The Hidden Risk in NPS
Melissa Short, VP Reporting Services
Why measuring effort to value is critical to understanding customer success
- Recommendation likelihood (also referred to as Net Promoter Score or NPS*) likely has limitations in describing customer success and can disguise risk. Even when highly likely to recommend, some customers still reported failure to reach results with a vendor’s solution
- Effort is a more honest representation of customer success. Frictionless customer experiences showed greater likelihood of delivering results to the customer
- Effort can expose risk in customer accounts and enable high-leverage behaviors in your customer success organization by providing a constructive platform to engage at-risk customers
- While recommendation likelihood is a useful measure of vendor sentiment, effort is a stronger measure of solution success. Companies who augment NPS with effort likely have a more balanced picture of customer sentiment and success
Is it accurate to assume customers who provide the highest recommendation likelihood also achieve the most results with a vendor’s solution? Vendors commonly believe customers will renew and even increase their spend if they experience success with their solution, and they often rely on recommendation likelihood to assess chances of renewal or churn. But, how accurately does a customer’s willingness to recommend a vendor depict their own success?
Recently, a customer describing their experience with a B2B technology and services vendor gave an exceptional recommendation likelihood (a ten out of ten). Yet, this same customer simultaneously failed to reach results with the solution. In a follow-up conversation, the customer explained, “The service team’s responsiveness is very good. Whenever you need them, they’re almost always there. The overall experience is good.”
But, the conversation unraveled when the customer explained why the solution failed to meet needs. It started with the sales team. “The transfer from the sales team to the service team is one of the biggest disappointments,” the customer said, ”The information mismatch is huge between service and sales.”
Despite the service team’s best efforts, the sales team’s failure to understand the customer and propose the right solution prevented them from implementing on-time, at-cost, and with all desired functionality. Post-implementation, limitations persist and the product has not been functioning as promised. On top of it all, the customer has completely missed one of two most important results identified at the engagement’s start. When it comes time to renew, the customer will consider competitors.
Would the vendor have noticed the renewal risk had they relied solely on recommendation likelihood to predict this customer’s renewal plans?
* * *
The following discussion represents nearly 1,500 customers utilizing a B2B solution in business or professional services, consulting, healthcare, insurance, or technology. Other industries are represented at lower frequencies, including aerospace, financial services, and retail. The product type offered varied by industry (e.g., many companies in the business services category provide their service through a software solution). The wide display of industries and offerings exposes shared themes across the B2B customer landscape.
Like the customer above, each respondent provided their recommendation likelihood and their perceived effort to value throughout their journey. Customers also indicated the extent of results they achieved with the vendor’s solution, which served as the basis for determining if they were successful.
Does a high NPS mean customers are achieving results?
B2B vendors often assume their top promoters are also their top achievers, but customers across industries could not confirm this. While a customer may be willing to recommend you, this does not guarantee they are also a reliable success story, and in fact, the opposite may be true. Some promoting customers unexpectedly failed to achieve their desired outcomes–and not infrequently.
Despite providing a “promoter” score of nine out of ten in recommendation likelihood, one in five customers reported failure to reach results with the vendor’s solution. Earning a ten in recommendation likelihood diminished odds of failure somewhat but not entirely. As a group, nearly 15% of promoters (nines and tens) failed to achieve business outcomes on average.
These “failing promoters” reveal a breakdown in NPS’s practical use. Let’s say you are a sales or marketing leader and are building a list of customer references for prospects. Even if you selected reference accounts from your list of promoters, there is a notable chance the reference would be unable to describe their own success with your company’s solution. Unknowingly, you could be selecting poor customer experiences to represent your brand.
If NPS isn’t a consistently reliable source of success stories, then where do we turn? The answer may be in effort–the amount of work required of the customer to achieve value. When customers rated their ease to value at a promoter equivalent (a nine out of ten), the risk of failure reduced by half compared to their NPS counterparts. In all, only 7% of customers indicating low effort (high ease) experiences failed to reach business outcomes. For sales or marketing leaders, locating references from high ease experiences notably reduces the risk of calling on a low-achieving customer to carry your reputation forward.
What about the other side of the coin? What if we look beyond failure in NPS and instead search for success stories amongst its promoters? Still, the 500+ respondents who were very likely to recommend a vendor showed limitations. Perhaps the most telling was that even a score of nine in recommendation likelihood yielded a low success rate: Only 35% of these promoters successfully realized outcomes with the vendor’s solution. Even though earning a ten improved outcomes, as a group, promoters only reached results 50% of the time.
In contrast, “effort promoters” were 28% more likely to report exceptional results attainment than their recommendation likelihood counterparts. Frictionless journeys not only yielded greater results in general. Low effort experiences also opened access to results to a far greater extent than customers offering highest recommendation scores.
This positions effort as a more accurate picture of solution success across a customer base. In a single, average score, effort can show perceived friction en route to value and strongly suggest what level of success customers collectively are reaching. In addition to this broad view of success, effort also provides operational and tactical insight where NPS cannot.
How prioritizing ease to value supports high-leverage behaviors
One customer shared their exasperation with a SaaS vendor whose value proposition centered around efficiency and streamlined sales and marketing workflows. But, the customer couldn’t even make it through setup, saying, “I’m currently dealing with an issue after I had to stop the migration to their system… It is beyond frustrating.” The customer questioned when or even if they would be able to clear a basic setup hurdle and move into consumption.
Another customer recently reduced their spend with a professional services solution and declined an upgrade. Effort to value was the focal point of their concern:
“I would have to put an extensive amount of work and training into my [team] just to try and see if we can even get the return on investment, and then I have to hold them accountable for using the tool. If I have to do that much work on my end to get the return on investment, it’s probably not the right tool.” In their final comments, the customer revealed: “I don’t have to work that hard with [competitor].”
Imagine a customer success manager’s next conversation with either customer above as they try to regain their confidence and retain their business. Which option is likely to resonate?
- Option 1: “How can we earn a higher recommendation likelihood from you?”
- Option 2: “How can we make it easier for you to use our solution?”
At-risk customers are almost certainly focused on salvaging their own success over safeguarding a vendor’s NPS. For B2B vendors focused on increasing renewals and reducing erosion, effort enables high leverage behaviors, like the ensuing conversation from the second option above.
Using effort, a customer success manager can identify risk in an account, lean into the customer’s sticking points, and frame a critical conversation around understanding the customer’s perspective. Understanding the barriers preventing success equip a customer success manager to take corrective action and prevent churn—and in turn, earn the customer’s loyalty.
Augment NPS with Effort
Both NPS and effort are helpful to understand the customer’s experience, and vendors who collect both are more likely to obtain a balanced picture of customer sentiment and success. But, vendors who rely only on NPS to assess customer health are likely overlooking risk and even missing opportunities to intervene effectively on at-risk accounts. This is because the focus of NPS is primarily on the vendor, not the customer.
While NPS is a useful measure of vendor sentiment, effort is a stronger measure of customer success.
This underlying difference helps explain why NPS can disguise a customer’s failure with the solution. Their willingness to recommend a solution to another business does not necessarily reflect their own success. Effort brings the customer into focus by representing one of the most important considerations in the customer’s journey—friction. Ease to value indicates how accessible results are to the customer, which offers a window into their success.
When it comes time to renew, will customers prioritize your brand or their own success?
*NPS is a registered trademark of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc. For the purposes of this post, the terminology for NPS and recommendation likelihood are used interchangeably as recommendation likelihood is the building block of NPS.