts of the world than others. However, regardless of where your customers live, there will always be those who will not respond, or who may not be as open as you would like them to be, unless their responses remain confidential.

Example 1

This example is an actual Deep-Insight client.

Company A ran a Customer Relationship Quality (CRQ) assessment (Survey 1) and told respondents that they had the option for their responses to remain confidential. Six months later Company A ran the survey again, but this time told respondents the option to remain confidential was removed.

The impact on their average Net Promoter Scores (remember NPS is a measure of advocacy on a 0 to 10 scale) was as follows:

Individuals’ responses in Survey 1	Completion Rate (Survey 2)	Average NPS (Survey 1)	Average NPS (Survey 2)
Chose confidentiality (did not share details)	55%	6.3	7.5
Waived confidentiality (shared details)	70%	7.1	7.2

For respondents who had shared their names with their responses in Survey 1, there was no significant impact. When asked to complete Survey 2, 70% did complete and only a small uptick in scores was noted (7.1 to 7.2).

However, where respondents chose to keep their feedback confidential in Survey 1, there was a much bigger impact. For starters, only 55% of these individuals chose to complete Survey 2. For those who completed Survey 2, there was also a significant increase in scores (from 6.3 to 7.5). In fact, ‘Confidential’ respondents went from scoring more poorly than average to scoring more positively than average when forced to share their details with the response.

Example 2

Here’s another client of ours. Having received very high scores for several consecutive surveys, Company B decided to introduce the option of confidentiality to ensure the integrity of what it was measuring. The findings were interesting, especially for newly-included respondents:

26% of respondents opted to remain confidential overall but for newly-included respondents the figure was 38%
‘Confidential’ respondents scored more poorly than those who agreed to share their responses – but not significantly so
Newly-included respondents who opted for confidentiality scored significantly more poorly than other respondents

“…but my teams are frustrated by these unactionable ‘Confidential’ responses”

In both examples above, the organisations had good business reasons when they chose not to include confidentiality in their CX process:

Improved usefulness as an account management tool as ALL feedback is provided to account management teams
All raw data can be fully integrated with internal systems, allowing ongoing re-segmentation of responses (this is limited when responses are confidential)

But the argument that your CX or NPS programme should include ‘Optional Confidentiality’ is far stronger. If you don’t include optional confidentiality, your most unhappy customers will either not respond or will not give you a completely honest response.

This puts your entire CX or NPS programme at risk. You will end up making decisions based on inaccurate or incomplete data.

So should NPS Surveys be Anonymous? No. Should they include ‘Optional Confidentiality’? Absolutely!

“Is there any way to convince ‘Confidential’ respondents to share their details but still give an honest response?”

Maybe, but this will take time; people are people after all.

If a customer is at a point in their journey with you that they do not want to share their details, but they are willing to give feedback, that’s OK. Of course, you can explain the benefits of what you can do if they agree to share their details with you (you can address their issues more easily) but don’t push too hard. There is a trust issue here. Pushing won’t help.

You have a much better chance of convincing this customer by including them in your ‘Close the Loop’ process even though you don’t have a response from them. Over time you will gain their trust, both in the CX or NPS programme as well as in your organisation. You’ll eventually win that shared response.