B2B

November 12, 2024

Sometimes, executives answering surveys have no idea what they are talking about (Discuss!)

Maurice FitzGerald / B2B, Behavioral economics, Blog, Cognition, Customer experience, Customer Satisfaction, Machine Learning, NPS, Psychology, Strategy / Customer Experience, strategy, Surveys /

There is a somewhat strange phenomenon that I have observed at an anecdotal level over the years. It is limited to B2B surveys and causes all sorts of problems. Or at least that’s what I think, and I would like to understand your views too. Here is what I want to discuss:

When we send relationship surveys to B2B customers, we always try to identify key decision-makers and decision-influencers and we ask them to answer a set of questions. This can be done in person, remotely, or by sending a link to a web-based survey, for example. Let’s imagine a situation where a company selling ERP software believes their customer’s Vice-President of Procurement is a key decision-maker. The company sends a survey request out by email and the procurement VP decides to respond. The survey follows a fairly standard format of an NPS question, a couple of open questions about what should be improved, and then a set of 12 questions asking the procurement VP to provide scores about product reliability, the contact center experience, how easy the software was to learn to use, and so on.

This person may have no idea what they are talking about

You may already see where I am going with this. The procurement VP does not use the software and really does not know what is going on. Nevertheless, they have decided to spend five or ten minutes filling out the survey, so they are going to give you scores for everything. Uninformed scores. Wrong scores. Scores that probably correspond to their overall opinion of your company rather than the actual questions being asked.

Then you decide you need to take action on the bad scores, even though your performance may already be perfect.

In this case, the VP is probably out of synch with the rest of the team, especially those using the ERP software every day. These are the people who have useful suggestions, though they may have only a minor role (or perhaps none at all) in deciding whether or not to renew the contract with the software.

Here is my current opinion

In my possibly-wrong opinion, these scores are therefore a relatively accurate predictor of attitudes and future purchasing behavior at the aggregate level (as is ther overall relationship NPS score) but are useless at the level of the individual questions, in terms of telling you which operational improvements you should prioritize to address those attitudes.

Of course you may well find purchasing VPs who have good knowledge of most operational touchpoints, but I think those are rare people in large companies.

I’m not totally certain what to do about this. Do you have some ideas?

I believe the major customer-touching teams in your company do all need input about what they could do better. This issue is that the input needs to be more accurate than it probably is at the moment. For the overall company relationship surveys that are answered by high-level executives, I doubt that adding a request not to answer the driver questions if you don’t know what you are talking about would be a good idea. Maybe we should supply the procurement VP with relevant operational data? Maybe we should accompany all relationship survey requests with the results and trends from any and all transactional surveys we may do?

For transactional surveys, the main issue we all face is that response rates are very low, so we can’t be sure they are accurate. That’s where analyzing operational data trends for all the customers helps. If the operational data numbers and trends don’t match the transactional survey results, I have to say I believe the survey results are wrong, probably because you are not getting the correct people to take the surveys.

So, what do you think? What should we CX and Customer Success experts do about this horrible situation? Yes, I have some ideas ideas. We need more solutions. Please help!

LinkedIn version of this post here

Notes
OCX Cognition predicts customer futures. Our breakthrough Customer AI solution lets enterprises transform what’s possible in customer experience. Reduce your customer risk, break down walls between teams, and drive speedy action – when you can see what’s coming, you can change the outcome. Building on more than 100 years of CX-focused expertise in our small team and thousands in teams we have led, we’ve harnessed today’s advances in AI, elastic computing, and data science to deliver on the promise of customer-driven financial results. Learn more at www.ocxcognition.com.

Maurice FitzGerald is Editor-in-Chief, Content at OCX Cognition. He retired from HP where he was VP of Customer Experience for their $4 billion software business and was previously VP of Strategy and Customer Experience as well as Chief of Staff for HP in EMEA. He and his brother Peter, an Oxford D.Phil in Cognitive Psychology, have written three books on customer experience strategy and NPS, all available from Amazon.

April 17, 2018

How do you know whether your latest relationship survey score is better than your last one?

Maurice FitzGerald / B2B, Blog, NPS / Customer Experience, Net Promoter System, NPS, Relationships /

This is not a stupid question!

Last week I had the pleasure of speaking to an LA-based reader and head of customer experience for a very large company. He was one of the early readers of our book Net Promoter – Implement the System. He has a great understanding of the different types of customer research. They have been getting in-depth feedback from their top 150 customers for some years. They represent about two-thirds of the company’s revenue, so this matters a lot. Net Promoter Score trends for your largest customers are good predictors of their loyalty and therefore of future revenue trends. In this particular case, the score had declined by a point compared the most recent survey, and he had just been invited to talk to the leadership team about the results. He wanted to be sure he was not missing anything.

Relationship research principles

There are a number of principles that are essential in relationship research. The first one is to ensure you are talking to the correct people. Let me illustrate this with a painful example. When HP and EDS merged, I was in charge of strategy and customer experience for Europe, the Middle East and Africa. I was also the business leader in charge of EDS integration for the geography, quite a challenge given the two companies had about the same number of employees. HP had some CX challenges with Vodafone. I went to their HQ in Newbury and tried to cut the conversation short. “I know you love EDS and want HP to improve a lot. Let’s make it simple. We will copy what EDS is doing.” The Vodafone reply was stunned surprise. “They are even worse than you. What are you talking about?” I proudly put the EDS Voice of the Client executive interview transcript on the table. They looked at it and said “But these people have nothing to do with the contract EDS has with Vodafone. Why were they interviewed?” (The real answer was that EDS had strong incentives on the results, so the account teams gamed the research.)

Survey correct people

Your research should cover the people who matter in a client organization. Ideally you will interview executives face-to-face. Video conferences, including Skype, are second-best, followed by phone interviews. I don’t believe in email / web surveys for your largest customers, but they are OK for medium to small ones. If you use Salesforce or Siebel, you probably have a ‘relationship map’ that shows the people with whom your sales people interact. If you have a Customer Success team, you may have additional contacts. You need a representative sample of decision-makers, decision-influencers, and in some cases end users too. This mix is one of the reasons you should not report a score by account outside the account team and their direct manager. The various people are not all equal. If you sell IT hardware, software and services, for example, you may interview ten people, but the CIO and procurement manager may have 90% of the decision power.

Understand trends from same respondents

Once you have a good contact list, it is critical to understand the trends from the same respondents over time. What score did they give you last time, and what is it now? Which Net Promoter System category were they in then and where are they now? What comments and suggestions did they make then, and what are they saying now. Did we address the issues they raised the last time? Treat the repeat respondents separately from the new ones. An organization chart like the one at the top of this article may help.

Follow trends in the open text responses

Assuming you record the comments and suggestions made by each interviewee, it is important to track how they change over time. Ideally you should use text analytics software for this, to remove human bias. Software will only give you a good result if you have a reasonably large amount of data, so manual analysis by a neutral person may be needed for individual customers, with automated analysis for the data across all customers. This will also be a good way of picking up trends in comments about your competitors.

Favor supplier surveys

While I am a fan of interviewing customers, there is a better solution: customers’ own supplier surveys. Many large companies have ‘supplier performance reviews’. The process is that the people who purchase or consume products and services from the largest suppliers are surveyed. A report is prepared for each supplier, comparing them to other suppliers and to their prior results. The reason I like this type of research is that the customers have ‘skin in the game’. The procurement department and others probably have incentives to improve supplier performance. This makes the last point I want to make far easier to execute.

Joint improvement initiatives

In an ideal world, you will agree improvement initiatives with your customers and staff them jointly. There are too many negative surprises with the alternate process where you execute without any customer involvement, then they inspect at the end. At the very least, try to get a customer representative to attend your regular progress review calls or meetings. This has a positive effect on the overall relationship too, especially when your competitors do not take the same approach.

A note about how to aggregate scores

You may want to produce an average NPS number across all of your top customers in three different ways. First, just consider all customers to be equal. Second, weight the results by the amount of money they spend with you. Third, weight the numbers by how much each customer spends with all vendors in your market. If the three results are similar, just use the unweighted average, as it is easiest to calculate and communicate. If the three numbers are very different, you will at least have some interesting discussions. What if the customers who spend most in your particular market all seem to hate you?

Conclusion

Relationship research is important and predicts customer loyalty. You can be sure a score is a good one if you interview the correct people and act on their suggestions. Asking people for improvement suggestions and then doing nothing with them will be a disaster, no matter what your score. And always remember that your relationship with your customers may not be as good as you think. You are competing for attention, and your competitor could win!

Note that this article has been written based on content in two of our books: Customer Experience Strategy – Design and Implementation, and Net Promoter – Implement the System. All of our books are available on Amazon. The drawing is by Peter FitzGerald. Feel free to comment and disagree below.

January 12, 2017

Differences between B2B and B2C

Maurice FitzGerald / B2B, Blog, NPS /

My experience is mainly in business-to-business (B2B) situations. Most of what you read elsewhere about customer experience is in the context of business-to-consumer, and at least some of it is not directly relevant to B2B. The reasons B2C methods may not work for you are the following:

In B2B, a single person is never responsible for all of the client organization’s interactions with your company.
The difference in the relative financial importance of your largest and smallest customers is much greater than for B2C.
The people who use your products or services are usually not the ones who make the purchase decisions.
Your relationship with your customer requires more constant attention because multiple sales and support engagements are likely to be happening at the same time.
Relationships with individual people in the customer organization matter as much as relationships with positions on organization charts.
It takes time to know whether you are improving things.
Your customers want and need you to be successful.
Angry customers stay with you.

There are businesses that look like B2C but are actually B2B. Kentucky Fried Chicken (KFC) is an example, and so is General Motors. Most of their income comes from franchisees, not directly from consumers. Keeping franchise operators happy is more important to KFC than the views of the end customers. It is largely up to the franchise operators to keep the end customers happy.

No single person responsible for everything

When I shop at my local supermarket, I start by scanning my loyalty card and picking up my barcode scanner. I then scan each article as I put it into the caddy. I check out on my own, and speak to nobody. The same happens when I buy something from Amazon. More commonly, my retail interactions involve a single person. If I buy a pair of shoes, it is possible that I won’t go back to that store for a year or two, no matter how happy I am with the shoes and the shopping experience.

When a business buys from another business, things can be far more complex. Yes, a business can still buy Amazon Web Services and never interact with a human being. At the other extreme, a decision to no longer handle invoicing internally in a large company but to outsource it can take two years. It can involve many different people, from the CFO to Procurement to labor unions at the customer end, from a sales person to an implementation project manager at the supplier end. And that is just to get to a decision. Implementation can be complex and involve a lot of different people. Management and organization changes can call the whole project into question and delay things significantly.

Differences in customer size matter

In most B2B situations, you have customers who matter more to you than others. There are two main reasons some may be special. The obvious one is revenue. A typical Pareto curve means that 20% of your customers may bring 80% of your revenue. The 20% need to be treated differently from the 80%. While you might like to think this is in the case in B2C, it has a different scale in B2B. There are very few B2C situations where a consumer is spending millions with one company. The second reason a customer may be special is that they are the pilot customer for a new product or service. You need them to be particularly happy with you, so they are willing to recommend the new product or service to others. (Of course, you should not expect a B2B customer to recommend your product to one of their competitors.)

In the graph below, you can see that just 8 customers bring in a quarter of this company’s revenue. These 8 need to be treated differently to the 219 customers at the right of the graph who also bring in a quarter of the total. The impact of one of the 8 buying more or leaving you is critical. The top customer currently spends $30 million.

Users are not purchasers

Perhaps most importantly, the user of a product or service is rarely the one who signs the purchase order. If you are a catering company, you may bid to supply canteen / restaurant services to a large client. The people who eat the food are unlikely to be consulted in any way in the purchase decision. Unless your food is awful, they are also unlikely to be consulted at all about renewing the contract. Of course there are exceptions and end users can be decision-makers. A noteworthy example is software. Before the emergence of cloud computing, most decisions to purchase software required you to buy hardware. This meant that the central IT department could control everything. That has changed. An individual user can download a free trial version of some application and use it. It can spread to a department, if the department has a credit card, and then throughout a company, no matter what the CIO wants. Slack is an example of software that uses that business model.

Constant attention required

The nature of large transactions and large projects means that some B2B customers require constant attention from your teams. The attention may be from different teams at different points in the implementation of a large project. Multiple multiple sales, project and support engagements may be happening simultaneously.

Relationships with both positions and individuals matter

Large customer organizations are dynamic. Their structures can change, and people move from one position to another as they develop their careers. People you know at one customer can suddenly pop up at another. This has profound implications for research and improvement methods. For relationship surveys, it usually means that an overall score for a customer has no value. What matters is the state of each individual relationship, particularly with decision makers, decision influencers, and to an extent with the end users of your product or service. The same applies in the other direction. Customers need to be carefully prepared for a change in ‘their’ account manager, for example. If your customer project takes a long time to implement, you can be reasonably certain they will change their organization and that this will have an impact on what you have to deliver. Plan on it.

It takes time to know whether you are improving things

If you run a supermarket and want to improve sales of something, you move the product to the head of an aisle. You learn about your success or failure right away. When selling to businesses, it takes much more time to know whether customer experience improvements are helping or hurting. For most types of B2B businesses, it will take 12 to 18 months before you know whether a change is giving you a competitive advantage. The reason is the typical purchase cycle. Customers will use a product or service for some time before needing to buy more. If you are working in a company that considers thinking two fiscal quarters ahead to be long-term planning, you may have difficulty retaining the funding for your customer experience improvement efforts. Maintaining sponsorship was the subject of the second blog post last week.

Your success matters to your customers

Most of your customers want you to be successful. Think about the procurement people, for example. In their ideal world, they want as many companies as possible – including yours – to compete with each other to offer products and services at the lowest possible price. Others want to see as many different innovations as possible, believing that your innovation will be to their competitive advantage. If you have already sold them something, your continued financial survival is important to their belief you will be able to support and improve your product or service. While the same may be the case in consumer businesses, consumers are more likely to have short-term relationships with companies, not caring much if one goes out of business. The consumer’s livelihood is unlikely to depend on the survival of a company that does not employ them.

Angry customers may stay with you

Customer satisfaction is easy to understand in consumer businesses, less so when selling to companies. If the waiter in a restaurant treats you badly, most people (in the USA at least) still leave a tip and never go to the restaurant again. That is life in consumer land, with the possible exception of banks, gyms and cable TV companies that make it difficult for you to leave. Let’s suppose your company supplies restaurant services to corporations. Six months into a contract, a customer’s employee finds a worm in one of your salads. The customer gets angry. You devote large amounts of resources to fixing the issue so it never happens again. The customer stays with you. I will talk about this in more detail in a post just before Valentine’s day.

Conclusion

B2B and B2C are very different, and your customer experience improvement strategy and tactics need to take the differences into account. As always, if you agree or disagree, feel free to comment below. If you would like to be sure to get my latest updates, subscribe to our newsletter here.