b2b – Page 4 – Deep-Insight

Why Sample Sizes are Nonsense (in the B2B World)

Posted on January 26, 2016 at 1:37 pm.

Most of Deep-Insight’s work is based on helping large international B2B organisations run effective Customer Experience (CX) programmes.

The key to running a good CX programme is understanding how to change the culture of an organisation to make it truly customer-centric, and that has to be based on regular high-quality conversations – both formal and informal – with your B2B clients.

Without regular client feedback, sales directors and account teams will not be in a position to address small issues before they escalate to a point where they damage or destroy the client relationship.

When we plan Customer Relationship Quality (CRQ™) assessments for our clients, one of the questions I regularly get asked is “How many of our clients should we sample?” The stock answer that I’ve been using for the past decade is “Think Census, Not Sample”. In other words, get feedback from your entire client base – every single one – and it’s the answer I still use.

It’s not meant to be a glib response but there are a few subtleties underpinning the answer that are worth exploring.

TRADITIONAL APPROACH TO SAMPLING

Many market research and customer insight people – even in B2B organisations – tend to approach the subject of customer feedback from a consumer perspective, where there are tried and trusted approaches for surveying large customer bases, or “populations” to use the technical term. If you’re not that familiar with these approaches or terminology like random sampling, margins of error and confidence levels, have a look at the Box below.

MARGINS OF ERROR, CONFIDENCE LEVELS AND SAMPLE SIZES – TRADITIONAL APPROACH

If you’re not a market researcher or statistician, don’t worry – there are plenty of good primers on the Internet explaining the basics of sampling techniques and associated terms – here’s one from YouGov.

You’ll also find several handy little calculators on the Internet (here’s a link to one) which let you know how many respondents are required for a particular population (customer base) in order to give a confidence level and margin of error. From this, it’s easy to calculate the number of individuals you need to invite to participate in a survey in order to get a robust answer.

Most opinion polls are conducted with a random sample of at least 1,000 people and here’s the reason why: pollsters like to be confident that their results are within a margin of error of 3% or less. Supposing the voting population in a country is 10 million people. Plug that number into our online calculator and we see that a 3% margin of error and a confidence level of 95% requires a sample of 1,067.

All that is fine if you’re working in a consumer environment or if you have tens (or hundreds) of thousands of SME customers. However, the traditional sampling techniques have less value when you are a B2B organisation and the vast proportion of revenues is generated by a handful of large clients. There may be a “long tail” of smaller customers but in most cases the Pareto Principle applies, whereby 80% of revenues are generated by 20% of clients. In some cases, the ratio can be 90/10 rather than 80/20. In such cases, the old traditional sampling approach needs to be chucked out of the nearest window and a different set of principles applied.

THE DEEP-INSIGHT APPROACH – FOLLOW THE MONEY

Our approach is to be pragmatic and follow the money – concentrate on those clients that generate the majority of the revenues, and do a ‘deep dive’ into those relationships.

It’s probably easier to explain using an example.

Case Study – Large UK Services Company
Revenues: Over £1 billion
Key Clients: 100
One of Deep-Insight’s UK clients has over 10,000 employees and generates annual revenues in excess of £1 billion. However, its customer base is actually quite small and the contracts it has with these key clients are extremely large. The company has several hundred clients in total but the vast majority of its revenues come from the ‘Top 100’ and even among the ‘Top 100’ the revenues are skewed heavily towards the 10 largest clients.

So how do you run a CX programme when your client base looks like this? In that particular case, the company has chosen to focus exclusively on its ‘Top 100′ clients. Purists might argue that this is not representative of the full customer base. This may well be true but it definitely is representative of the full revenue base, and that’s the commercial perspective of “following the money.”

From a pragmatic perspective, it makes little sense to take a sample of the Top 100 clients. You should attempt to get feedback from every single one and ideally you want to get a wide representation of views from across each of those 100 clients.

Even from a statistical perspective, it makes little sense to sample – if you need convincing, have a look at the second Box below.

APPLYING THE DEEP-INSIGHT APPROACH

Suppose there are 10 key individuals (at most) in each ‘Top 100’ client whose feedback is really “important” (in other words, the decision-makers who will renew the current contract when it’s up for renewal) that’s still only a population of 1,000 individuals across your Top 100 clients – run the numbers and you’ll see that you need to include all, in order to get a statistically significant sample.

Let’s plug those figures from our Case Study into the online calculator and see what happens.

For a population of 1,000 decision-makers, we need 278 responses to get a robust score (robust being a margin of error of 5% and a confidence level of 95%). Deep-Insight will typically achieve completion rates of 35-40% from its online B2B assessments so that means we need to invite 700-800 of those 1,000 key individuals to participate.

If you think a margin of error of 5% is too high, then plug in 3% into the online calculator. Now the number of responses jumps to 517 out of 1,000. This means you DEFINITELY need to invite all 1,000 to participate to get anywhere near your target margin of error.

Successful CX programmes in B2B companies are not built around statistics. They are built around empowering staff and providing account managers with all the customer feedback they need to manage client relationships more effectively. That means getting feedback from ALL individuals in those key clients and working really hard with the account teams to get participation and completion rates as high as possible.

So when you’re planning your next Customer Relationship Quality (CRQ™) assessment, remember to get the account managers involved and “Think Census, Not Sample”.

Product Management: First Month, First Insights

Posted on September 25, 2015 at 2:18 pm.

Written by Rose Murphy

Rose Murphy
Product Manager, Deep-Insight

I’m delighted to start my new role as Product Manager. It’s an exciting challenge for me and for Deep-Insight. But where do I start? What do I do first?

Having spent ten years working my way up to Operations Director in Deep-Insight, I know our products and services like the back of my hand. I’d like to think I have a good grasp of the enhancements required to improve the reports and results we provide to our customers. But how can I be sure?

Here’s the single biggest thing I learned in the last few weeks since starting this role.

What I knew within operations, I really knew. What I know now, I only think I know.

I need to gather a lot of information and knowledge in the next few months. It’s easy to feel overwhelmed by this.

Here’s the plan; I am going to deal with the ‘known unknowns’ one day at a time.

There are a lot of unknowns at the start of this process, but I have decided that there are only two that really matter.

1. What do our customers really ~~want~~ need?
2. What is the correct product roadmap for the next couple of years based on this?

I thought I knew the answer to number 1 above. I did with the word ‘want’. I have been listening for years to client feedback on our products.

But do I really know what happens within our client’s organisations once we deliver the results? Do I know what they really need?

We spend a lot of time with the management teams responsible, as a result of our findings, for creating action plans and driving change throughout their organisation.

But what about the team on the ground responsible for working with the reports on a daily basis?
– Do we really know everything that happens with our reports and results once our clients receive them?
– Have we ever truly observed how the account management teams use our reports and findings to help them manage their accounts?
– Have we ever assessed if our clients are making full use of every piece of information in every document we send to them?

To answer the question at the beginning of this blog, that is what I am doing first.

I will visit every client that will have me and meet as many people as possible within their organisation. I am going to ask many questions but I am also going to stop asking questions and simply watch.

I believe that it is this process of watching how our products are being used that will bring me much closer to understanding what our customers really need us to do. I will consider this information to be the single most important factor when deciding on our product roadmap at the start of next year.

That’s better. Now I have a plan. I’ll keep you updated.

What is a ‘Good’ Employee Net Promoter Score?

Posted on September 15, 2015 at 2:28 pm.

Written by John O'Connor

What is a ‘Good’ Employee Net Promoter Score?

Last year, I wrote a blog post entitled What is a ‘Good’ B2B Net Promoter Score?. For some reason it turned out to be surprisingly popular. The blog still gets dozens of hits every week. I’m guessing that was because there’s a lot of nonsense posted on the Internet about companies achieving Net Promoter Score (NPS) results of +62 or even +78, or about people being hugely disappointed because they only achieved a score of +25.

Meanwhile, some of our own clients at Deep-Insight would get upset when I tell them their customer NPS was only marginally positive or – even worse – negative. The two simple messages in that blog post were:

“Be careful about how you interpret NPS figures”

and

“A customer Net Promoter Score of approximately +10 is the average for European B2B firms.”

eNPS versus NPS

In that blog, I was discussing NPS as a measure of customer advocacy. More and more, it is also becoming the de facto standard for measuring employee advocacy and employee engagement. So this blog will address the question: “What is a ‘Good’ Employee Net Promoter Score?”

Before I let you know what that magic number is, it’s worth digressing slightly to explain the basics of how NPS is calculated. If you’re already a net promoter aficionado, skip the box below.

HOW IS THE NET PROMOTER SCORE CALCULATED?

For the uninitiated, a company’s Employee Net Promoter Score (eNPS) is based on the answers its employees give to a single question:

“On a scale of 0 to 10, how likely are you to recommend Company X to a friend or colleague?”

Employees who score 9 or 10 are called ‘Promoters’. Those who score 7 or 8 are ‘Passives’ while any employee who gives a score of 6 or below is a ‘Detractor’. The actual eNPS calculation is:

Net Promoter Score = the percentage of Promoters minus the percentage of Detractors

Theoretically, companies can have a Net Promoter Score ranging from -100 to +100.

So think about it. The only Promoters you have in your company are those employees who are prepared to give you a score of 9 or 10 out of 10. In the average American company (remember that the whole Net Promoter concept originated in the USA) that makes sense. Americans tend to score very positively when they are satisfied, so having a high cut-off point is appropriate. However, if you’ve grown up and live and work in a European country, you approach the Net Promoter question from a very different cultural perspective.

It’s a Cultural Thing

Many – nay, most – Europeans regard 8/10 as a very good score. Some will argue that 9s or 10s are only handed out in exceptional circumstances. This is culturally ingrained into us Europeans through our schooling system and particularly through our university grading system.

In European universities, a First Class Honours degree requires a score of 70% (7 out of 10). Scores of 75% are remarkable, while scores of 80% (8 out of 10) and higher are almost unheard of. These cultural differences have to be taken into account when interpreting whether a particular Employee Net Promoter Score is ‘good’ or ‘bad’.

The Magic Number

So what is a ‘Good’ Employee Net Promoter Score? We have been measuring NPS and eNPS since 2006. We do this mainly for European and Australian companies. The average Employee Net Promoter Score (eNPS) across all of our clients during that time has been a paltry -10. Yes, that really is a negative sign before the 10.

MINUS TEN!

Put it another way: achieving a positive Employee Net Promoter Score is a solid achievement for most European firms. Rarely do we see eNPS results in excess of +20.

So there you have it. If your company has just received a negative eNPS in the latest employee survey, don’t feel too bad. You’re in good company!
To find out more about Deep-Insight’s employee assessments, click here.

* Net Promoter® and NPS® are registered trademarks and Net Promoter System^SM and Net Promoter Score^SM are trademarks of Bain & Company, Satmetrix Systems and Fred Reichheld

Selling? Don’t. Become a Trusted Advisor Instead

Posted on April 24, 2015 at 2:33 pm.

Written by John O'Connor

Many of our B2B customers struggle with the challenge of turning their sales people from mere order takers into true relationship managers. Or better still: into a ‘Trusted Advisor’.

This is particularly true of companies who sell to large and complex clients. I’m talking here about situations where a large account generates annual revenues of €1m (or £ or $) or more, often as part of a long-term contract.

The same challenges apply to smaller accounts but the dynamics of large accounts and big deals are a little different. For starters, winning a 5-year or 7-year contract worth €5-10m a year is always an expensive and long-drawn out sales process. Bid teams are often assembled, and may spend months (or even years) working on a bid. Service buyers often start with a long-list of potential suppliers, whittle it down to a short-list and then have a ‘bake-off’ between the final two. The worst position of all for a bidder is to end up coming second, as they may end up with bid costs running into seven figures with nothing to show for it at the end.

Knowing the Decision Makers

It’s critically important to qualify any opportunity properly. A key question – probably THE key question – to answer during the qualification process is “How well do we know the decision-makers?”

If the answer is “Not very well” or even “Actually, we have no idea who the real decision-makers are” then the right answer is probably to decline to bid. If you do decide to continue, do so in the knowledge that you are unlikely to win. The winners are often insiders, people who already have the ear of the chief executive, or who are known to the Board. So if you do end up coming second, don’t complain about ‘the old boys network’ working against you. The reason you lost was because the people making the decision were asking different questions to the ones you answered in the Request For Proposal (RFP). Questions like “Do I trust this person?” and “Can I rely on the team to transform my business?” or even “If this all goes horribly pear-shaped, am I likely to lose my job?”

You may think that the evaluation criteria that the buyer has shared with you is what determines the decision. Don’t be fooled. Many buying decisions are made independently of the stated evaluation criteria, and quite often the scores are adjusted after the event to fit the decision.

The Importance of being a Trusted Advisors

Ultimately, decision-makers spend big money in the expectation that it will transform their business. And because there is a strong emotional component in the decision-making process (their reputations and jobs may be at stake) they base their decisions on an assessment of the individuals making the sales pitch – possibly more so than the product or solution on offer. That’s where it’s important to know the decision-makers and be seen as a trusted advisor by them – a true ‘relationship manager’ as opposed to a bidder or ‘order-taker’.

You won’t become a trusted advisor overnight. You first have to build credibility with the client, and be seen as a person who can add value outside of a pure technical or sales role. You have to spend time with them and be able to put yourself into the shoes of the CEO and understand the business issues that he or she is facing.

Trusted advisors are not meek. They are comfortable having robust conversations with senior executives and are not afraid to challenge them. Similarly, good senior executives are happy to be challenged, as long as they think you have a well-thought through point of view, and are acting in their best interests. That requires integrity, an intimate knowledge of the company, a business perspective rather than a technical perspective, and a genuine desire to help solve the problems faced by the business.

Reinvigorating your Sales Team

I’ll leave you with a final thought. If you are managing a sales team, be aware that not everybody in your team is capable of becoming a trusted advisor. For some, no amount of training or up-skilling will help them make the leap from ‘order-taker’ to true ‘relationship manager’. If you’re a CEO or Sales Director and you think this might be an issue in your organisation, you will need to bring in some new blood. Excellent sales directors are great at motivating their people but they are also ruthless when they feel a sales manager does not have the capacity to become a trusted advisor.

To find out more about turning your sales team members into Trusted Advisors, click on the image below. Better still, contact us here.

5 Generic Actions to Drive up your Relationship NPS Scores

Posted on April 15, 2015 at 2:38 pm.

Written by John O'Connor

We run B2B customer assessments for large corporate clients in the Netherlands and elsewhere. Very often I get asked questions like this after we deliver the customer feedback to senior management:

“OK, you’ve told us what our customers think of us, but what do we do about it now?”

“Tell us what we do in the next few weeks so that we don’t lose momentum.”

So here’s what I tell them:

1. BRIEF YOUR PEOPLE.

Typically, you need to brief at two levels and both are equally important:

– Executive Team. The senior executives in your organisation need to ‘own’ the overall results. If the customer feedback is negative or requires fundamental change, only the executive team can decide on the appropriate actions.

– Account Managers. These are the people who need to ‘own’ the results at account level. They are also the people you need to set up and run the account feedback sessions (see below).

Make sure to get the senior executives to read all the verbatim comments and see if their summary of the top issues agrees with the Deep-Insight analysis (they will understand the context better than we can). The most effective way of increasing Customer Relationship Quality (CRQ) and NPS scores is to have the programme driven by the executive team. Without the drive and passion at this level, the programme will fail.

2. DISCUSS THE RESULTS WITH YOUR CLIENTS.

Typically this happens in two stages:

– Stage 1. Within 2 weeks of the assessment results being delivered, you should get a general communication to all customers that you invited to give feedback. This should include a general ‘Thank You’ message for participating in the assessment (OK, not everybody completed it – our completion rates are typically 35-40% – but let’s not be mean!) as well as a message that their account manager will be in touch to arrange a feedback session to discuss the results (the overall results plus the specific results for their account)

– Stage 2. Within 8 weeks (or whatever target you set – but you must set a target), the account managers should have completed face-to-face meetings with all key customers. Ideally, they will have used that discussion to create a ‘Joint Action Plan’ setting out what both parties need to do, in order to address any issues unearthed in the assessment. Remember that the actions are on both sides – the account manager may need the client to change certain things as well.

3. FEED THE RESULTS INTO THE ANNUAL BONUS SCHEME.

If you haven’t done so already, think about incorporating the CRQ or NPS scores into account managers’ annual targets and bonus plans. If you have done so already, pay out the bonuses! This is probably the second most important driver of success in any customer experience programme. What gets measured and rewarded, gets done.

4. PLAN THE ACTIONS.

Again, do this at two levels:

– At corporate level. These are typically the key themes mentioned in the verbatim comments. Choose one or two big initiatives to work on during 2015. Keep it focused – any more than one or two initiatives will result in a dilution of effort.

– At client level. Each client will have its own specific set of issues including some ‘quick wins’ that can be addressed immediately.

5. MOST IMPORTANT, MONITOR PROGRESS.

If the results are poor, consider an interim assessment in 6 months (we call this a ‘Healthcheck’) but definitely repeat the feedback assessment after 12 months. If you don’t do this, you won’t know if you have achieved success.

None of the above five items are rocket science, but it strikes me as odd that some clients fail to take these actions. I know from 10 years of delivering Deep-Insight customer feedback to clients in the UK and the Netherlands, I know that these actions will result in better customer experience and improved feedback scores.