Does your Net Promoter Score (NPS) matter?

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DOES YOUR NET PROMOTER SCORE (NPS) REALLY 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 ‘NO’. 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 recommender 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.

Does NPS Work for B2B Companies
* Net Promoter® and NPS® are registered trademarks and Net Promoter SystemSM and Net Promoter ScoreSM are trademarks of Bain & Company, Satmetrix Systems and Fred Reichheld

Why B2B Benchmarking is NOT a good idea!

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Am I better than the competition?

If I got a penny for every time a client has asked “How do we compare against our competitors?” or “How are we doing against the benchmark for our industry?” I’d be a rich man. But the thing is that B2B benchmarking is not a good idea.

Seriously. You should strive to be a ‘Unique’ company and not an average company.

Most of our clients want to know how they are doing against the benchmark score for their industry. My response: “If you really aspire to being a mediocre company, then I’ll tell you what the average score is for your industry and how you compare against the average. But you can do better than that. You can be UNIQUE.”

In fairness, some of our clients have latched on to the message that they should ignore the competition. They should focus purely on being indispensable to their existing customers. Still, it’s tempting to see where you stand in a league tables against your industry peers.

So let me ask a few questions about why you want to do benchmarking. Because B2B benchmarking is not a good idea!

What exactly is your industry?

Are you in the insurance industry, or the insurance broking industry? Or are you in both? Or re you an outsourcing company that specialises in insurance third-party processing?

They’re all in the insurance world but these are very different industries. They have different dynamics and there are differences in average scores from one industry to the next. For example, we know from experience that many IT and most BPO (Business Process Outsourcing) companies tend to get lower than average scores, while corporate banking and professional services companies tend to get higher than average scores. Firms operating in niche markets also find it easier to be seen as different and unique.

If I say you’re at the industry benchmark, will you really be happy?

If you aspire to hit the average score for your industry, or your country, you’re setting the bar pretty low. What you’re telling me is that you want to be an average company.

To take my point to its extreme, benchmarking is little more than a recipe for mediocrity.

Do you realise that international benchmarks are inherently flawed?

This is not just because the insurance broking or widget-manufacturing markets in the Netherlands have a completely different structure than they do in Australia. It’s also because Dutch and Australian clients have completely different approaches to the way they answer customer surveys.

There are some good academic papers on how different nationalities are pre-disposed to answering questionnaires differently. Let me give just one example. Some people will claim that the average Net Promoter Score (NPS) for B2B companies is between 25% and 30%, regardless of industry. However, these figures are heavily skewed towards US companies.

Our experience of gathering NPS scores across 86 different countries since 2006 is that the average NPS score for any B2B industry is closer to 10%. But then again, our clients are more heavily weighted towards European and Australian respondents, who generally tend to score less positively than their American counterparts.

But I still want to benchmark my performance!

I thought you might say that.

If you really do want to benchmark yourself, then let me suggest that you approach the subject of benchmarking in a slightly different fashion:

  1. START BY SETTING THE BAR HIGHER. Aspire to be the best, or at the very least to be ‘Unique’ in the eyes of your customers. Our database at Deep-Insight shows that only 10% of B2B companies are considered Unique by their clients, but these Unique companies have significantly stronger relationships – and retention rates – than the ‘average’ company. Unique companies typically have twice the number of Ambassadors and have NPS scores of 30% or more.
  1. BENCHMARK YOURSELF AGAINST YOUR OWN PERFORMANCE LAST YEAR. That’s a much more reliable way of seeing if you are becoming more customer-centric or not. The journey to becoming a customer-centric organisation is a long one – don’t think you’re going to achieve it in anything less than three years – so be sure to check your progress formally on at least an annual basis.
  1. BENCHMARK YOURSELF INTERNALLY. See what your clients think of you, compared to the scores that are achieved by other divisions or business lines within the same company. If you’re an international company, benchmark yourself against other geographies (but watch out for the cultural differences between, say, American and European divisions.)

Remember that B2B benchmarking is not a good idea. It’s not a BAD idea. It’s just that you should ignore the competition and become unique for your customers.

Good luck!