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Net Promoter Community > Richard's and Laura's Blog > 2006 > March
 

As we discussed in my last column, The Sound of Silence: Part 1 - Detecting the Signs, it is important to understand which types of customers you most want to hear from. To make sure you hear from them, define a role matrix for your business, which might include decision makers, purchase influencers and end users. Each of these groups plays a different role within your sales process. Before you can make sense of the difference between Promoters and Detractors, you need to know who's who and how they influence your business. For B2B companies, these roles often represent distinct individuals with different viewpoints. For B2C businesses, several roles might be embodied in one respondent -- the consumer.

 

 

Let's give some more thought to how to characterize roles as part of a typical segmentation model. The goal of customer segmentation is to group customers based on common needs so you can approach them with targeted solutions based upon those needs. I won't get sidetracked discussing the importance of developing good customer segmentation models. In this example, we will assume that an appropriate segmentation framework has already been created.

 

 

Let's continue with the example of our B2B Enterprise Software company, which has four types of customers: Enterprise, Mid-market, Small/Medium Business and Consumer. In order to develop an accurate picture of this company's Net Promoter Score, we need to figure out what percentage of each customer segment is represented in the total.

 

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As you can see in the diagram to the left (click image to enlarge), this B2B company has plotted different customer segments, along with the percentage of respondents they feel they need from each segment. They have rightly understood that Enterprise Accounts are critical to their business: these accounts represent 20 percent of the total customer base and 80 percent of the total revenue.  Because relationships with Enterprise Accounts tend to be complex with many touch points, the percentage of respondents should be high. Remember, we are not talking about everyone in the CRM database. Our role matrix has identified a discrete set of people. As this company looks at its other segments, they realize that the interactions are less complex, which means a particular customer segment can be represented with a lower percentage of total responses.

 

I have depicted this situation very simply in this graph. Clearly you can take any one of these segments and divide them further. For example, not all consumers are in the same segment. That said, the point of this exercise is to:

 

1) Make sure you understand your customer segmentation models
2) Be aware that each segment contains distinct sets of customers with distinct needs
3) Overlay the concept of census vs. sample to help you gauge whether your Net Promoter Score is an accurate reflection of that segment—and ultimately of your business. (See Scott Smith's blog, Easing the Burden, Leveling the Load for more info on this subject.)

 

Perhaps the most important point of this exercise is to understand that not all non-respondents are created equal. A non-response from a CIO at an enterprise account worth $10,000,000 is different from a non-response from a consumer account worth $200. Thus the risk factors are higher: if your largest accounts are underrepresented, you will not have an accurate view of your Net Promoter Score.

 

Which brings us back to our original question: If a customer fails to respond, should you classify them as a Detractor? How do you interpret their silence? The answer depends on who is not responding and the role they represent within your customer base. Is it one of your most valuable customers, as determined by revenue, margin, up-sell potential, tenure, referral power, or any other criteria you care to define? If so, you might want to take a look at Richard Owen's recent blog, The Case of the Missing Executive, to determine how to classify them.

 

Creating your own segmentation model will help you determine whether your Net Promoter Score accurately depicts your business--and whether those silent responses might end up reverberating on your balance sheet.

 

We all have stories about finding and categorizing silent customers. Please reply with your anecdotes so we can learn from your experiences by posting a comment below.

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Now that we have learned the importance of correctly classifying customers (see my previous blog, Identifying Decision-Making Despots), this seems like a good time to embark on a mission of search and rescue. Personnel critical to the success of your corporation have been abducted, and many of them have been absent for quite some time. As you understand the full breadth of this conspiracy, you realize that nobody seems to understand that they are even missing! For all intents and purposes, they are simply non-existent.

 

 

If this sounds like an episode from the X-Files, then you are right about one thing: The truth is out there.

 

Traditional survey processes are the guilty party here, since they conveniently ignore non-respondents. After all, with some heroic extrapolation, you've got a pretty good idea about how these non-respondents feel, right? Not so fast. First of all, we don't believe that you can simply pretend that non-respondents no longer exist. While this tactic may be justifiable in mass-consumer markets, business customers are simply too valuable to assume their behavior using extrapolation rather than first-hand information. Secondly, simply acknowledging that missing customers are meaningful does not make it easy to attach the correct meaning.

 

 

In order to sort through this muddle, let's review the most common theories that people use to explain how missing respondents will behave:

 

 

Theory 1: Non-respondents Are Basically Promoters. Proponents of this theory don't usually state it so directly. However, if you subscribe to the "ignore them, there can't be anything wrong" theory of non-response, then you must be assuming that non-respondents have a positive view of your firm. Otherwise, you would do something about it, right? Now I'm an optimist at heart, but looking back on five years of Net Promoter data does not lead me to believe that most companies are blessed with such legions of promoters. This conclusion smacks of problem avoidance, so I'm not a big fan of this theory.

 

 

Theory 2: Non-respondents Are Detractors. If someone can't take the effort to respond to you, the implication is that they can't think very highly of your product or service. Therefore, it's safe to assume that they are detractors.

 

 

This theory has some appeal from an operational standpoint. It's the most conservative approach and it doesn't run the risk of overstating your Net Promoter score. It also has the advantage of encouraging high response rates, since it has a built-in penalty for lower response percentages. From a management standpoint, it encourages paranoia, which many enterprises consider a virtue in attitudes towards customers. Assuming that you have done a good job of building a credible respondent database, and that you have employed our recommended techniques to recruit respondents, then this is a viable approach for managers who want to keep their organizations focused on the attitudes of their customer bases. However, it would not be a useful approach for industry benchmarking or other comparable business scoring.

 

 

Worse, in the early days of your program, the negative scores this approach generates could prove pretty harmful. If you are not convinced that your executives will view negative Net Promoter scores as a useful "learning exercise," then I suggest you avoid this approach.

 

 

If you find yourself wanting something a little more sophisticated than the sunny optimism versus the gloomy conservatism of these first two theories, than Theory 3 is for you.

 

 

Theory 3: Context Counts. Let's say that you have been running high-frequency surveys of your customers for some time. Theory 3 suggests that the trend of historical responses can be your guide to assigning a Net Promoter value. This line of thinking is similar to Isaac Newton's first law of motion, commonly known as the theory of inertia. Respondents who have historically been detractors are unlikely to signify their conversion to promoter-hood by not responding to your surveys. Most likely, they have simply given up and should be considered strong detractors. Similarly, respondents whose scores have been declining are unlikely to stage a turnaround when they choose not to respond. You can assume a lower score, which probably means either a detractor or neutral at best. If non-respondents are historically positive, you might consider them neutral until you hear otherwise--but you had better verify their status through other means.

 

 

Theory 3 is based upon rules of historic response. But what about people who have never responded? Long term non-respondents are generally typified by one of the following:

 

 

-- They are the wrong people to poll in the first place (they see themselves as having no direct input to the program or no investment in your company's success)
-- They are long-term detractors (which can only be identified by follow-up calls)
-- They are philosophically averse to the process of data collection (again, a follow-up call can usually identify this type of individual)

 

 

At the sales-team level, local account knowledge combined with historical response patterns can usually dictate the right course of action when dealing with non-respondents. Follow-up interviews can provide data to corroborate the answer. Even if you choose to identify non-respondents by a default score of neutral, detractor or--horror of horrors, promoter--don't miss the opportunity to learn how they really feel during the account-review process.

 

 

In my opinion, assigning rules-based scoring for non-respondents is the simplest and most practical approach. Otherwise, go with neutral scores. If you are in the process of turning around your customer relationships, then assume they are detractors until proven neutral, and establish a process to neutralize them during follow up calls. Whatever you do, don't ignore this valuable piece of data by letting the executives stay missing, the corporate equivalent of photos on a milk carton.

 

 

The best sales organizations subscribe to the old saw about feudalism: it's your Count that votes. Then they try to figure out who is, indeed, "the Count." That's a good way to view your Net Promoter program as well.

 

 

If you have any other practical suggestions about how to reign in customers who have gone AWOL, I'd love to hear from you. Post a comment below.

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