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Is your NPS cheating you? (Part 1)
I have some sad news. If you are running a Net Promoter program in a B2B firm, your NPS isn’t being all that faithful to you. Why? Because you’re ignoring what’s probably your largest segment: those that are ignoring your requests for feedback.
I’m sorry. I know this kind of news is never easy to swallow.
Lots of great things happen with high (60%+) response rates. You get the opportunity to engage with more people. You get better representation of customer health. You get more insight into what’s working and not working. You’ll be able to show the rest of the business some truly trustworthy insights that will be hard to ignore. If you’re below 50% you’ve got work to do…
And you get an accurate predictor of customer retention. Allow me to explain what’s happening so you can have a clear picture of what’s been going on behind your back.
NPS Response Rates in B2B can predict relationship strength to ID accounts most likely churn.
As you know, “textbook definition” of NPS is determined by placing customers in 3 categories:
- Promoters – People who score your organization with 9’s or 10’s
- Passives – People who score your organization with 7s or 8s
- Detractors – People who score your organization with 6 or less
As you may or may not know NPS is calculated as NPS = % of Promoters – % of Detractors
NPS tells you that this is because Net Promoter is based on relationship between survey scores and the subsequent behavior of individual customers over time. People who rate a company higher buy more and refer more friends to the company than people who rate it lower.
NPS in B2B is lying to you
That’s because it totally ignores a very important 4th group. “Non-Responders” or people who didn’t respond. What I refer to as “Disengaged.”
These people aren’t even calculated into the NPS equation.
Which is a false representation. Waypoint investigates this area for our clients and consistently finds that Disengaged clients are far more likely to churn than responding clients. For one client silent accounts were 7 times more likely to churn. SEVEN times.
For this client, responders had an almost 100% renewal rate, regardless of scores. The Non-Responders? 80.13%. Which tells me that response rates mean much more than NPS does. (Of course, this also assumes proper positioning and communications that provide customers with a clear understanding of how their feedback will be acted upon. In other words, customers gain a “what’s in it for me” to provide feedback. More on that in part 2 of this article.)
So in this situation we took a look at “Perceived” NPS (the traditional mindset toward NPS) vs. “Real” NPS (when we calculate in the disengaged).
Take a look at these 2 simple pie graphs generated from the data. I think they speak volumes:
Yes, 54% less.
To see a more detailed explanation of this topic, check out this article.
HOW TO HANDLE THE FOUR NPS GROUPS
OK, so now we know how to identify the FOUR groups in order to give a legitimate NPS reading. Let’s examine how to handle each group:
Group 1: Promoters (score 9,10)
Obviously this group is going to be generating most of your positive word of mouth.
The main task here is to activate your promoters. Engage them for referrals, in reference programs, and more. They are excited to promote so give them the opportunity. You’ll also want to dig in deeper to find out what you are doing right by them and start applying that to the other groups.
Your NPS promoters love you, so give them the opportunity.
Group 2: Passives (score 7,8)
This group is a hair away from being pushed into Group 1 (or fall into Group 3).
You need to figure out how to get them into that group. It might be a simple as asking (or reading, if the survey was designed correctly) why they scored you a 7 and not a 9 or 10. Then fix the problem.
Group 3: Detractors (score below 6)
Even though this group gave you sub-par marks, they took the time to respond (As we’ll learn in part 2 of this series, that speaks volumes.)
They are crying for help.
They didn’t just cut bait and run, they are basically saying: “We like you, but we need you to fix some things.“
Best advice? Find out what they want fixed and address it. You can’t necessarily fix everything that they say, nor can you set the expectation with them that the “fix” will be up to their liking. But you can provide work-arounds and manage their expectations, by telling them how the team is handling the request and when they can anticipate to see a solution. See how easy?
Group 4: Disengaged (No score. They don’t respond)
OK, today we learned that this is a very important group.
More important than getting or keeping them satisfied, we need to get them engaged.
Prove to them that you care. When you ask a client to answer a survey, remember they are thinking WIIFM (What’s in it for me). So prove to them there is something in it for them. The best reward is you making them know that you are listening and adjusting your procedures accordingly. What I refer to as “Demonstrated listening”. (More on that in Part 2.)
More important than keeping Silent Accounts happy is to get them engaged. Prove that you care.
Sorry to be the bearer of bad news about what’s going on behind your back.
But the good news is if you play it smart, you can stop NPS cheating on you for good and live happily ever after.
In Part 2, we’ll look at response rates and proper targets. See you then.
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