It’s hard not to notice how ubiquitous Net Promoter Score has become. After every flight, hotel stay, ecommerce transaction, etc, there comes a survey asking “How likely are you to recommend [Product/Brand/Service] to your friends or colleagues?”
Need a primer or a refresher on Net Promoter Score?
While consumer businesses got into the Net Promoter Score early, over the last few years B2B technology companies have caught up. Among our clients, practically every company either has an NPS program or is thinking about implementing one.
Overall, the move toward Net Promoter Score is good news. Increasing customer feedback is unequivocally valuable, especially for an industry that has been known to place a greater emphasis on innovation over customer experience. However, when it comes to NPS, B2B tech companies need to beware – While a low NPS is definitely a problem, a high NPS isn’t necessarily the good news you think it is.
To understand why, let’s start with the reason NPS is supposed to be superior to traditional measures of satisfaction. Ultimately, NPS is supposed to measure customer loyalty and customer loyalty has been shown to correlate with growth in a way that satisfaction does not.
Where loyal customers make additional purchases and bring in new customers via word of mouth, the same cannot be said for customers who are just satisfied. Customers can be satisfied without thinking what you do is important or differentiated. They can also be satisfied without being invested enough in your business to put their own reputation at stake by recommending you.
Unfortunately, NPS is not a great measure of customer loyalty for B2B tech companies.
The problem stems from the NPS question itself: How likely are you to recommend [Product/Brand/Service] to your friends or colleagues?
Implied in the question is what you are recommending that Product/Brand/Service for. For more mature categories such as hospitality, retail, and automotive, this is not an issue. If you are recommending a Ford Fusion, you are obviously recommending it as a car.The same is not true in B2B technology.
B2B technology markets are characterized by rapid innovation and quickly shifting product and competitive landscapes. Companies that stand still and are not focused on what’s next get left behind. This is where the flaw in NPS is for B2B tech companies comes into play. When a B2B tech company asks a customer “How likely are you to recommend our Product/Service/Brand?” what they are actually measuring is customers’ loyalty based on how the customer is currently using the company’s Product/Service. It is not measuring whether that loyalty extends to where the company wants to take its customers next.
Case Study: Hospital Marketing Software
An example of this phenomenon in action is the experience of a leading vendor of hospital marketing software, who enjoyed a solid NPS score. Largely due to HIPAA and other regulatory concerns, Hospitals were late adopters of the internet for marketing. When the company started presenting their online marketing plans, they quickly discovered that they were not their customers’ first choice in this new area. Given their solid NPS score, they expected their customers would follow them online. However, while their customers were highly loyal to them for traditional marketing solutions (high repeat purchase rates, retention rates and referral rates), this loyalty did not extend into this new area.
Over the previous several years, their customers, while spending little on online marketing, had still developed strong relationships with the interactive agencies who had built their websites and Facebook presences. As the hospitals then started ramping up their online marketing spend, the company found that the interactive ad agencies were the favored vendors for those capabilities.
Had their NPS program been designed to take into account the changing market and competitive landscape, it would have captured this critical development earlier, enabling the company to effectively respond before competitors had laid claim to the digital marketing opportunity.
Need help with building a truly effective NPS program?
At Topline Strategy, our Strategic Customer Experience (StrategicCX) methodology is ideally suited to the needs of B2B tech companies. Our methodology elevates Net Promoter Score programs from just measuring current performance to providing actionable intelligence on how to keep your customers loyal as your business, the market and competitors evolve.