Published in B2B

The Power of The Ultimate Question

Understanding NPS

The Net Promoter Score (NPS) or “the ultimate question” as it is commonly referred to, has a history that dates back a full 26 years.  Developed by Fred Reichheld in 1993 and published in a Harvard Business Review article in 2003 entitled The One Number You Need to Grow his initial research suggested that the best and most effective way to predict profitable growth was for businesses to measure their customer’s disposition toward recommending them to others—assessing the customer’s world in a single question, as it were.

His research was then fully published in 2006 in a milestone book titled The Ultimate Question and revised and expanded even further in his follow-up publication in 2011 titled The Ultimate Question 2.0.

The idea of a single-question survey was in stark contrast to lengthy surveys with multiple questions that took long enough to answer that customers either abandoned the survey mid-stream or bypassed the survey entirely, yielding increasingly lower response rates—a trend that started to decline back then and has been declining ever since. Eventually that single-question method of understanding a customer’s satisfaction, loyalty, and intended behavior developed further into two questions and today the concept has expanded further into three distinct questions as illustrated below.

1. The Standard Net Promoter Score Question [an 11-point scale question]

Based on your experience, how likely is it that you would recommend our (product, brand or service) to a friend or colleague?

2. The Reason Why Question [an open-ended question]

What is the reason behind your rating?

3. The Follow Up Question [an open-ended question]

What is one thing we could do differently to increase the value of our (product or services) to you?

With three questions now included in the NPS series, this is more often referred to as The Net Promoter System. A lot has transpired since the advent of NPS and much has been learned about its adoption, application, and effectiveness—both favorable and unfavorable. During my ten year plus tenure as a corporate CX director, I introduced NPS to the leadership team to which they readily understood the concept and its simplicity and fully embraced NPS as the key performance metric in evaluating customer satisfaction and loyalty.

In my present research and consulting role, the question naturally arose as to how far NPS has come over those 26 years and to what extent does NPS remain the key customer loyalty and performance metric specifically among B2B organizations or whether it has been supplanted by another and perhaps more favorable CX metric. Furthermore, I wanted to know how NPS was being applied within B2B and how it was being linked with favorable and demonstratable business outcomes. This blog is a summary of those findings.

The research was conducted between September 24, 2019 and November 25, 2019 and targeted CX Professionals within B2B organizations with titles ranging from Chief Customer Officers and VPs of CX to Directors and Managers of CX. There were 509 total responses to a research instrument that contained a total of 14 quantitative and qualitative questions. The summary of key learnings below derives mostly from the quantitative responses.

Summary of Key Learnings:

  • NPS is very much alive and well as a primary CX metric in 2019, within B2B organizations
  • It is regarded as an industry standard CX metric that will likely continue into 2020 and beyond.
  • It compliments other CX metrics but is less likely to stand alone.
  • Its demonstrated value as a linked predictor of business outcomes falls short due to typical roadblocks, including: organizational culture, leadership support and prioritization, and the lack of understanding that the CX discipline is a long-term process requiring investment, time, and patience.
  • 85% of respondents indicated that they either currently use or had previously used NPS as their primary metric and/or key CX performance indicator. 14% had never used NPS at all.
  • 85% of respondents have targeted B2B clients for their Surveys (54% B2B only; 31% both B2B and B2C). 15% targeted solely B2C clients.
  • 18% of respondents have used NPS for less than 2 years. 54% have used NPS for up to 5 years. 46% have used NPS for 5+ years. 14% have been using NPS for over 10 years.

NPS is specifically applied within B2B organizations in the following general ways:

  • 81% use it within a relationship survey
  • 77% shared results internally
  • 66% awareness exists at the C-level
  • 63% follow-up with dissatisfied customers
  • 58% of leadership teams support, endorse, and champion CX
  • 55% use it within transactional surveys
  • 45% of employees are aware of NPS and what it means to the organization
  • 42% segment NPS based on demographics
  • 30% use NPS within surveys with greater than 10 questions.

NPS is also applied within B2B organizations in the following advanced way:

  • 20% are taking specific actions based on NPS
  • 15% are linking NPS to financials and other business metrics
  • 12% are branding NPS within their organization
  • 11% are following up with satisfied customers
  • 11% are using NPS as an employee satisfaction metric
  • 10% are compensating selected employees based on NPS
  • 6% are sharing NPS results external to the organization

Electronic surveys (email and web) are the most frequently used methods for survey deployment within B2B organizations for obtaining NPS, as indicated by most respondents. 50%+ said NPS was the primary loyalty metric in use today among B2B voice-of-the-customer programs. 25% said it was not. 50% expect their CX budgets to remain constant in 2020. 40% of expect to see an increase—10% expect decrease.

Despite the ongoing debate on the usefulness, application, and effectiveness of NPS, it remains solidly entrenched as the most widely used metric among B2B organizations as a primary CX metric. Some would argue that its time has come and gone—or perhaps should be gone. Leadership within some organizations have mandated it’s use much to the chagrin of some CX practitioners and experts.

Its reputation as an industry standard tends to reinforce the notion that, if everyone else is using it, then it must be good enough for us as well. One thing that did come clear from this research is that NPS is a complementary metric to other CX metrics and is often not used alone as the sole metric to determine and track customer loyalty over time. That’s a refreshing finding, as it has become apparent to many over the last 26 years of NPS’ existence that one number alone cannot predict or even reveal actual customer behavior.

Consider the following two scenarios:

1. Inferred Customer Behavior:

2. Inferred Customer Attitude:

 

The bottom line here is that actual customer behavior cannot be predicted using NPS, but that does not detract from its potential use as a CX metric among other metrics, especially if organizations want to benchmark themselves against their competitors. In that sense, the Net Promoter System has a distinct role within the CX ecosystem. The analogy I often use is that NPS is simply an indicator among many—of what and just how significant of an indicator can always be debated.

Just like the dashboard on a Boeing 777, it’s an instrument among many others. You can’t rely on any one instrument alone to effectively and successfully fly the aircraft. Even if one instrument isn’t critical to flight, having it doesn’t necessarily detract.

Measuring NPS doesn’t or shouldn’t detract either unless you become fixated on it. If there’s anything that we need to get away from, in my opinion, it’s the fixation on a single CX metric whether that’s NPS or any of the alternatives.

The full and complete 14-page Net Promoter Score (NPS) – a B2B Research Report that this blog article was based on is available for download at a nominal fee at www.horizoncx.com.

That report contains detailed information with charts and graphs and qualitative feedback on the following elements of NPS:

  • Choice of NPS as a Primary CX Metric
  • Alternative CX Metrics to NPS and Reasons for Choosing
  • Length of Time Using NPS
  • How NPS is Being Derived and How Widely is it Applied
  • Survey Design and Methods of using NPS
  • Survey Deployment Methods for obtaining NPS
  • Why NPS is Considered a Best Loyalty Metric for B2B
  • Why NPS is NOT Considered a Best Loyalty Metric for B2B
  • Financial Linkage of NPS to Business Outcomes (ROI)
  • CX Budgets—increasing, decreasing, or remaining the same
  • Sizes of CX Teams and Most Senior CX Job Titles
  • Verbatim comments from B2B practitioners of CX