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5 Actions to Improve your Net Promoter Score

Posted on September 14, 2017 at 1:18 pm.

Some years ago, the focus of NPS discussions changed. At least, in the USA they did. It used to be: “How do I measure NPS?” and now it’s: “How do I improve my Net Promoter Score?”

Remember that Net Promoter Score is an American metric for customer advocacy. Europe is still a few years behind the USA. The topic of how to improve NPS results will dominate executive leadership discussions in Europe for the next few years. If you’re a leader in a European B2B company that is already measuring NPS, this blog is for you. It’s about the 5 actions to improve your Net Promoter Score.

Insight from a Decade’s Worth of B2B NPS Data

Deep-Insight has been gathering NPS data since 2006. We gathered this data from B2B firms operating across a variety of different industries in over 80 countries. A few years ago, we integrated NPS into our Customer Relationship Quality (CRQ) methodology. We now have tens of thousands of data points – exclusively from B2B companies – showing which items are strongly correlated with NPS and which are not.

A quick word on our terminology:

We call accounts where you have the strongest and deepest relationships Ambassadors. An Ambassador typically has many ‘Promoters’ and few ‘Detractors’. We call companies at the other end of the relationship spectrum Stalkers and Opponents. These accounts typically have few ‘Promoters’ and large numbers of ‘Detractors’.

The pie chart on the right shows a client portfolio for a typical European B2B organisation. Most accounts have good relationships, and a third have excellent relationships.

As the graphic on the left shows, the key elements of any business relationship are Trust, Commitment and Satisfaction. Each of these elements is highly correlated with a customer’s willingness to recommend. In other words, their willingness to give you a good Net Promoter Score.

Trust, Commitment and Satisfaction are only the outcomes of other elements of performance so we need to delve deeper. By doing so, we’ll find out which areas to concentrate on in order to improve a company’s Net Promoter Score.

5 Actions to Improve your Net Promoter Score

Based on more than a decade’s worth of data, we know the five key actions to improve your Net Promoter Score.

First things first. Any large account is likely to have a combination of Promoters, Passives and Detractors. Different strategies are required for dealing with each category. The actions required to turn Detractors into Passives are not the same as the actions required to turn Passives into Promoters.

Here’s a quick summary of those 5 actions.

Turn Detractors into Passives

1. MAKE YOUR CUSTOMERS FEEL VALUED. The one thing you should do, above everything else, to turn Detractors into Passives is to have empathy with them. Show a willingness to engage. Listen to them and make them feel valued. People give extremely low advocacy scores (0 – 3 out of 10) when they feel unloved and frustrated. Unloved because they are ignored. Frustrated because they believe you are not interested in solving their problems. Even if there is little you can do immediately to fix their problems, tell them that you understand how they feel. Let them know you will do your utmost to address their issues. But be honest. If it’s going to take six months, don’t say six weeks.

Convert Passives into Promoters

2. DIFFERENTIATE YOURSELF FROM YOUR COMPETITORS. The more you differentiate yourself from the competition, the more you will be seen as ‘Leading Edge’. Our analysis tells us that if you are perceived as a leading-edge company, your NPS score will be higher. By the way, there’s no point in trying to discuss innovation with Detractors. They’re not in listening mode. What they want is for you to address their immediate problems. Do that and you will earn the right to chat about innovation. Not before.
3. PROVIDE VALUE FOR MONEY. This is linked to the previous point. The more differentiated you are and the more unique your offering is, the greater the value you deliver to your clients. Passives think you provide good value for money. Promoters think you provide excellent value for money. Price is rarely the issue. Focus of what you can do to increase the value of what you deliver rather than on the price at which you deliver it.

Actions – All Customers

4. MAKE IT EASY FOR YOUR CUSTOMERS TO DO BUSINESS WITH YOU. Regardless of whether you are a Promoter, Passive or Detractor, there is a high correlation between ‘Ease of Doing Business’ and NPS. Become less bureaucratic. Break down the silos between departments. Build cross-functional teams. Look at your processes and simplify them. Get your clients involved. Just ask them – they want to be included.
5. BE PROACTIVE. Customers want you to respond quickly and effectively to their needs. That means not just reacting to problems as they occur. It means anticipating problems BEFORE they occur. That’s what good account management is all about.

If you’re interested in turning NPS data into a full-fledged Customer Experience (CX) programme that improves retention rates and revenues, get in touch with us. We’d love to hear from you.

Why B2B Benchmarking is NOT a good idea!

Posted on January 26, 2016 at 3:31 pm.

Written by John O'Connor

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:

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.

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.

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!

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

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.

What is a Good B2B Net Promoter Score?

Posted on October 9, 2014 at 2:58 pm.

Written by John O'Connor

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.

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.

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