The B2B Blindspot: Why NPS Isn’t Enough

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The B2B Blindspot: Why NPS Isn’t Enough


Why do so many B2B CX programmes fail?

Later this year, Bert Paesbrugghe will be hosting a LinkedIn webinar called The B2B Customer Success Blindspot: Why NPS Isn’t Enough. It sounds like it will be a good session and I have cheekily borrowed his title for this blog as it got me thinking about some of the reasons why B2B companies set up customer experience (CX) or Net Promoter Score (NPS) programmes in the first place.

More important, it’s worth reflecting on why these CX and NPS endeavours often fail to deliver on their initial promise. And that’s the sad truth – many of these programmes fail to improve the service delivered to customers. They don’t succeed for a variety of reasons. One of these is the belief that Net Promoter Score is a silver bullet for solving all manner of customer woes.

It’s not. That’s the blindspot. NPS is not enough for B2B companies.

B2B is different

The first thing to mention is that the Business-to-Business (B2B) world is VERY different to its Business-to-Consumer (B2C) counterpart.

The consumer world is all about the 4Ps: Product, Price, Place and Promotion. Marketing guru Philip Kotler popularised the 4Ps back in the 1960s. They were a core part of his Marketing Management book that many of us still have on our shelves today.

My only real problem with the 4Ps model is that it’s essentially a B2C concept. It doesn’t cover the subtleties of the B2B world where very often a service provider is delivering a very complex service across multiple locations – often in different countries. This is a world away from selling and marketing consumer products such as Mars Bars or Mercedes cars.

The 4Ps also don’t take into account the need for key/ global account management or the associated challenges of building and maintaining relationships with multiple decision makers and influencers across large global organisations.


NPS is one-dimensional

Net Promoter Score has proven to be one of the most durable metrics in management, ever since its invention by academic and business consultant Fred Reichheld more that two decades ago. 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, an excellent marketeer, promoted the benefits of his Net Promoter Score (NPS) concept in publications like the Harvard Business Review. He then proclaimed its merits in his 2006 book The Ultimate Question. Since then, NPS has became a hugely popular metric for customer loyalty and customer experience.

I’ve written about NPS before and, in general, I’m a fan of the metric for both its simplicity and its popularity. Sure, it’s not perfect, as Professor Nick Lee points out. But then again, is there a perfect KPI for anything? Let’s agree that Net Promoter Score has its place and is worth measuring even if it is a little one-dimensional. 

So NPS is good, but much more is required, particularly in the B2B world with all of its complexities, peculiarities and challenges.


Why NPS is not enough (in B2B)

Let’s go back to basics here. B2B IS different. So let’s recap on what some of those differences are:

  • Customer Base. Consumer brands like Mars Bars and Mercedes cars are sold to millions of individuals. Three million sold every single day, in the case of Mars Bars. In contrast, we work with B2B clients that generate annual revenues of more than €1bn from fewer than 100 clients.
  • Value. A Mars Bar costs around €1.60 at the time of writing (let me know if you can source them cheaper!) while an outsourced IT contract can be worth €100m. Admittedly, a Mars Bar can be consumed in less than five minutes while a €100m contract might take five years to consume. But you get the picture: value and Value For Money are very different in the B2B and B2C worlds.
  • Marketing Strategy. We talked earlier about Kotler’s 4Ps. While the consumer world is all about Product, the B2B world is more around Service and Relationships. Even in today’s AI-enabled world, those services are still delivered by people. Relationship-building is a critical component of the marketing mix the B2B world.
  • Sales Focus. In the consumer world, merchandising and point-of-sale advertising are key. In the B2B world, far more emphasis is placed on educating the customer about features, benefits, return on investment, and so on. This is still mainly done through personal contact and relationships.
  • What to Maximise? The consumer world is about the transaction – promoting those Mars Bar at the point of sale, for example. Customer lifetime value (CLV) is rarely if ever mentioned in the consumer world. CLV is arguably the most important thing to maximise in the B2B world as it typically takes 2-5 years to recover the initial sales cost of a major multi-year contract win.
  • Buying Process. In a supermarket, buying a Mars Bar is a split-second decision. Even for a Mercedes, the decision can be quick. Clinching that 5-year outsourcing deal can and does take years from beginning to end. It also involves multiple decision-makers and influencers.
  • Buying Decision. In the consumer world, decisions are often made on emotion – hence the importance of brand and image. In the B2B world, we like to think decisions are made on rational grounds, based on cleary-defined evaluation criteria.


What else is needed?

Let’s assume we have just sold a 5-year outsourcing deal to a client and we are now in the onboarding or delivery stage of that contract. Yes, it’s useful to know if our client would recommend us to a friend or colleague. That’s the Net Promoter question, but is it enough?

Not really. Ideally, we need to know much more. For example, do our clients trust us now that we have started working for them? Are they committed to us for the long term? Are they happy with the service that they are now receiving? 

These are just some of the questions that we need to ask our B2B clients in a systematic way. We need answers at an aggregate level but we also need feedback at an account level. Contract A may be going swimmingly. Contract B may already be on the rocks (to continue the theme) but we might not know that if we are only getting aggregated client feedback.


Eliminating the blindspot: Customer Relationship Quality (CRQ)

An alternative to asking the one-dimensional NPS question is to view the customer relationship more holistically. That’s where Customer Relationship Quality (CRQ) fits in.

CRQ can be visualised as a pyramid comprised of three different levels.

  1. The first and most fundamental is the Relationship level. Do your clients trust you, are they committed to a long-term relationship with you, and are they satisfied with that relationship?
  2. The second is the Uniqueness level. Do your clients view the experience of working with you, and the solutions you offer, as truly differentiated and unique? Do they see us as good value for money?
  3. At the top of the pyramid is the Service level. Are you seen as reliable, responsive and caring? Get this wrong and you will never be seen as Unique and you will struggle to build a long-term relationship with that client.

Interestingly, CRQ and NPS scores are highly correlated. If you score well on all six elements of this Customer Relationship Quality (CRQ) model, your clients will act as Ambassadors, generating a high NPS result for you. However, CRQ gives you so much more information to act upon, and that’s far more important.


The most important part: Action

The CRQ model above was specifically designed for the B2B world. That said, it really doesn’t matter what questions you ask your clients if you fail to do anything with their feedback.

The most important part of any NPS, CRQ, CX or client listening programme is the ‘Action’ piece. The reason that many  customer programmes fail to deliver is that they are run by the Marketing department (sorry guys and gals!) while the members of the company’s Senior Management Team have collectively washed their hands of any responsibility for acting on that client feedback.

In most B2B organisations, key client relationships are owned by Sales. In some cases where delivery is an ongoing function, it’s the Service or Operations functions that have most of the day-to-day client contact. It’s rarely, if ever, somebody from Marketing. The Sales Director (or Service/ Operations Director) needs to own the ‘Close The Loop’ element of the programme. It’s unfair to expect Marketing to take responsibility for it.

Put it another way: it’s madness to think that Marketing can effect change on its own. That’s a Leadership function. I’ve never seen a successful NPS ar CX programme that has not been driven from the top. So regardless of what you think of NPS as a B2B metric, don’t assume that NPS or any other set of survey questions is going to improve your top line or your profitability. It won’t, unless there’s follow-up action. That action needs to be managed systematically, and it needs to be driven by the  SMT or Executive Team.

Finally, do remember that it’s not about the score. It’s about using that valuable client feedback to take action and become more customer-centric. That’s how you generate more revenues and boost profits.

What Does Net Promoter Score Actually Measure?

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What Does Net Promoter Score Actually Measure?

Interview with Professor Nick Lee

Some weeks ago, I met Nick Lee, Professor of Marketing at Warwick Business School to discuss his views about Net Promoter Score (NPS). I specifically wanted to get Nick’s views on NPS as a measurement tool. Does it work? Is it linked to sales growth? What does Net Promoter Score even measure?

Professor Nick Lee

Nick has an impressive background. In fact, The Academy of Marketing has already honored him with Life Membership in recognition of his outstanding lifetime research achievements and contribution to marketing scholarship. He is currently the Editor-in-Chief of the Journal of Personal Selling and Sales Management (JPSSM), which is the premier journal for research in professional selling. He is the first UK academic to hold this position, and only the second ever from outside the US. Nick was also the Editor in Chief of the European Journal of Marketing from 2008-2018. 

Nick is more than just an academic. He holds strategic advisor positions for a number of innovative sales and leadership development companies, and he was part of the All Party Parliamentary Group inquiry into professional sales in 2019. His work has been featured in The Times, the Financial Times and Forbes, and he has appeared on BBC Radio 4, BBC Radio 5Live, and BBC Breakfast television. 


Net Promoter Score: 20th Birthday

What prompted me to interview Nick Lee was a recent academic paper he was involved in called “The use of Net Promoter Score (NPS) to predict sales growth” which was published in the Journal of the Academy of Marketing Sciences (JAMS) in 2022.

Our discussion was very timely as Net Promoter Score is a metric that was invented by Fred Reichheld, a partner at Bain & Company, 20 years ago this year. 

Over the past two decades, NPS has divided opinions. While it has been embraced enthusiastically by many businesses, it has been shunned by others. The academic world has questioned what Net Promoter Score actually measures.

I think you’ll find Nick’s comments on Net Promoter Score and what it really measures quite fascinating because he doesn’t hold back from his criticism of NPS but also points out that the flaws don’t invalidate its usefulness as a measurement system, as long as it’s used in the right way: tracking changes over time, rather than simply chasing a number. 


The Interview

John:

Good morning Nick. To start, could I ask you to tell me a little about your own academic background. What was your first interest in the field of marketing?

Nick:

Well, I began my academic career as a doctoral student in marketing strategy. It seemed to me that the connection between sales and psychology was quite important. And there was a lot of work in management that was related to psychology, but very little of that research had been focused on the sales force.

A lot of sales research is actually about things like incentive structures and territory design. I call that ‘technical management’ but what I was more interested in was not so much the decisions that managers made, but how they implemented those decisions. Sales management is more about psychology than a mathematical or technical thing. More recently, we’ve seen how digital transformation has led to a a merging of the ‘technical’ things with the more psychological things, and that’s really the space I operate in now.

Is NPS a Fundamentally Flawed Metric?

John:

So let’s talk about the psychology of Net Promoter Score. It’s clearly a sales and marketing concept. It’s also a performance metric. When did you start getting involved with Net Promoter Score and is it a good sales and marketing measurement tool?

Nick:

My interest in NPS really came from Sven Bähre and that paper we wrote called The use of Net Promoter Score (NPS) to predict sales growth. Sven drove that project while my role was to use that project to address something that was important to the marketing literature. And I think it is very interesting that academia’s gone down one road with Net Promoter Score, the very simple road which says “NPS is useless and a load of rubbish”.

At the same time, business practice has completely ignored that academic view. Net Promoter Score has become the dominant customer metric in business. It feels like someone has to be right and someone has to be wrong here. But the interesting thing is it turns out that both sides are right. They’re just talking about different things. And that’s what fascinated me.

John:

So tell me about those different things. When I looked at Net Promoter Score many years ago, a guy called Tim Keiningham – one of the people you refer to in your paper – was very critical about NPS as a metric. At the time he worked at Ipsos so I wondered if he was bringing his own biases to the table. But at the same time, he was saying that the data did not show any link between NPS and sales growth.

Nick:

Oh, that’s interesting about Keiningham, I didn’t know that he was at Ipsos then. So there are a couple of issues that lead to this disconnect. One is that we generally don’t like it when a publication like the Harvard Business Review tells us there’s a single number that every company needs to look at. That automatically gets people’s interest and it actually didn’t make sense to me. 

The other issue is, and I have every sympathy with this view, is that Net Promoter Score doesn’t really measure what it claims it measures. There are so many potential flaws in the idea that this one number could be a valid measurement of anything real. I spend a lot of time trying to develop measures around attitudes and psychological concepts. And this is a classic example of a metric that doesn’t seem to actually ‘measure’ anything. So on that basis, it is quite flawed.

When you add in the idea that you have to subtract the bottom scores (Detractors) from the top scores (Promoters), you're torturing the measure to within an inch of its life.


What does NPS Actually Measure?

John:

Surely Net Promoter Score is a measure of advocacy, if nothing else?

Nick:

To some extent it taps into advocacy, sure. However, it’s a number in response to a single question that doesn’t take account of all kinds of other factors that might be relevant. And then you have this weird calculation for subtracting ‘Detractors’ from ‘Promoters’. As a mathematical construct, that’s not great. But the real issue is that advocacy is a much more complicated idea and can’t really be accurately captured by a response to a single question.

So there’s no real evidence that that answer to the NPS question is a reliable measure of advocacy. And then when you add in the idea that you have to subtract the bottom scores (Detractors) from the top scores (Promoters), you’re torturing the measure to within an inch of its life. At that point, it ceases to become a measure anymore, even if it was at the beginning. It becomes a number which is divorced from the underlying concept.

John:

I’m with you. But does that invalidate it completely as a measure?

Nick:

Well, here we get to the bigger question: rather than “is NPS a measure”, we need to ask “is NPS actually useful?” In academia. we’ve said nothing about NPS for the last 20 years apart from “it’s crap”. But when I see a whole bunch of senior executives in large companies saying “well, I’m finding a use in it”, then academia needs to look at that.

What’s my conclusion? I think that is a problem for academia insofar as we tend to talk past each other in a lot of areas. We have to provide some insight into what practitioners are doing in this field. Of course, it’s our sole driving force as a discipline to find out what practice is doing and we study that. But at the same time, it is worth studying if the entire business community is using something that 20 years ago we in academia said was wrong. 

John:

Have you come to any conclusions as to why senior leaders use Net Promoter Score, or how they can use it more effectively?

How Should NPS be Used?

Nick:

One reason why it’s used so much is partly a self-fulfilling prophecy. It’s used because everyone uses it and therefore nobody wants to not have that information. That’s an important factor.

But then the other aspect is that it’s used because it’s simple. It’s easy to collect and it’s simple to use. Whether it’s easy to interpret is actually a more challenging question. I don’t think it is that easy to interpret. For starters, what does the NPS number actually mean at any given point in time?

Now when you start tracking NPS over time, those questions fall away because what you’re looking at is trend data. What was it last year? Is it up or is it down? You have to operationalise NPS in the right way – by tracking the change in NPS score from one period to the next, not the absolute score. That’s important.

Net Promoter Score is also influenced by a lot of transient factors. For example, it’s very easy to manipulate and there’s a big selection bias. Who is asked to complete the NPS survey? Also, every surveyor cannot help but lead the customer on towards a higher NPS score. So at any given point in time, the net promoter score doesn’t mean much because of that selection bias. But if you assume that those forces are broadly the same over time, you can extract that little bit of signal from that noise with the time series a little bit more effectively than at a single point in time.

John:

I’m with you. But in our experience, the level of bias can increase over time. So you need to have a governance structure to ensure consistency. Or indeed, you may need to break the system apart and start again if the ‘gaming’ gets too deeply ingrained.

We should track trends, not individual time points. And the more data we have, the better. More bad data isn't better than less good data. But more flawed data is probably better than less flawed data.

Nick:

Yeah, I think you’ve got it right there. It is important not to be naïve that over time there might be an ‘instrument effect’ or a ‘history effect’ where people learn how to better game the system. I think with something like Net Promoter Score, that’s less of a thing because it’s pretty easy to know how to game the system straight away. And the only thing you can do really is try to say to your customers: “this is really important to me, can you please leave me a good score?” And there’s only so convincing you can be there. It’s not like you’re going to get better at doing that after a certain point in time. So I would be less worried about that.

But of course there are always ways to game the system. But the point is we should track trends and not individual time points. And the more data we have the better. Of course more bad data isn’t better than less good data. But more flawed data is probably better than less flawed data. So given we assume the data is flawed all the time, the most important thing is to know how that data is flawed. And while you can never perfectly extract the signal from the noise, the signal is there if you have enough data points gathered over a sufficiently long period of time.

Where Do We Go From Here?

John:

So where do we go from here, and where should academics be focusing their efforts?

Nick:

A few things for us to work on. First is international comparability. Big multinationals use Net Promoter Score across their different national areas. And I would imagine they’re comparing EMEA with America with Australasia. Is NPS really able to support that comparison? That’s a challenge so that’s the first thing I would look at.

Second is to move away from a single question. We really need multiple measures in order to compare them statistically across different cultures. So Net Promoter Score is one item. You would like it to be three or four items. And then you could compare those items across countries.

A third area is to get a wider industry perspective. We looked at NPS in a branded consumer goods context: sportswear. Is it equally useful across all kinds of different industry sectors? Particularly if you look at the service sector and front line services, which are linked to business to business (B2B) personal selling. Is NPS a useful metric for these interpersonal interactions? How well does it work in a B2B setting?

John:

Nick, I really appreciate your time today. I’m looking forward to seeing more research into Net Promoter Score. From a selfish perspective, I’d particularly like to see some B2B research done as there’s very little out there that I can find on the topic. Thanks again, Nick.