Beyond the Score: The Limitations of NPS for B2B Companies
We all know the statistics; it's 9-11 times more cost effective to sell to your existing customers as it is to gain new ones. But in reality, the focus is still very much on sales and new business.
This is in part because it's more sexy to "hunt" rather than tending to the ones you already have. And also, because once the client has signed on the dotted line you can move on to the next one - more revenue!
But what about your existing client base? What is the health of the client relationships you've already spent so much to establish? And what happens when you lose a client? The fact that for each client that churns you need to sign up two new clients should have companies focusing on retention of B2B clients because it makes a lot of financial sense.
Wouldn't it make sense to put a little more effort into the current customers since they already know, like and trust you? Wouldn't it make sense to start being proactive when it comes to getting their thoughts on their experience and satisfaction... before it's too late?
When it comes to measuring the client experience, the most popular method is without a doubt Net Promoter Score (NPS). In theory (and there is a lot of theoretical assumptions when it comes to NPS and its benefits) NPS is said to measure customer satisfaction, loyalty, and overall opinions about your business. But these assumptions and findings have been difficult to replicate in independent studies and even the original research that was used to establish the academic foundation of NPS has been highly criticized.
It's also used by some companies as a relational metric and others as a transactional metric... and by even others as an eclectic mix of the two.
And let's not get into the fact that, despite a confusing objective about what NPS is measuring, it is especially limited when it comes to B2B companies and their diverse and complicated B2B relationship.
In this blog post, we will delve into the limitations of NPS when used in B2B and what ambitious customer focused companies can do to be pro-active instead of reactive when it comes to customer experience and client satisfaction.
From NPS to Something Better: The Need for Deeper Feedback in B2B Companies
Let's get to the core of the matter, NPS doesn't give an accurate representation of customer satisfaction in a B2B setting. Unlike B2C businesses, B2B relationships are more complex and involve multiple stakeholders. Often, one decision-maker will provide NPS feedback that may not reflect the views of all stakeholders. Therefore, the feedback will most likely not accurately reflect the opinions of the entire organisation or the different users and decision makers within a company.
Another limitation of NPS in the B2B space is that it does not provide enough actionable insights for improvement. Unlike B2C firms, most B2B businesses often have long-term and ongoing relationships with their customers and clients expect you to increase your knowledge and understanding of them and their needs.
As a result, NPS feedback which is void of all insights or diagnostic nature can not delivery enough specific and actionable insights to improve the customer experience.
Measuring the NPS score is similar to a doctor taking your temperature and saying that it's improved by 3 points. "Ok great, but why?" Just knowing something (ambiguous) has changed without know why or what changed it doesn't does very little for the company and nothing for the customer. Managers need to ask themselves, "are we measuring client satisfaction for us or for the customer?"
Moreover, NPS doesn't capture the details of a customer's experience. It only provides an overall score based on responses of recommending or not recommending the brand. For B2B businesses, it's critical to implement a more in-depth feedback system that provides feedback on specific aspects of their customer experience such as customer service, product quality, and overall experience.
Lastly, the sample size for NPS in the B2B space along with it's abismal resopnse rate means that the results aren't statistically significant and you may be doing more harm than good by acting on incomplete data.
The average response rate for B2B is 7-11%, and much lower for NPS responses with the follow up question.
Thus, any insights gained from the dataset are not reliable, and it is impossible to make an informed decision based on the data.
If you are going by gut feeling you are just guessing.- Kári Thor Runarsson, CEO of Cliezen
NPS alternatives in B2B: Deep Insights for Proactive Companies
In conclusion, while NPS may be a useful tool to measure customer feedback in the B2C space, it has significant limitations when used in the B2B setting.
And B2B companies should be aware of these limitations when collecting client feedback and implement additional methods with greater reliability and actionability.
It is crucial to implement a more in-depth feedback system that provides feedback on specific aspects of their customer experience. That way, B2B businesses can improve customer experience, increase satisfaction, and ultimately, drive growth.