Does your Net Promoter Score (NPS) matter?

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 ‘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.

 
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

How to Maximise Completion Rates for a CX Programme?

B2B Customer Experience (CX) programmes are our bread and butter at Deep-Insight and we’re used to handling questions on how to make CX programmes more effective.

One of the questions we often get from first-time clients is: “What completion rates can I expect from my CX programme?” Another common question from longer-term clients is “How do I improve my completion rates?”

Let’s deal with each question in turn.

“What completion rates can I expect from my CX programme?”

Let me preface this by saying that we are talking about business-to-business (B2B) relationships so there is an inherent assumption in the question that our clients have some existing – and hopefully strong – relationships with their clients and that the contacts in the client organisation will be receptive to a request to give feedback as part of that ongoing relationship.

This is usually the case but clients – particularly senior clients – are busy people so it may not come as a surprise to hear that the average participation rate in a B2B customer assessment is around 35%.

But that 35% figure is an aggregate score and there’s a little more to it than that, if you have a look at the graph below.

completion rates CX Programme

It turns out that the most common completion rate is 26-30% but we have a smaller number of clients – typically clients who have been running our Customer Relationship Quality (CRQ) assessments for many years – who regularly achieve completion rates of 50% and higher.

If this is your first time running a customer assessment – either a simple Net Promoter Score survey of something a little more complex like our CRQ relationship assessments – you can expect completion rates of less than 1 in 3.

This may sound OK if you regularly run consumer surveys where a 5% completion rate can be a good result, but for an existing long-standing B2B client relationship, it looks paltry. And yet we have been running customer assessments of all sorts for nearly 20 years and these are the actual numbers.

So now let’s get to the second question: “How do I improve my completion rates?”

“How do I improve my completion rates?”

The starting point is to understand why some B2B companies sometimes get low completion rates and others consistently exceed 50%.

Our lowest-ever completion rate (4%) came from a first-time UK software company where the quality of contact data was simply terrible – people who had left their companies three years earlier, people who had never even heard of our client, and so on. That’s because the Account Managers did not personally sign off the client contact names. You get the picture.

Our highest-ever completion rate came from a company that has been a client of Deep-Insight’s for 10 years and whose customers view the annual CRQ assessment as an important part of their ongoing strategic relationship with our client.

But there are other reasons for low and high participation rates – here’s a quick summary of the profiles of our clients that fit into both categories:

completion rates CX Programme

Try these 6 steps in order to improve your completion rates for a CX programme:

  1. Make It Strategic. If the CX programme is CEO-led and driven from the top, it will not be seen as another box-ticking exercise. Make sure this is a key item on the Executive agenda.
  2. Put in Governance Structures. By this we mean things like: a) Account Directors should supervise and sign all contact names, not just pull them from the CRM system; b) the Sales Director should personally sign off all Strategic Client contact names.
  3. Don’t call it a Survey! At Deep-Insight, we ban the use of the term “survey” . For us, a CRQ assessment is a strategic ongoing conversation with the clients and their views will be taken seriously.
  4. “Warm Up” the Contacts. An invitation to complete a survey should not come out of the blue. Ideally, it should be introduced by letter or by email by the CEO or Country Manager, and while an assessment is “live”, the account manager will know to stay in touch with the client and urge them to complete the assessment.
  5. Close the Loop. This is critical. If you ask for feedback, you need to share that feedback with the client, agree the actions that BOTH PARTIES will take to improve the relationship.
  6. Repeat. Get into a rhythm where your clients and your sales/account teams know that every February or October (or whenever), the annual strategic assessment will take place. You may want to run frequent assessments. Some companies have quarterly Net Promoter or Pulse assessments – but don’t overdo the frequency. Your organisation needs time to put remedial actions into effect.

If you are interested in reading more about running a CX programme effectively take a look at our process or contact us at sales@deep-insight.com.

 
Does NPS Work for B2B Companies
 

What? Zero is a good Net Promoter Score?

Deep-Insight works with clients spanning all industries – and our results show that it can be tougher to deliver services consistently well (and build strong relationships) in some industries than it is in others.

One particularly tough industry is the provision of Outsourcing services. These services include IT, payroll, finance, manufacturing, call centres, washroom services… in fact, there are very few functions and processes that have not been outsourced. This phenomenon is not just confined to the private sector – some of the biggest outsourcing deals involve the provision of services to local, regional and central government clients.

Over the past two decades, outsourcing has become commonplace as companies have focused on their core areas of expertise and hived off other functions to specialist organisations that can provide those services better, faster, cheaper than they can. Unfortunately, many of these arrangements fail to deliver the expected benefits, and many service providers get badly burnt when large contracts that they have bid for, and won, run out of control.

I spend a lot of my time with senior executive teams – including those in the outsourcing industry – helping them understand what their major corporate (and government) clients think of them. When I present their customers’ feedback to these leadership teams – in the format of Customer Relationship Quality (CRQ) and Net Promoter Scores (NPS) – one of the most common questions I get asked is “Are those scores typical of our industry?”

Put it another way: they want to know what a ‘good’ CRQ or NPS score is for their industry.

SOME INDUSTRIES ARE DIFFERENT

Many executives tell me that their industry is different. My stock response is that the nature of a business relationship is the same regardless of what industry you operate in. If the fundamentals of a business relationship are the same from one industry to the next, there should be little difference in CRQ or NPS scores across different industries.

And yet, in practice, we do see significant differences in certain industries. For example, corporate banks seem to find it easier to build strong relationships with their corporate clients than companies that provide complex outsourcing solutions.

So why is this? Why does it appear to be so difficult for service providers to get really good customer feedback results and scores? And – back to the title of this blog – what is a ‘good’ Net Promoter Score if you operate in the Outsourcing industry?

7 DEADLY SINS OF OUTSOURCING

Several academics such as Jérôme Barthélemy have tried to address this question. Jérôme has identified the “7 Deadly Sins of Outsourcing” – the pitfalls that companies blunder into when they make a decision to outsource a process or entire function to a service provider. These seven sins are:

  1. Outsourcing activities that should not be outsourced;
  2. Selecting the wrong vendor;
  3. Writing a poor contract;
  4. Overlooking personnel issues;
  5. Losing control over the outsourced activity;
  6. Overlooking the hidden costs of outsourcing; and
  7. Failing to plan an exit strategy (i.e., vendor switch or reintegration of an outsourced activity)

THE TERRIBLE THREE

It’s not just the company that’s doing the outsourcing that’s at fault. The vendors – or outsourcing service providers – are also guilty of their own deadly sins, the most common of which (the Terrible Three) are the following:

-The Sales – Delivery Gap. This typically happens when a vendor has a ‘bid team’ – a professional sales and commercial group – that bids for new contracts. Before the ink is dry ve to be able to on the contract, the bid team has moved onto the next major deal, having handed over delivery and implementation to a completely different team that looks at the contract and shouts: “WHAT? You expect us to deliver that? With those resources? And for that cost?”

-The Efficiency Challenge. Outsourcing providers need economies of scale to make money. The unit cost of providing payroll services to 10 companies is lower than to a single company, but only if the service provider can establish a large efficient ‘factory’ for the delivery of these services. In most cases, the ‘factory’ managers operate on principles that are based on efficiency and cost containment rather than on delighting the customer.

-The Offshoring Issue. As discussed above, service providers must run an outsourced operation at a lower cost that the company doing the outsourcing. One way of achieving that is offshoring – locating the ‘factory’ in another part of the world where labour costs are significantly lower. So the UK service provider moves the IT development to India, or the Australian service provider transfers the call centre functions to the Philippines. Nothing wrong with that, as long as it’s meticulously planned and executed. Often it’s not, and even when it is, there are always teething problems.

SO WHAT’S A GOOD NPS SCORE FOR AN OUTSOURCING COMPANY?

In a previous blog I said that an ‘average’ Net Promoter Score for a European B2B company is in the region of +10% and that scores in excess of +30% are truly excellent.

Our experience is that an ‘average’ NPS score for Outsourcing companies is negative – typically in the region of -10% and that any NPS result in positive territory can regarded as a good result.

So there you have it. Zero CAN be a good Net Promoter Score for some European B2B companies.

If you are a senior executive in a company that provides outsourcing services, you can settle for mediocrity and target your staff to achieve a zero or slightly positive NPS. Alternatively, you can work with your clients to make sure they avoid the 7 Deadly Sins (as well as making sure you avoid the Terrible Three internal sins), thereby outperforming the competition and making much greater profits for you and your shareholders.

 
Does NPS Work for B2B Companies