Anything worth doing…

Editor's note: Alan Hale is president of Consight Marketing Group, Chicago. 

After conducting dozens of Net Promoter Score (NPS) projects for clients, we have seen successes as well as failures. The successes became more profitable as well as gaining wallet share and overall market share over time. The failures did not deliver much, fizzled out and were considered a waste of time.

Prior to writing this article we reviewed some secondary research on customer experience and Net Promoter Scores. Here are a few pertinent statistics:

  • In 2014 Gartner research had predicted that by 2016, 89% of companies expected to compete on customer experience.
  • Careers Partners International (2018) indicated that two-thirds of Fortune 1000 companies use the Net Promoter Score methodology.
  • A Confirmit study (2018) said only 20% of companies had a high return on investment on NPS.
  • Glympse research (2018) stated that NPS leaders on average had 2.3 times the profitability of industry peers.
  • Customer Gauge research (2017) reported that 49% of people managing their Net Promoter programs were not promoters of their own internal programs. 

score boardWe believe NPS is a powerful tool in the toolbox to measure customer loyalty, if done correctly. It was developed and trademarked by Fred Reichheld, Bain Company and Satmetrix. It measures loyalty – instead of satisfaction – of customers of the organization, business units and divisions over time. This is done by assessing the personal risk of the respondent in recommending the company to a friend or colleague based on the overall relationship with the company, as opposed to a specific transaction.

In our opinion, NPS is similar to EBITDA (earnings before interest, taxes, depreciation and amortization) for financial managers. NPS measures the marketing relationship with your customers as EBITDA measures the financial health of an organization. Senior management can use both sets of metrics across the entire company. The numbers are important benchmarks but they do not tell you what you need to do to improve your performance.

One of the common complaints we hear is that NPS is not actionable and therefore not worth doing. A typical comment is something like, “Our client has a 23% NPS but we do not know how to improve that score.” Word clouds showing the frequency of words is not the answer; it is not insight. It is a graphical way of showing data. Data analytics gurus will talk about their platform and costs for online surveys. But what is lacking, quite frankly, is the required insight to make necessary changes to positively impact the organization. One needs to obtain the insight during, not after, the NPS voice-of-the-customer (VOC) research process by conducting in-depth qualitative discovery research.

The following is a checklist to make your own NPS more actionable. This perspective has been developed from working with clients in business-to-business settings who have been successful in leveraging their NPS insights to increase business performance.

1. Obtain buy-in and support from senior management. As with all other major initiatives, it is imperative to obtain the support of senior management. There needs to be a commitment to actually use this data to improve the company. If you are just collecting research data, results will not positively impact the organization and will be a waste of time and resources.

2. Do not bias the research results. We have seen companies trying to force only their best customers to be included in the survey. You need to randomly sample and talk with both Promoters as well as Passive and Detractor customers. Ideally, this discussion is with each of your key customers. We also have seen reps trying to tell customers to make only positive ratings and comments. This is not unbiased voice-of-the-customer research. You cannot fix your organization’s weaknesses if you do not know what they are. 

We believe in having an independent third-party objectively analyze the results. The mechanics can be done internally but it is hard to break the paradigm unless you can honestly believe the results of the VOC research. Your company is busy with addressing long-term and day-to-day initiatives in addition to putting out fires. Contracting this effort to a qualified third party to focus on this strategic research just seems to make more sense. We recognize there are exceptions where companies have a dedicated and trained staff but in general it is best to seek an outside specialist.

3. Identify your major accounts using the 80/20 rule, where the top 20% of your accounts make up 80% of your volume. If a company has 200 accounts, maybe 40 of them would make up 80% of the revenue. Apply the 80/20 rule for the last three years to also identify those large accounts who have significantly decreased their spending with you.

High wallet-share and customer loyalty in current large key accounts are worth more than acquiring some new random customers. Ask yourself: What would happen to our company if one of these major accounts defected to our competition? Wouldn’t you rather know from an objective standpoint how customers perceive you rather than relying solely on the salespeople’s feedback, which is often biased? Wouldn’t you like to know how to better serve a customer before the customer leaves and then scramble to determine what went wrong?

4. Identify which respondents within these large accounts should be included. Respondents should consist of influencers, users and decision makers. In the packaging industry, respondents of companies using the packaging might consist of a senior manager, a marketing/branding person, a packaging engineer and a corporate sourcing executive. A tool for a contractor could include purchasing, the foreman and a sampling of contractors.

One needs to identify the most relevant personnel to reveal a 360-degree perspective of how you are doing in that account. Assuming an average of 2.5 people being interviewed in the above example of 40 accounts would yield 100 people to obtain feedback from. This is a manageable number.

We sometimes hear from data analytics gurus that the results are not statistically significant. Our answer is: Who cares? If we understand in depth what drives 80% of our sales, we control our destiny. In the B2B arena, success is determined on how you perform for the top key accounts. If you want to include other medium/smaller accounts, use a lower-cost option like web surveys. In the business-to-consumer market, with millions and millions of customers, it makes sense to start with data analytics to tease out potential opportunities and then follow up with qualitative discovery research. 

5. Incorporate probing diagnostic qualitative questions in addition to asking the Net Promoter Score question “Why did you give it that score?” Some examples of these questions are: What are we good at? Where do we need to improve? What are other best-in-class vendors doing that we should also implement? When Lou Gerstner was turning around IBM, he would visit its top customers and ask, How are we doing? What are we good at? What do we need to fix? What else should we be doing? 

We believe this critical insight cannot easily emerge via an online survey. At best, you obtain a few words on how to improve. The vast majority of the time you obtain nothing. 

Our strong preference is to conduct an in-depth phone interview for this voice-of-the-customer research for business-to-business markets. Other qualitative research methods like personal interviews, focus groups and ethnography can be utilized as well.

6. Determine if you are a supplier or a partner. Note: If you supply a small, insignificant product, there is a strong possibility that the customer does not want a vendor to be a partner in this category. However, in cases where it is valued, determine what it takes to be a partner. Ask them: Are we a supplier or a partner? What do we need to do to become a more valued partner? What do we need to do to become a partner to your most valued customers?

7. Other useful questions to ask: What is the one thing we can do to improve your Net Promoter Score? If senior management were sitting down with you, what else would you recommend?

8. Determine the importance of each of the criteria to the customer. How important is each performance criteria? Make sure you invest resources on the important things; let your competition throw money away on the things that customers do not care about. 

9. Have the customer rate your performance, the performance of your major competitor and potentially the performance of a best-in-class supplier regardless of the product category. Then probe on what these other suppliers are doing that you are not. This tells you how big the gap is as well as what you need to do to fix the gap. If your quality performance rating is a 7.3 and your competitor rates a 9, there is a huge gap that needs to be addressed. Key questions to ask are: Why did we get that rating? How can we improve? Ask them to provide a few relevant examples. 

Measuring against best-in-class suppliers helps provide information on things other successful companies are doing that have not yet been adopted in your industry. It also helps you migrate towards a market leadership position.

When measuring product attributes, consider performance, ease of use, product quality, product consistency and lack of critical features, etc. A client once received low performance quality scores for providing chemical compounds that were not consistent from batch to batch. This required the additional time of a process engineer to fine-tune each batch to bake, costing the customer both incurred engineering costs and opportunity costs of delayed sales revenue.

Other common aspects that are worth investigating include: delivery, technical support, customer service, value for the price, ease of doing business and company responsiveness. The ratings are important but asking why and how to improve are the keys to gathering insight. A good rule of thumb is that the discussion should be 20% quantitative and 80% qualitative.

10. Document the findings to institutionalize the knowledge. We strongly recommend writing a detailed transcript of the discussion after each interview. This is very helpful in giving visibility to the sales team and senior management as well as in developing a specific customer action plan. These transcripts should include both the ratings and summaries of the qualitative feedback. Transcripts can be coded green (everything going well), yellow (some concerns but average performance) and red (danger of losing customer/client).

In presentations to clients, they are more receptive to the research findings if the ratings are accompanied by snippets of voice-of-the-customer commentary from well-known customers. This approach delivers insights into what is needed to improve the situation as well as generating buy-in at the C-suite level.

11. Determine how aligned the company is with the perceptions of its top customers. Have management and sales take a modified survey to determine how aligned they are with key customers. It is too easy to say “we knew that” after the research is done. Put a stake in the ground.

We had an example where the top management thought they would receive a Net Promoter Score of 32% from their top customers. In reality, research showed a -46% NPS. That is a huge disconnect. If anything, when aligned, company personnel tend to be harsher on company performance ratings as they see “how the sausage is made” – i.e., all the operational issues that customers may not see.

12. Cascade communication and provide feedback to the sales team and the company at large. Everyone needs to be on the same page. The sales and marketing departments cannot solely drive this process. Sales and all other departments must know what issues need to be addressed both by a specific department as well as the entire company. Presentations to the company at large should include both the research findings as well as the suggested action plans for the entire company.

13. Identify the top three or four initiatives to implement first. With limited time and resources, it is unrealistic to expect a company to undertake too many initiatives and be successful. A client once had 22 major initiatives going on at once. As expected, they failed and not much progress was made.

14. Invest appropriate resources (time, money and senior management focus) to make these initiatives successful. Make sure this is a high priority within the organization and make sure adequate resources are provided. Specific people need to be assigned the responsibility of completing each initiative and be held accountable for its success. 

Make progress transparent to the CEO and the senior management team. Some companies have successfully used war rooms to allow senior management to walk in and see the progress of the initiatives as well as key performance metrics at a glance. Tie incentives to the success. Make this program highly visible to the organization. Senior management needs to constantly talk up the importance of making these large key accounts “raving fans” of the company, as coined by Ken Blanchard.

15. Design an action plan for each specific key account to address their issues and make them raving fans. Raving fans become brand advocates while disillusioned customers become brand assassins. What are the two or three things you need to do to drive this customer’s loyalty? Issues cited by senior management should be given a higher weight and priority than other respondents. 

16. Provide specific account summaries (transcripts) to the sales reps. The objective is to provide honest, unfiltered third-party feedback. Have the sales reps review written account summary transcripts prior to visiting the account. Reps are hired to be successful sellers but they may not have the required skill set to listen, empathize and/or accept critical feedback. 

The worst thing that can happen is if the rep attacks/challenges the customer and becomes defensive during the feedback process. Doing so burns bridges. The customer becomes more dissatisfied and may refuse to cooperate in the future.

There are extensive training programs for salespeople that include role-playing. These training programs help to provide greater comfort level and sensitivity in this feedback process. We would also recommend that marketing accompany the rep on a customer review meeting. It is well advised not to ignore this critical step of training the rep.

17. Make the feedback closed-ended. Schedule a personal on-site visit with each of the key accounts. The sales rep and a senior manager should visit each account to listen, recap research findings and deliver an action plan. Sample dialogue is as follows: “We heard this. Did we hear right?” “This is what we are going to do.” “Do you have any other concerns?” “We will meet quarterly (or twice a year) to determine if we are on track.” The lack of a closed-loop feedback system is a major omission of current NPS programs.

We recommend that one member of the senior team is assigned to each key account. Key customers want a relationship with senior management to make sure their interests are aligned and that the correct amounts of resources are assigned. Senior managers may have five or six accounts that are assigned to them.

18. Senior management needs to drive initiatives based on the key insights of the VOC research. This is not about doing some research. It is about developing insight to turn customers into raving fans by implementing key initiatives to drive the organization’s future success. If this step is ignored, the result will be a lot of costs with not much of a gain for the organization.

19. Measure progress. This process is similar to Six Sigma, whereby one executes a process, measures results and then fine-tunes the process. In the 18 to 24 months after the initiatives have been launched, do another NPS and determine if you have made significant progress. Make adjustments to fine-tune. NPS is an ongoing journey, it is not a one-and-done effort.

20. Celebrate successes. It is important to celebrate your victories. The celebration needs to be companywide not just for the sales and marketing departments. The organization needs to embed this methodology into its cultural DNA.

Research costs become an investment

Executing the above will drive customer loyalty and satisfaction, increase wallet share and drive profitability. Raving fans will spend more and be willing to try other products and/or services. Because of the attention the account is receiving, they may not be as price-sensitive as other customers. Research costs become an investment and over time you will be able to calculate the return on this investment.

We frequently hear that this is a lot of work. It is hard work. But it provides insight you cannot obtain simply by using online survey platforms. This is how to turn research costs into an investment and see a return. It takes insight, not just data, to be a preferred supplier. This approach is also very difficult to replicate by your competitors. 

Use the above as a checklist for your NPS program. By incorporating these practices, we have seen clients increase their NPS and become more successful as measured by revenue and profitability. We wish you much success in your journey.