Does your Net Promoter Score (NPS) matter?

Does your Net Promoter Score (NPS) matter? – To answer this it is important to really understand what we asking our customers when we use NPS

Recently, after a perfectly OK meal in a restaurant, someone asked me this question: Would I recommend the restaurant to friends or family? Without hesitation, I said ‘N0’. Queue shock and gasps. The meal was ok, the service was fine, the atmosphere was nice. How could I be so mean?

I didn’t think I was being mean. It was all fine but a recommendation from me is a reflection on me, it is saying something about me and my standards – for food of all things. I certainly wouldn’t recommend a food experience that was a bit, well, “meh

In the professional B2B world the stakes are a lot higher. Social Media – yes that includes LinkedIn – has created a whole business out of self-promotion. Recommending or promoting someone else’s business is an easy way to do this with little effort. It is the ultimate win/win. A recommendation from a customer is the most effective sales tool you can have and in turn, the recommend-er gets to add value to their brand. But this delicate equilibrium can only exist if your customers trust that recommending your business, and your company’s hard work, will reflect well on them.

So, how do you find out if your customers trust you enough to recommend you? Enter Net Promoter Score or NPS. A clever, albeit obvious, idea –ask them!

And we have been asking, NPS is everywhere and we are obsessed. It can influence the whole mood of an organisation. But can you confidently say that that all of your promoters really are recommending your company? Not until you answer at least the following questions:

Are your Senior Leaders driving a culture of valuing the feedback, not the score?

We are often asked: ‘Do you measure NPS? Head Office needs us to provide an NPS number’.

One does not need a doctorate in psychology to know that if there is motivation, implied gain or actual gain, to reach a target number, then that will drive certain behaviors to reach that number. A commitment to consistently gathering the data with integrity needs to come from the leadership team, visibly and regularly. Helping our clients get this engagement from their leadership team is the first thing we do in any CX project, see how we do it here.

Is your organisation measuring it with integrity, or are you chasing a number?

Teams are often trained to find clever ways of making sure that NPS moves in the right direction. A new and improved NPS score is then announced and celebrated. NPS is very useful but only if the culture and approach for gathering it ensure that it is done with the intention of really understand the customer. It’s crucial that organisations do not distract by chasing and competing for a number. This is about the customer after all.

Is Transactional NPS concealing the truth?

Yes, in the last 5 minutes I had a great experience with your customer service team member. But will I recommend your business just based on this? No, of course not. But I will answer 10 because I am a nice person and I don’t want the individual who just really helped me to suffer. This use of NPS is manipulative and gives you absolutely no insight into your customers’ intentions for recommending you.

So, does your NPS score matter?

Does it reflect if your customers are actually recommending you in the marketplace, or has your organisation become better at understanding how and when to gather the responses in order to ensure a score is achieved?

Only when you can answer that should anyone care what the score is.

* 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

Susan and Bill have Relationship Problems! (Part III)

The last time we met Susan and Bill, they were discussing survival tactics. Thankfully, they have managed to get the company back on an even keel – excuse the boating pun – over the past few months and now have a new challenge to face.

At the last board meeting, the CEO asked them to prepare a strategy that would transform the company from an ‘Even Keel’ company to becoming a ‘Leading Edge’ company.

“I don’t want us to be competing on price. I want us to be seen by our clients as unique, innovative, really easy to do business with. Now it’s up to you two to make that happen. Get back to me by 23 September with a strategy. And it better be good.”

Unfortunately, Susan and Bill are at loggerheads trying to plot a course towards that Leading Edge organisation that their CEO so desperately wants to become.

Different Views from Sales and Marketing

Susan“Leading Edge is a simple sales concept. Leading Edge = More Sales. It really is as simple as that. We can become Leading Edge if Bill provides me with market-beating products. That’s the thing he can’t seem to grasp.”

Bill:“Leading Edge is a complex brand concept. It’s how you are seen vis-à-vis the competition. We’re a services business and the differentiating factor is the quality of our service and account teams, not the products. That’s what Susan fails to grasp.”

Susan’s view is (as usual) plain and easy to grasp: “Give me decent products/services and I’ll sell them. If the products/services are Leading Edge, we’ll sell more of them. It’s not really my job to DESIGN them, so don’t go asking me about transforming this company into a leading edge organisation.”

Bill has a slightly more nuanced view. He accepts that it’s his job to translate customer needs into the sorts of products and services that the clients will love and buy, but he also makes the valid point that he and Susan are in a B2B services business, and that Susan’s account teams (as well as the Service/Delivery teams) have a key role in making the service a Leading Edge one in the client’s mind.

Bridging the Gap

As usual, Bill is half-right. And so is Susan.

But let’s start by bringing a little clarity on the terms we are using. Let’s begin with a definition of what a ‘unique’ brand is in the business-to-business world.

In the B2B world, the uniqueness of your brand is dependent on a combination of whether you provide a unique Solution for your clients and whether they find the Experience of working with you to be uniquely satisfying.

Deep-Insight defines Solution as a combination of innovationleading edge and value-for-money. These are three related but slightly different concepts but if you score well on all three, the chances are that you have an offering that can help your clients improve their standing in the marketplace in a way that none of your competitors can provide. When we talk about ‘solutions’ we’re not just talking ‘product’. As Bill says, it’s as much about how the account managers, sales and delivery teams position your company’s product or service, as it is about the product/service itself.

Experience is a measure of how easy you are to do business with and if you are seen as a trusted partner. You can have the best products or services in the world but if your clients can’t work with you and don’t see your people as trusted partners, your brand is going to suffer.

So when Bill and Susan’s CEO talks about wanting to be a unique, innovative, leading edge company, he’s really talking about building a B2B brand that excels at all the different elements that we group under the headings Solution and Experience. And that means the Bill and Susan need to work together to get all those elements right. But as the methodology above shows, you can’t build a unique B2B brand without having an excellent service to underpin it. So Bill and Susan and going to have to rope in the Operations Director as well. We wish them well on their journey.

Ultimately, the real definition of Leading Edge will be dictated by your customers. But you’ll never know if you don’t ask them.

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.

Trusted Relationships = Consistently Good Service

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

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

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

It’s between Service Performance and Trust.

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

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

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

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

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