Are you going to NPS me? Yes, I am!

Written by

This is the topic of a talk I’m giving this week at a customer loyalty conference in Melbourne. It is in response to another talk entitled “Are you going to NPS me? No I’m not” in which Dr Dave Stewart of Marketing Decision Analysis will be presenting the case that Net Promoter is a deeply flawed concept. Dave will say that NPS should be discarded by organisations that espouse customer advocacy. To be honest, Dave’s position is close to what I thought of the Net Promoter Score concept when it was first introduced by a pretty smart academic and business consultant called Fred Reichheld back in 2003.

Tom Fishburn

Net Promoter Score

Reichheld’s basic premise was that you only need to ask one question in order to understand if a customer is going to stay loyal to you or not. The question is: “How likely are you to recommend us to a friend or colleague?” Fred, being the excellent marketeer that he is, proclaimed the benefits of this Net Promoter Score (NPS) concept in respected publications like the Harvard Business Review. He then promoted it in his own book The Ultimate Question which came out in 2006, shortly after I took on the CEO role here at Deep-Insight. Since then, NPS has became very popular as a customer loyalty metric.

However, NPS has also attracted some heavy criticism. Tim Keiningham gave NPS a particularly scathing review saying that he and his research team could find no evidence for the claims made by Reichheld. (It should be said that Keiningham worked for the market research company Ipsos so his views may not be completely unbiased.)

At that time, my own view was that NPS was probably too simplistic a metric for business-to-business (B2B) companies. I also felt that Deep-Insight’s own customer methodology – which also included a ‘would you recommend’ question – was a much better fit for complex business relationships. And if I’m honest, there was an element of ‘Not Invented Here’ going on in our own organisation as well.

So we decided to ignore NPS.

The Rise of NPS

But here’s the thing: our customers didn’t ignore it. When we ran customer feedback programmes for customers like Reed Elsevier and Atos in the UK, ABN AMRO in the Netherlands, Santander in Poland, and the Toll Group in Australia, they would all ask: “Can you add in the NPS question for us – we have to report the numbers back to headquarters?” Of course, being the good marketeers that we were, we duly obliged. However, we always gave the results back in a separate spreadsheet, so that it wouldn’t contaminate our own reports and our own wonderful methodology!

Roll the clock forward to 2013. NPS still hadn’t gone away. In fact it had become even more popular. It was particularly popular with large international companies where a simple understandable metric was needed to compare results across different divisions and geographical areas. And when I finally looked into it, I discovered that Deep-Insight had actually been gathering NPS data from customers across 86 different countries since 2006.

Is NPS a good predictor of loyalty?

Around the same time we also did some research into our own database to find out what really drove loyalty and profitability in our clients. Now this is not an easy thing to do, as many of you who have tried will know. But where we had several years of customer feedback data, it was relatively straightforward to analyse how many of our clients’ B2B customers were still with them. If they have deliberately defected, we investigated if that defection could have been predicted by a poor Net Promoter Score, or by any of the metrics in our own CRQ methodology.

I have to say that the results were quite interesting. A low ‘Likelihood To Recommend’ was not the BEST predictor of customer defection. However it was actually a pretty good predictor. Deep-Insight’s overall Customer Relationship Quality (CRQ) metric was a slightly better predictor.

A poor Commitment score – one of the key components of CRQ – was the best predictor of whether a B2B client was going to defect to the competition or not.

So there we had it: NPS did actually work.

It worked not because it’s the BEST predictor of whether a client was going to defect, but because it’s a GOOD predictor, coupled with the fact that NPS has been embraced by some of the world’s leading organisations as an easy-to-use and internationally-accepted customer benchmark. 

At Deep-Insight, we came a little late to the party. We only incorporated Net Promoter Score into our customer methodology in early-2014. Today we find that the combination of NPS and our own CRQ metrics works really well for our clients.

The future for NPS

Now let’s go back to the cartoon at the top of the blog (and thank you to the wonderful Tom Fishburne for allowing us to use it). If there is a statistically purer methodology than NPS, why not use that instead?

The answer is simple: most senior executives aren’t interested in re-inventing the wheel. They are much more interested in taking the feedback from their clients and acting on it, so that they can protect and enhance the revenues they get from those clients.

So for those B2B executives who are wondering if NPS is the right customer metric for them or not, I would suggest that you’re asking the wrong question. What good CEOs and Sales Directors are asking these days is:

“If my Net Promoter Score is low or if I have a lot of Opponents and Stalkers as clients, what do I do?”

In fact, the really successful CEOs and Sales Directors are spending the time thinking about the challenges of putting a really effective customer experience (CX) programme in place, rather than worrying about the purity of the metrics. That’s what you should be doing too.

Help! What Do I do with my Stalkers and Opponents?

Written by

If you’re a typical B2B company, the chances are that you have good or excellent relationships with the majority of your clients. But you will also have clients where your relationship is not as strong. At Deep-Insight we help you understand these client relationships by segmenting them based on the strength of their relationship with you.

Here are the five categories we use:

Customer Relationship Quality – the Strongest Relationships

Ambassadors

The most loyal client category is the Ambassador segment. Ambassadors are your most valuable customers. They have a unique relationship with you and will recommend you to others. They are also prepared to pay a premium for your products or services – price is not an important consideration for them because of the quality of the relationship. Typically, a third of your clients are Ambassadors.

High Rationals

The next segment of clients are known as Rationals. They rate you positively but do not see anything unique in the relationship. Rationals will take their time to assess alternative sources of supply and the relationship can become unstable if good alternative offers exist. Typically, half of your key B2B accounts fit into this category. Generally they are good clients albeit not as loyal as Ambassadors.

The Weakest Relationships

But wait! That doesn’t add up to 100%. What’s the story with the others?

Well, the answer is that in all B2B account portfolios, there are clients that don’t love you that much. We typically find that 10-20% of accounts have poorer relationships with you and fit into one of the following three categories:

Ambivalents

Ambivalents often have a “love/hate” relationship with you. In some instances, they love the way you solve their problems but hate the way you treat them. More often, you are killing them with kindness but failing to solve their business issues. You may think the relationship is strong but you don’t really understand their issues and can’t propose business solutions to move their business forward.

Stalkers

Stalkers are often only interested in price. Sometimes they can be large corporate accounts looking for special offers and discounts. Other times, they are smaller accounts that view your services as poor value for money. Stalkers see nothing unique in the relationship and often have very high service requirements. They play different competitors against each other and do not generate a positive value for your portfolio.

Opponents have the poorest relationships with you. They are deeply dissatisfied and often highly frustrated by what they see as consistently poor service. Opponents have a negative relationship with the company and generate negative value. They can sometimes be won back if the reason for their dissatisfaction is identified and addressed but, in many cases, the relationship has broken down irretrievably and they can not be won back.

Managing Ambassadors

Before we look at how to manage Stalkers and Opponents – the main point of this blog – one quick point about how to manage Ambassadors. Ambassadors are willing to recommend you. So ask them for testimonials. Trustmary is a Finnish company that helps clients do exactly that using Net Promoter Score as the key metric for identifying Ambassadors.

Don’t be afraid to ask Ambassadors for testimonials or for introductions into other businesses. They want to help you. So just do it.

Managing Stalkers and Opponents

So what to do with these poorer-value relationships, particularly Stalkers and Opponents?

Three things:

1. Decide if you want to keep them or fire them

It may sound strange to talk about ‘firing’ clients but sometimes there are clients that can not be serviced effectively or profitably. Sometimes their expectations are too high, or the fit between their needs and your products or services is limited. In such cases, it’s valid to ask the question “Would we both be better off if we ended the relationship?” The big advantage about firing customers is that it frees up sales and account management time. This time can be used for more profitable activities such as cross-selling and upselling to Ambassadors, or for converting Rationals into Ambassadors.

2. If the answer is FIRE THEM, find a ‘beautiful exit’

Stalkers and Opponents have a corrosive influence on your company. They sap energy and consume resources that can be better used elsewhere. They also have a corrosive influence on other clients as they spread a negative message about your capabilities and services. Have that tough conversation with the client before the situation deteriorates, and help them move to a competitor. Do it cleanly and professionally. Find what Finnish Business Professor Kimmo Alajoutsijarvi refers to as a Beautiful Exit to the relationship – a disengagement that “minimises damage to the disengager, the other party, and the connected business network.”

3. If the answer is KEEP THEM, put a proper recovery plan in place

Many of Deep-Insight’s clients will put a Service Improvement Plan (SIP) in place for poor-scoring accounts, typically Opponents or Stalkers. These SIPs involve a significant increase in service support to that client. They also require an open and honest conversation between the Account Director and the most senior people in the client organisation. In large complex B2B client relationships, changes in behaviour are typically required on both sides to bring the relationship back on an even keel again. Don’t be afraid of saying to your client: “We’re committed to making improvements on our side, but we need you to do X and Y for this relationship to work.” (more…)

5 Things To Remember To Get Your Completion Rates Up

Written by

One of the questions we get asked a lot is: “What sort of completion rates do you guys normally get on an assessment?”

Well, the answer is that it depends on what sort of assessment you’re talking about – we provide feedback on relationships with customers, channel partners and suppliers, and the completion rates differ from one type of assessment to the next:

-For employee assessments, our typical completion rate is in excess of 90%.

-For corporate customer and channel partner assessments, it’s typically 35-40%.

-For supplier assessments, the average completion rate are somewhere in the middle: 60-70%.

The next question we get asked is “Is it really that high?”

Well, we mainly get asked that question in connection with customer assessments, as some of our clients think 35-40% sounds impressive. This is particularly the case when people compare our figures to the ones you might get on a typical consumer surveys, where sometimes as few as 2% of consumers will bother to complete a questionnaire (Petchenik & Watermolen, 2011).

Remember that we are talking about existing, often long-standing, business-to-business (B2B) relationships – that’s what we do at Deep-Insight. We’re not a consumer research company. In fact, we’re not even a market research company, although we often are compared to firms like TNS or Gallup. We’re different. We look at – and assess – the quality of the relationships that large companies have with their biggest B2B clients. And if you think about it, why would good customers NOT want to provide feedback on their relationship with you, particularly if their account manager has convinced them that it’s an important part of their ongoing customer feedback process, and that their input is genuinely used to help improve the service given not just to them but to all clients?

The 5 pieces of advice I give to our clients are:

1. Spend Time Getting A Good Contact List Ready.

Most of our clients tell us they can pull together a list of key client contacts in a week. Two at the most. Our experience tells us that it takes at least 4-6 weeks to come up with a really good clean list of customer contacts who have a strong view of their relationship with our client. If the list isn’t compiled properly, we end up polling the views of people who really don’t have a strong view on the company, and who won’t be interested in responding.

2. Pre-Sell The Assessment To Customers.

One of our clients has been achieving customer completion rates in excess of 70% on a consistent basis for the past number of years. It does this because the CEO – together with the account managers – has managed to convince his key accounts that the 10-15 minutes they invest in providing feedback WILL result in a better service. “Tell me what’s wrong, and I promise we’ll do our best to fix it.”

3. Make Sure to Contact Customers While The Assessment Is Live.

We normally hold our assessments open for two weeks and we know from experience that if account managers have been properly briefed to mention the assessment in every conversation they have with a client during those two weeks, the completion rates will improve dramatically.

4. Manage The Campaign Smartly.

This is not rocket science, but you would be amazed at the number of companies that want to run assessments over school holiday periods, or during particular times of the year that may coincide with the most most busy time of the year for their customers. Plan your launch dates in advance, and think about the timing for issuing reminders. We usually recommend launching a customer assessment on a Tuesday morning, with the final reminder going out on the Tuesday two weeks later. That means that even if somebody is out of the office for two weeks, they’ll still have an opportunity to provide feedback.

5. Don’t Panic At The End of Week 1.

We normally see a flurry of activity during the first six or eight hours of a B2B campaign and typically the completion rate after Day 1 is about 8%. At the end of the first week (before we send out a first reminder) it’s often the case that the response rate hasn’t broken through the 10% barrier. This is not unusual. Completion rates will increase and a message in the final reminder that “This assessment is closing today” usually elicits a final flurry of responses!

As I said, a lot of this isn’t rocket science but it does require a bit of advance planning. If you do put the effort in up-front, you’ll see it rewarded in significantly higher completion rates.

What is a Good B2B Net Promoter Score?

Written by

U P D A T E : We now have an updated analysis of what a GOOD B2B Net Promoter Score looks like. It’s based on data from 2015 to 2022.

* * * * * * * * * * * * *
So what is a GOOD B2B Net Promoter Score?

It’s a question we get asked a lot. Sometimes the question comes in slightly different formats. For example:

“What Net Promoter Score target should we set for the company?

“+25 seems a bit low, so maybe +50?”

“Or should we push the boat out and aim for +70?”

Well, it depends on a number of different factors. As we mentioned in an earlier blog, it can even depend on factors such as whether your customers are American or European. Seriously, that makes a big difference.

Customer at the Heart

What Factors Impact Your Net Promoter Score?

It’s crucial to understand how these various factors impact your overall Net Promoter Score. Your NPS result can be very sensitive to small changes in individual customer scores. Be aware of these factors when deciding on a realistic NPS figure to aim for. Most Europeans consider a score of 8 out of 10 to be a pretty positive endorsement of any B2B product or service provider. However, in the NPS world, a person who scores you 8 is a ‘Passive’ and therefore gets ignored when calculating the Net Promoter Score (see box below).

HOW IS THE NET PROMOTER SCORE CALCULATED?

For the uninitiated, a company’s Net Promoter Score is based on the answers its customers 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?”

Customers who score 9 or 10 are called ‘Promoters’. Those who score 7 or 8 are ‘Passives’ while any customer who gives you a score of 6 or below is a ‘Detractor’.

The actual NPS calculation is:

Net Promoter Score = Percentage of Promoters MINUS the Percentage of Detractors

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

Here’s the thing. If you can persuade a few of your better customers to give you 9 instead of 8, then suddenly you’ve boosted your Promoter numbers significantly. We know more than a handful of account managers who carefully explain to their clients that a score of 8 out of 10 is of no value to them. If clients appreciate the service they are getting they really need to score 9 or 10.

Sure, there’s always a little ‘gaming’ that goes on in client feedback programmes, particularly when performance-related bonuses are dependent on the scores. However, we find it intriguing to see the level of ‘client education’ that account managers engage in when the quarterly or annual NPS survey gets sent out!

Five Key Factors

We said at the outset that the Net Promoter Score you achieve is dependent on a number of factors. Here are the five key factors:

1. Which geographical region do your customers come from?

We’ve covered this point in an earlier discussion with Professor Anne-Wil Harzing. American companies generally get higher NPS results than Europeans – typically 10 points higher and often much more.

2. Do you conduct NPS surveys by telephone or face-to-face or by email?

In the UK and Ireland, we don’t like giving bad news – certainly not in a face-to-face (F2F) discussion. Even if we’re talking over the phone, we tend to modify our answers to soften the blow if the feedback is negative. Result: scores are often inflated. In our experience, online assessments give more honest results but can result in scores 10 points (or more) lower than in telephone or F2F surveys. This gap can be smaller in countries like the Netherlands, Germany and Australia where conversations tend to be more robust. It’s a cultural thing.

3. Is the survey confidential?

Back to the point about culture – it’s easier to give honest feedback if you can do so confidentially. This is particularly the case if the customer experience has been negative or if you have a harsh message to deliver. Surveys that are not confidential tend to paint a much rosier picture than those that are confidential.

4. Is there a governance structure in place?

At Deep-Insight, we advocate a census approach when it comes to customer feedback. Every B2B customer above a certain size MUST be included in the assessment. No ifs or buts. Yet we are often amazed by the number of companies that allow exceptions. For example: “We’re at a sensitive stage of our relationship with Client X so we’re not going to include them”. In many cases, it’s more blatant. Clients are excluded because everybody knows they will give poor feedback. A proper governance structure is required to ensure ‘gaming’ is kept to a minimum. This gives the survey process credibility.

5. Is the survey carried out by an independent third party, or is it an in-house survey?

In-house surveys can be cost-effective but suffer from a number of drawbacks. The main drawback is that they generally result in inflated scores. For starters, in-house surveys are rarely confidential and are more prone to ‘gaming’ than surveys run by an independent third party. We have seen cases where in-house surveys have been replaced by external providers and the NPS scores have dropped by a whopping 30 points or more. Seriously, the differences are that significant.

So what is a GOOD NPS score for B2B companies?

Now, let’s get back to the question of what constitutes a good B2B Net Promoter Score. Here’s our take on it.

Despite the claims that one hears at conferences and on the Internet that “we achieved +62 in our last NPS survey”, such scores are rarely if ever achieved. We’ve collected NPS data for B2B clients across 86 different countries since 2006. Our experience is that in a properly-governed independent confidential assessment, a Net Promoter Score of +50 or more is extremely rare. Think about it. To get 50, you need a profile like the one below, where a significant majority of responses are 9 or 10. In Europe, that simply doesn’t happen.

B2B Net Promoter Score
Our experience of B2B assessments is that A NET PROMOTER SCORE OF +30 IS EXCELLENT and generally means you are seen as ‘Unique’ by your customers.

A NET PROMOTER SCORE OF ABOUT +10 IS PAR FOR THE COURSE. Consider +10 to be an average NPS score for a B2B company in the UK or northern Europe.

Note that negative Net Promoter Scores are not unusual. Approximately one third of Deep-Insight’s B2B clients have negative scores. One in 10 has a score of -30 or even lower.

Benchmarking

One final comment about benchmarking. Deep-Insight’s customer base is predominantly northern European or Australian. However, many of our clients operate in eastern or southern Europe – and in Asia or North America. We need to be careful about how we benchmark different divisions within the same company that are in different regions.

In our opinion, the best benchmark – for a company, business unit or division – is last year’s score. If your NPS is higher this year than it was last year, then you’re moving in the right direction. And if your NPS was positive last year, and is even more positive this year, happy days!

* 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)

Written by

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: becoming a ‘Unique’ company.

At the last board meeting, the CEO (an avid sailing enthusiast) asked them to prepare a strategy that would transform the company from an ‘Even Keel’ company to becoming the best in the marketplace.

“I don’t want us to be competing on price. I want us to be seen by our clients as leading edge in the market, 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 for making this company ‘Unique’. And it better be good.”

Unfortunately, Susan and Bill are at loggerheads trying to plot a course towards that ‘Unique’ organisation that their CEO so desperately wants them to become.

EPISODE III: Becoming a ‘Unique’ Company

Susan – Sales Director

“Uniqueness is a simple sales concept. Uniqueness = More Sales. It really is as simple as that. We can become Unique if Bill and the product development team provides me with market-beating products. That’s the thing they can’t seem to grasp.”

Bill – Marketing Director

“Becoming Unique 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) very simple: “Give me decent products/services and I’ll sell them. If the products/services are unique, 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 unique 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. That means that Susan’s account teams (as well as the Service/Delivery teams) have a key role in crafting a Unique solution and experience for her clients.

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 ‘Unique’ means in the B2B world.

Uniqueness
In the B2B world, Uniqueness means that your clients have a fantastic Experience working with you, and that you provide a world-beating Solution for them.

Experience is a measure of how easy you are to do business with and if your clients see you as a true business partner that is critical to their success. You can have the best products or services in the world but if your clients can’t work with you, they won’t see you as a true business partner.

Solution is a combination of innovation, leading edge and value-for-money. These are three related but slightly different concepts. If you get good scores for 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 Solution 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.

Is your company ‘Unique’?

So when Bill and Susan’s CEO talks about wanting to be a Unique 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 answer to the question about whether your company is Unique will be dictated by your customers. But you’ll never know if you don’t ask them.

Contact us if you want to find out.