How Does Net Promoter Scoring Apply To Indirect Channels?

NPS has become the ‘catch phrase’ for measuring customer experience for just about every big company you can imagine. In fact, the scoring system has become so widely adopted that Wikipedia reports it is used as a measurement tool for two-thirds of the Fortune 1000 companies. What is NPS you ask? NPS stands for ‘Net Promoter Score’. Net Promoter Score is a measurement tool that refers to a customer’s willingness to promote or evangelize your brand and has come to be considered a key metric for understanding a customer’s experience when they interact with your company.

It’s a measurement of customer loyalty and the creators stake the claim that high NPS scores correlate to a company’s revenue growth. Someone must believe them for this technique to have seen such solid penetration into these large companies.

Why Net Promoters?

Let me give you an example of why measuring experience matters. A few months back I had a poor customer experience in my local hardware store. I went to the store down the street to purchase. After I returned home I tweeted about my experience, the good experience in the second store and the poor experience in the first.

I almost immediately received a reply from the second store that thanked me for my comments, asked who I’d worked with, told me how much I was appreciated. It left a very strong and excellent impression of this company. The first store ignored my comment and experience completely.

I’ve told many people this story, mentioned the store that provided the really positive experience and recommended that they drive the extra half mile to that store instead of the one that provided such a

poor customer exchange. I’m a promoter for one store and a detractor of the other.

The NPS Process

Net Promoter Score or NPS was introduced by two companies in 2003, Satmetrix and Bain & Company and has been adopted by many research organizations, consultancies, and business strategists, likely because of its simple execution and ease of understanding. And at bChannels we’ve adopted it in our consulting engagements with our technology clients.

NPS consists of a core question (scored 0-10) that is typically follow by a qualitative follow up question, especially when low scores are given. Generally, it goes as follows:

• How likely is it that you would recommend our company to a friend or colleague?

• What makes you say that?

The participants that answer this core question are broken down into three segments:

Segment 1: Promoters, those that answer with a 9 or 10

Segment 2: Passives, those that answer with a 7 or 8

Segment 3: Detractors, those that answer with a 0 – 6

The NPS (Net Promoter Score) is calculated in the following way: %Promoters – %Detractors = NPS

This equation gives the company, brand, or product a score that ranges from -100 to +100.

Using the Net Promoter Score

Different industries have different NPS baselines, and there may be cultural deviations. As a for instance the US often scores higher than the UK. But as a general rule, when measured over time, companies can easily understand their brand experience and track fluctuations against either company or industry historical baselines in a way that is predictive of how the company is viewed. The follow up qualitative question we’ve mentioned gives insight into root causes of improvement or decline of the customer experience.

That’s all fine and good for consumer based companies (B2C), but what’s the application for businesses that provide products and services to other businesses (B2B) or even for the technology industry?

At bChannels we specialize in partners (B2B), indirect routes to market, channel programs, and technology. We are consultants that frequently help technology providers understand their partner networks and the needs of these partners. We work with the largest technology companies in the world, and we apply NPS to these relationships.

As a technology provider it is important for you to understand how the channel views the partner-vendor relationship. Partner NPS (PNPS) helps you uncover that view. You have to recognize that your partners, these companies that you rely on so much for your indirect sales, have other options and many times they are not only selling your products, but are also selling very similar products on behalf of your competitors. It’s important to understand how they view the relationship you have with them.

Why PNPS?

Consistent tracking of PNPS, along with a customer experience model that helps technology providers understand ‘root causes’ will help your company grow and increase your profitability.

Research has clearly shown that improved NPS decreases your operational costs, drives revenue, and as a result increases your profitability. One of the founders of the consumer NPS system, Satmetrix, recently claimed that “91% of marketing leaders believe that in two years they will be competing primarily on the basis of customer experience.”

At bChannels, we believe that technology companies are on a similar trajectory. You’ve heard of CEX (Customer Experience) – at bChannels we believe it’s important to measure your PEX (Partner Experience). And, if you need some assistance along the way, we’ve got a lot of expertise in executing these programs and would be happy to help.

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