Measuring B-to-B Customer Loyalty

B-2-B Customer Loyalty

B-2-B Customer Loyalty

You’ve probably seen some version of these B2B customer loyalty statistics*

● Reducing customer attrition by as little as 5% can increase profitability by 20% to 125%.
● The likelihood of selling to an existing customer is 60% to 70%, compared to 5% to 20% for a new one.
● 40% to 50% of companies haven’t brought on a new vendor in the last five years.
● Loyal customers spend ten times more on your business than new ones.
● Acquiring new customers can cost up to five times more than generating new business from someone with whom you’ve already worked.
● 84% of B2B decision makers start the buying process with a referral.

Customer loyalty pays off. Measuring it gives you information about how loyal your customers are now, how you benefit (increased sales and profit and lower cost of sales), and hopefully how to continually increase that loyalty. Remember the old saying: “What gets measured, gets done.” If you do not yet measure your customer loyalty, you need to start.

Measure what matters

But what does that mean? With longer sales cycles, multiple decision makers, and complex purchase decisions with higher price tags, what does loyalty look like? For most B2B businesses, there are three types of metrics that adequately measure customer loyalty:

  1. Repeat Customer Rate (RCR): This metric tracks how long customers continue to purchase from your business after the first sale. The beauty of RCR is that you probably already have this information; you can easily establish your baseline and RCR and track it in your customer relationship management (CRM) system. You can also enhance this metric by looking for customers who purchase more volume, more frequently, or those who expand to purchase more different products or services from you. Each of those measurements tells you something a little different about how you build loyalty with your customer base.
  2. Customer Lifetime Value (CLV): This metric measures the total profit contributed by each of your customers during the entire duration of their time purchasing from your company. Again, you can probably use data you already track in your CRM to look at annual revenue, purchase frequency, and purchase trends to predict the CLV for each of your customers. Once you know the CLV of each customer, further analysis can help you understand why some customers are more loyal than others, and to implement strategies and tactics to increase CLV overall.
  3. Net Promoter Score (NPS): NPS is one of the more frequently used metrics of customer loyalty for B2B businesses. Simply, NPS measure the percentage of your customers who are most likely to refer you to others. (To determine NPS through survey research, ask customers how likely they are to recommend you to a friend or colleague. On a scale of 1 to 10, where ten is the most likely, respondents answering 9 and ten are considered your promoters. Those who select 6 or below are considered detractors, and those in the middle are passives. Subtract the percentage of detractors from the percentage of promoters to get your NPS score.)

The beauty of NPS is that it simplifies the often complicated and multifaceted relationships between B2B companies and their customers. By evaluating why some customers become raving fans, you may be able to target better your sales and marketing programs, as well as implement loyalty programs that drive results.

Move the Needle

You can decide to use one or all these metrics to give you a good picture of current levels of customer loyalty. These are all an important starting point, but none of these measures gives you enough information to know what you need to change. Further analysis on each one of these measurements can help you improve sales and marketing, increase repeat purchase, and lower cost of sales. The key is to leverage this information to maintain and increase customer loyalty throughout your customer base.

Quantitative and qualitative research techniques can help you answer questions such as: Which of my customers are loyal? What do these accounts have in common that drives their loyalty? What can I do to make these customers even more loyal? How do I get them to generate referrals and word-of-mouth? How can I increase loyalty among my less-loyal customers? What factors will motivate increased loyalty – and how will that impact profitability?

As W. Edwards Demming said, “Profit in business comes from repeat customers, customers that boast about your product or service, and that bring friends with them.” Loyal customers drive your business success by purchasing more, being less expensive to sell to, and by promoting your business through word-of-mouth and referrals. Isn’t it about time your customers started promoting you?

*Sources: Bob Murphy, Marketing Profs; Eliza Fisher, Annex Cloud

Brand Positioning Basics for B2B Companies

Brand Positioning Basics for B2B Companies

Brand Positioning Basics for B2B Companies

“Why do I need a brand? I’m not Coca-Cola.”

Consumer brands spend millions developing, monitoring and enhancing their brands, which may lead to the misconception that brands are not important for B2B companies. Even if you don’t think you need a brand, you already have one. David Ogilvy described brands as “the intangible sum of a product’s attributes.” That includes the advantage you deliver, how and where you deliver it, and the value of that benefit. Essentially, if you have customers, you have a brand. So, let’s examine some brand positioning basics – and why brands matter for B2B.

What is brand positioning?

Al Ries and Jack Trout first popularized brand positioning as a concept in their book Positioning – The Battle for Your Mind. Today, there are as many definitions of positioning as there are marketing experts. Most, however, agree that key messages come from branding and positioning create a distinct place for your brand in the mind of the consumer. Further, most experts would also agree that – ideally – your distinct place in the consumers’ minds should be different from your competitors. Most simply, positioning is “what you want to be known for.”

Over time, marketers began using the “classical” brand positioning statement: “For (target market), BRAND is the ONLY (category, frame of reference, competitive set) that (differentiation) because (proof points or reason to believe).” By filling in the blanks, marketers either accurately described their brand – or identified an aspirational brand position that they would then work to achieve. An example is “For businesses (target audience), HighFive is the only video conferencing service (frame of reference) that can connect all of your employees and all of your conferences rooms easily with one click (differentiation), because HighFive was built for business, not social networking (reason to believe).” (Click here for information about the brand positioning statement and marketing research: 4 Questions You Must Answer About Your Brand.)

In today’s world, whether B2B or B2C, real differentiation may be hard to maintain. Therefore, some marketers have begun to call it “distinction.” While it may be true that your brand is an undifferentiated commodity, every brand can have some aspect that separates it from the pack.

So, before you resign yourself to a life of price competition as your only marketing option, think about other ways that your brand might stand out from other brands in the frame of reference for your target market. What about your brand relationships: are your customers more loyal? Were you the first-to-market? Often, even in an undifferentiated market, you can create a distinction by identifying a very compelling and desired quality and building a competitive advantage through your delivery of that attribute to customers.

Why Brand Positioning Matters for B2B

There are three reasons brands matter in B2B, as much if not more than in B2C markets:

  1. Cut Through Clutter. B2B products and services are often complex, and the individual features and benefits can become mind-numbing clutter. A strong brand helps you get noticed and becomes your loyal customers’ ‘shorthand’ for navigating a complicated – and risky – purchase decision. Accenture successfully rebranded under the tagline “High performance. Delivered.” to reinforce their brand promise and make the purchase decision easier for B2B clients.
  2. Tap into Emotions. There is a myth that B2B purchases are rational and not impacted by our emotions. Wrong! Human beings make B2B purchases. Remember the saying, “You don’t get fired for buying IBM”? Career protection may not have been a stated evaluation criterion, but you can be sure it was important.
  3. Facilitate Delivery of Brand Promise. Cultural transformation at Barry-Wehmiller (B-W), a $2 billion capital equipment and engineering consulting company based in St. Louis started by listening to and responding to employee frustrations. Since then, B-W’s strong brand culture has spread to other companies it has acquired, maintaining and reassuring customers of their excellent customer experiences.

Focus, Focus, Focus

The key benefit of building a strong B2B brand is focus. Brands become behavior standards and decision guides to strengthen marketing messages, operations, and strategy. Unifying diverse parts of your company under a strong brand can save money, improve productivity, and increase customer satisfaction and loyalty.

Are you sure you don’t need a brand?

Basic Data Analysis for Non-Researchers: What You Need to Know and Pitfalls to Avoid

Basic Data Analysis for Non-Researchers

Basic Data Analysis for Non-Researchers

If it’s been a while since your last statistics course, you might feel a bit intimidated by some of the terminology used in marketing research. After all, great examples of data misinterpretation and misuse are all around us these days! This blog should help you understand some the most common terms as well as explain common pitfalls for each.

  1. Mean. The arithmetic mean, or as most of us say, “the average,” is the total of individual responses divided by the total number on the list. Means describe the overall trend of a data set or to give a quick snapshot of your results. Anyone can quickly and easily calculate a mean without sophisticated software or analytics – another advantage of the average.

Common Uses: The mean is often used to compare data over time. You might hear about the average price of milk or a gallon of gas, the average number of people per household, or the common academic achievement test. Using the average makes it easy to evaluate and describe the trend.

Pitfall:  However, the simple mean can be a dangerous tool. It is sometimes confused with the mode the most common measure in the set) or the median (the measure where exactly 50% of measurements are above, and 50% below). However, if your dataset has a lot of outliers or a very skewed distribution, the mean alone does not provide sufficient information for analysis.

  1. Standard Deviation. The standard deviation, often represented by the Greek letter sigma (∑), tells you about how the data is distributed around the mean. Low standard deviations indicate that the data are closely aligned with the mean, while high standard deviations indicate the data are spread more widely around the mean. The standard deviation gives you a quick view of the dispersion of your data.

Common Uses: Standard deviation is often utilized in the calculation of statistical tests (see below) but are also indicators of data dispersion. For example, a researcher uses the standard deviation to understand how well a sample represents the population it was drawn from.

Pitfall: The standard deviation can also be misleading if the data don’t have a normal distribution curve or many outliers. Again, if that is the case, the standard deviation will not give you the insight you need.

  1. Regression analysis is used to describe the relationships between dependent and explanatory (independent) variables. In addition to the direction of the relationship, regression can also tell us if the relationship is strong or weak.

Common Uses: Regression helps us understand how different variables are related to other variables. So, if you wanted to know what factors drive satisfaction, you would use regression to understand which factors had the strongest relationship with your customer satisfaction metric. You could then focus your efforts on those factors to improve the overall satisfaction of your clients.

Pitfall: Regression is commonly used, but can also be misleading. For example, an outlier may represent the input from a significant customer or product. Because regression analysis tends to smooth out these outliers, you might be tempted to ignore them.

  1. Calculating Sample Size. When your customer base, a population, or any large data set, you can save time and money by collecting data from a representative sample, not from every single individual. But what’s the right sample? Understanding how accurate you need your results (how statistically significant), you can then apply an equation to give you the correct sample size for your research project.

Common Uses: Any time you need to select a subset of a greater population, whether people or things, you should understand how the number you choose will impact your ability to analyze and project your results back to the population. So, of course, if you are drawing a sample for a survey, calculate sample size. But also if you are conducting quality control tests in a manufacturing setting, you might also want to understand how many you would need to test.

Pitfall: When studying a new, untested variable in a population, you might need to make assumptions about the proportion of that variable. If your assumptions are wrong, this error is then passed along to your sample size, potentially distorting your data analysis.

  1. Hypothesis Testing. In data analysis and statistics, we test hypotheses to see if the results are statistically significant, that is they could not be the result of random chance alone. These tests allow us to sort out the significant differences between subgroups and population segments.

Common Uses: When we conduct quantitative marketing research, we begin with project objectives. Those goals lead to assumptions and hypotheses, and we collect the data to test these assumptions. Once the research is conducted, we prove or disprove each of those hypotheses and assumptions, and tells us what our next steps should be in solving the issue or problem we face.

Pitfall: When conducting hypothesis tests, researchers need to be aware of and watch out for the impact of certain common errors within themselves and because of their perceptions and expectations. As an example, the placebo effect occurs when participants expect one result and then falsely perceive or get that expected result. Another example is the Hawthorne effect (also called observer effect), which happens when participants give skewed results because they know they are the subject of the research

The methods described here are very commonly applied in basic marketing research. However, as you well know, data analysis can also use very sophisticated and complex advanced techniques. If these terms sound unfamiliar to you, it’s probably best to check with an expert before making leaps of judgment based on your results. After all, better safe than sorry!

8 Great Reasons to Concept Test

8 Great Reasons to Concept Test

8 Great Reasons to Concept Test

Concept testing is that stage in product or marketing campaign development where concepts (usually detailed descriptions or storyboards) are evaluated to determine if they have enough potential for further investment and development. With the astounding rates of new product failure in the market, it is safe to assume that many businesses neglect this critical phase.

Concept testing is done both with surveys as well as qualitative research (such as focus groups or in-person interviews). Base your concept test methodology on both who you need to include in the research as well as whether your concept lends itself to being presented graphically or verbally, without rational explanation or discussion. In either case, the research investment conducted at the concept testing phase is minimal compared to launching a new product that does not meet sales goals or one that needs extensive re-tooling or re-marketing post-launch.

Here are some of the many purposes of concept tests:

  1. To develop the original idea further. Often, either with or without customer input, we have a brainstorm of a “killer” new product. Or do we? Running a quick concept test will tell you whether your product has the potential to justify investment in further development.
  2. To estimate the concept’s market potential. Okay, we think the concept is terrific, and some customers seem to like it, but will enough of them buy it at a price point that allows a profit? Sometimes, it is critical to know whether you have a blockbuster or a niche product to guide further investment. You never want to overinvest in a product that can’t carry the weight.
  3. To eliminate lower-potential concepts. As a corollary to the first two bullets, you may find that your great idea is not so great. Identifying and killing low-potential product ideas before they drain resources unnecessarily is another important purpose of concept tests.
  4. To determine the value of concept features and benefits. Knowing what your customers like (or dislike) about your new concept can guide future development. Additionally, it is important for marketers to understand what benefits to communicate to the target audience at launch – and beyond.
  5. To identify the highest potential customer segments. Who likes the concept the most, and why? Who is likely to be an early adopter – and even potentially a loyal purchaser? Understanding your customer base can help you optimize your product launch.
  6. To estimate of sales or trial rate. To scale up production of the new product (or delivery in the case of a new service), you need to have an estimate of how much you will sell or what percentage of current customers will try the new offering. You must avoid disappointing customers because you failed to forecast uptake for your new offering correctly.
  7. To identify optimal messaging and inform marketing plans for launch. Which marketing messages resonate with your early adopters? What sales channels should you use for the start? Understanding how to appeal to your most initial customers is critical for the successful launch of any new product
  8. To refine marketing plans post-launch. Once you have started, you need to roll-out the product into full distribution. Will the launch marketing work for this purpose, or are different customers going to need different channels and messaging?

Innovation, and developing new products and services, is the lifeblood of your business. Don’t leave that critical function to chance. You can vastly reduce the risk of product failure – and increase the probability of new product success – by conducting concept tests at key points in taking a new product or service to launch.

@ClearSeasRsrch

Clear Seas Research Reports

Answering These 6 Questions Will Make Your Messages Superheroes

Answering These 6 Questions Will Make Your Messages Superheroes

Answering These 6 Questions Will Make Your Messages Superheroes

Your key messages are the superheroes of your marketing campaigns. They cut through the clutter! They jump off the screen! They change minds and create sales!  Marketing messages form the focus and deliver the pay-off for our campaigns. Without a robust set of marketing messages, you risk weak and ineffective communications. We ask a lot of our marketing messages, and that’s why it is always a good idea to test them before you launch your campaign.  Here are six questions that you should answer to make sure your marketing messages have the maximum superpowers:
1.    Does the message fit your brand? All brands have a set of beliefs and perceptions in the minds of consumers, and within limits, you must stay within those perceptions. If your message does not fit the expectations of your audience, you create dissonance for them. And conflict is complicated for consumers to understand and accept.
2.    Is the message believable? Like the brand fit, your brand can make certain promises, if you stay within the limits of their perceptions. You can allude to the fact that your automobile is as fast as a jet engine, but is that believable? Probably not – unless you can offer compelling proof points for that claim.
3.    Is the message memorable? How many times have you heard someone say, “I saw this great ad, but I can’t remember who it was for!” If consumers don’t remember who is giving the message, your marketing fails. Making sure that your brand is highlighted and reinforced is an important part of any successful marketing.
4.    Does the consumer care about the message? Keywords must communicate something that is important to the customer. Do they care about what you are saying? Are you talking about compelling things? When you evaluate your marketing messages, keep this in mind: WIIFM? (“What’s in it for me?”) The consumer must get something out of your message; marketing that communicates unnecessary words are a waste of time and money.
5.    Is the message different from competitors? Unless you are a monopoly (in which case, why are you marketing?), your marketing messages must break through the clutter of competitive messages. Like being memorable, if your customers don’t hear or see your message above the competition, your marketing is not doing what it should.
6.    Will the message change behavior? It is tough (some say impossible) to predict whether consumers will change their purchase patterns based on the results of a marketing message test. But it is important to understand whether respondents believe your message could change their intention to buy, could increase their interest in your product, or move your product into the consideration set.

Answering these questions by testing your marketing messages will not guarantee success, but it can help avoid failure. Not having the best words in your marketing is more than just a waste of time and money, it can damage your brand over the long-term by eroding what your brand stands for with consumers. Your investment in message testing will give you high returns in both the short and long-terms: delivering sales and strengthening your brand.

Unlock Innovation with Qualitative Research

Unlocking Innovation with Qualitative Research

Unlocking Innovation with Qualitative Research

Most businesses understand that innovation and new products are critical activities for their success. But neither innovation nor great new products simply come like a flash of lightning. As Idris Mootee writes in the Ivey Business Journal: “Innovation is a process, and while the introduction of a genuinely innovative product or service may be highly publicized or even glamorous, the process itself is driven much less by creative brainstorming or strategic planning than by carefully managed and highly-sophisticated cross-disciplinary thinking and research.”

The type of research best applied to the front end of innovation is qualitative research. Unlike in the more structured quantitative survey, qualitative works when you don’t know what questions to ask. Use a qualitative research setting to explore your customers’ challenges, needs, and pain points.

While focus groups usually come to mind when businesses think about qualitative research, and indeed can be used to explore the customer needs and challenges that you leverage to innovative product and service launches, consider utilizing an alternative amongst the multiple qualitative techniques available.

  • In-Depth interviews work best when you want to get profound and rich information out of each participant. Because these are one-on-one interviews (done in person, by telephone, or by videoconference), and not done with a group of people, you get more information from each participant. Additionally, if your participants are widely dispersed geographically then in-depth interviews are an excellent choice, or if you don’t want them speaking openly in front of other participants (for example, in the case of competitors.) For example, a one-hour discussion with plant managers could give you a lot of information about their pet peeves and how they would change products.
  • Ethnographies are another qualitative research technique that is valuable in the front end of product development. In this method, the target customer is recruited to have a researcher observe them as they proceed through an individual task or for a particular period. What power tools do contractors use over others? How do plant employees use their safety equipment – really? And most importantly, in addition to observing behavior, the researcher will ask the participant why they are making the choices they make, how satisfied they are with their choices, and how they would want the options improved. When the research setting is in-person, consider using Ethnographies. In some cases, a researcher may choose to use mobile ethnographies using smartphones, in some research situations. Ever wondered how those plastic garbage bags got built-in ties? Ethnographers saw consumers searching for twist ties!
  • Diary research involves recruiting participants to keep a detailed record of their actions, thoughts, feeling and reactions in performing a certain task, or using an individual product. Diaries are often supplemented with specific tasks to perform, or images/videos/recordings to upload, as well as questions to answer. Diary projects result in very rich, detailed information that researchers then mine for insight into challenges, problems, and needs that could potentially result in product innovation. Diaries have answered the question “How do engineers spend their days?” And the question, “How can we make it easier to schedule meetings?” Again, diaries. Now many researchers are using smartphones for diary research. They allow researchers to interact with their participants by voice, email, and text, and participants can easily record images and videos. Of course, the added benefit to smartphones is that most participants have them accessible most hours in the day!

These are a few of the more traditional qualitative research methods used to gain insight to feed the development of sought-after product concepts and ideas for further development and testing. However, the key to any qualitative research project done to support innovation and new product development is always to remember: “You don’t know what you don’t know.” You are doing this project to learn, to gain new perspectives, and hopefully to find that kernel of insight that leads to breakthrough innovation. You must challenge sacred cows and “the way we’ve always done it” and approach the entire project with fresh eyes and mind.

4 Questions You Must Answer About Your Brand

Jeff Bezos Chief Executive Officer of Amazon

“Your brand is what other people say about you when you are not in the room.”
Jeff Bezos, Chief Executive Officer of Amazon

Do you know what your customers are saying about you behind your back? Understanding your brand from the client’s perspective is essential to effective brand management.

Many businesses believe that, because they create and deliver brand communications, that must be what your customers feel. In reality, what you’re saying about your brand is only part of it. You must think of your brand as a three-legged stool, made up of:

  • What you say and do in the marketplace,
  • What your competitors say and do in the marketplace, and
  • Your customer’s evolving business environment.

It can be very easy to believe that you know what your customers think, but if you haven’t heard from an objective, third party source, you could be very surprised. Here are four questions you must answer about your brand:

  1. What are they saying behind your back? We would all like to believe that our customers are honest with us and that they will let us know when we’re running aground. There are two issues with that thinking. First, your customers are human beings, and, in general, people tend to avoid giving bad news. Second, it’s your brand, and it is not your client’s responsibility to manage it for you. You must take responsibility for managing your brand.
  2. How do you compare to your competition? Trust us; the answer is not always about price! How are you better and different from your competition and where do your competitors have the advantage? You don’t have to excel at everything – the point is to be distinctly better than your competitors at something that is important in your customers’ purchase decisions.
  3. What are your customers facing that might impact your brand? We all know that things change – frequently and quickly! How can your brand evolve and continue to meet the changing needs of people that purchase your product or service? Being able to innovate and adapt is a hallmark of great brands. After all, 88% of the companies on the Fortune 500 in 1955 are no longer there, and a good portion them because they missed critical opportunities to change with the times.
  4. Is your relationship sustainable? Especially for B2B companies, it is essential to expanding your brand relationships throughout your clients’ organizations. It is great to have long-term relationships with a customer, but where will you be when they move on or retire? What do other people in the organization think about your brand? How willing will they be to continue that brand relationship?

Can you answer those questions? More importantly, how do you think your customers might respond to these issues about your brand? If you don’t know, you need to conduct brand image research to get an honest and unbiased evaluation. Your brand can be a critical, strategic asset, but manage it, nurture it, and evolve it to stay relevant and compelling. And get the answers to these questions to make sure.

Beyond Touchpoints: Integrating CX Throughout the Organization

Beyond Touchpoints: Integrating CX Throughout the Organization

Beyond Touchpoints: Integrating CX Throughout the Organization

Managing the key touchpoints for your customers is undeniably linked to improved business performance. In fact, Gartner reports that companies will redirect 50% of product investment projects to customer experience improvements in 2017. And The Service Council reports that 60% of companies believe that customer experience will be the top source of competitive differentiation in the next three years.

Businesses have long understood the need to provide a high-quality, differentiating customer experience or customer journey. We map our touchpoints, decide which are important and measure and improve customer satisfaction with those touchpoints. And many businesses measure customer satisfaction overall and with specific transactions (e.g., sales, service calls, field service visits, etc.)

However, it is important to remember that customer experience goes beyond in-person or phone encounters with sales and service. To completely understand the customer experience with your company, you need to evaluate all points where the customer has contact with your company. To name just a few: what about invoicing and collections? Are invoices easy-to-understand? Is it easy for customers to get their billing questions answered? What about product instructions? How easy is your company to work with when the customer needs something customized? How easy is it to navigate your website? How are your POP displays in retail?

Great customer experiences require a more holistic or cross-functional perspective. Simply “bolting on” customer satisfaction measurements to your existing processes may not be enough to ensure a great customer experience. As Pete Kinser writes in UX Magazine, “Bringing customer-centered thinking into an organization is about more than just proclaiming that you’re focused on customer experience. It’s about changing your process, sure, but it goes even deeper: It’s about changing attitudes. It’s about making your customers a central organizational value that guides behaviors and decision making.”

Additionally, a process-oriented, holistic approach to improving the customer satisfaction will bear fruit in more sustainable customer relationships. After all, organizations that have an uneven customer orientation between different business functions deliver an uneven customer experience. Employees may be confused about roles and responsibilities or may become disengaged. And if the resulting customer experience is different between functions, the organization loses credibility with customers, and customer loyalty suffers.

As Alex Rawson, Ewan Duncan, and Conor Jones wrote in the Harvard Business Review, “Optimizing a single customer journey is tactical; shifting organizational processes, culture, and mind-sets to a journey orientation is strategic and transformational. Journey-based transformations are not easy, and they may take years to perfect. But the reward is higher customer and employee satisfaction, increased revenue, and lower costs. Delivering successful journeys brings about an operational and cultural shift that engages the organization across functions and from top to bottom, generating excitement, innovation, and a focus on continuous improvement. It creates a culture that’s hard to build otherwise, and a true competitive advantage goes to companies that get it right.”

Call Clear Seas Research to talk about enhancing your Customer Experience.

One Size Does Not Fit All! Choosing the Best Satisfaction Metric for Your Business

Choosing the Best Satisfaction Metric for Your Business

Choosing the Best Satisfaction Metric for Your Business

When Net Promoter Score (NPS) burst onto the business management scene in 2003, Harvard Business Review author Fred Reichheld touted it as “The One Number You Need to Grow.” Businesses large and small, consumer and B2B, jumped on the NPS bandwagon, perhaps seduced by the apparent simplicity of the approach. After all, what CEO wouldn’t want to have to only look at one metric to get and keep their business running on the right track?

While NPS is an important metric for some businesses, it is not the ONLY metric needed to manage growth in any business. Indeed, for many businesses, it may not be important at all.

What makes a good business metric? Ben Yoskovitz, the co-author of Lean Analytics, gives these characteristics of a good business metric:

  • Tracking. A good metric can be compared (over time, among subgroups, against competition) to show the direction of movement. The statement “Revenue is up 10% over last quarter” is a better metric than “Revenue is $20 million.” Corollary: good metrics are often ratios or rates, which are intrinsically comparisons.
  • Succinct. A good metric is instantly and easily understandable and directly relates to your business goals. If you must explain it and why it is important, it is not a good metric.
  • Behavior-changing. The metric should immediately communicate how behavior must change to drive results.

The ability to drive behavior change is by far the most important characteristic of a good metric because it tells you what to focus on, and what actions to take to drive results. And most businesses are complex organisms: you will need more than one metric to drive change across different functions.

While NPS may be one of the metrics you choose to use in your scorecard, here are several others you should consider:

  • Customer Satisfaction Score. Frequently referred to as C-SAT or O-SAT (for Overall Satisfaction), the satisfaction score has been around a long time in the annals of business metrics. Common sense tells us that if customers are not satisfied, they will defect, and our business will not grow. There are many ways to measure customer satisfaction, including immediately after a transaction vs. a more long-term, relationship approach. Think about your market structure, competition, and corporate strategy to determine which type of C-SAT metric is right for your business. While it has long been recognized that satisfaction alone is not sufficient to understand your customers, it remains important as one of the key metrics for many businesses.
  • Loyalty. Another important aspect of customer satisfaction is loyalty, which may translate into intent to renew, or repurchase, depending on your business. Think about what’s most important: getting a customer to purchase again, to increase the size or frequency of their order, or to purchase other products and services from your business. That will help you structure the appropriate loyalty metric.
  • Exceeding Expectations. The foundation of customer satisfaction is meeting their expectations. But true customer advocacy, you must go beyond meeting their expectations – you must exceed (or “delight”) them. This metric may also be a good choice for your business, depending on your industry and market dynamic.
  • Comparison to Competitors. If you are in a very competitive market with little-perceived differentiation between players, you might consider a metric that evaluates how you rank against your competitive set. Are you better, much better, about the same? If so, you may have a competitive advantage you want to exploit. And clearly, if you are worse or much worse, you have some work to do!

There are two additional metrics that are coming into business use that you might want to consider:

  • Customer Effort Score. The Customer Effort Score is a relative newcomer to the business metric scene but is very relevant for certain industries. If your product is a big-ticket, long-term process (for example, manufacturing airliners), the customer will expend much effort in the purchasing process. On the other hand, if your company should be easy to work with, and customers believe it takes a lot of effort to purchase from you, you have your marching orders!
  • The Net Value Score. Like the customer effort score, some companies are beginning to use a Net Value Score to determine whether the cost and effort of being a customer are less than or greater than the benefit delivered by your company.

These metrics are all big-picture, “overall” indicators and, while they might signal corrective action should be taken, they will not tell you what action is required. So, in addition to whatever overall metrics you choose, you should also evaluate how you are doing on specific important business factors, such as customer service, delivery, product quality, etc.

If you are an NPS fan, we are not suggesting that you stop using it. Any metric is driving customer experience enhancing behavior is a good metric for you. However, most customer satisfaction programs no longer rely on a single metric. Developing a program of the right metrics for your customers and your business may take a little trial and error, but will deliver improved customer satisfaction for the long-term.  To learn more about our approaches to customer experience and customer satisfaction, register with us today.

Strategic Market Research Planning for 2017: Get Ahead of the Game

Strategic Market Research Planning for 2017

Strategic Market Research Planning for 2017

Hopefully, you took our advice and did some long-range planning a few months back Finish Strong: 5 Things You MUST DO Before the End of 2016. Whether you did or did not, now is the time to plan for the research that will support your longer-term strategic planning efforts next year.

One of the most important – and most often overlooked – uses of marketing research is to provide information for long-term planning efforts. Especially in B2B companies that may not have a tradition of researching every question that pops up, there may be questions that have persisted for several years – or even forever – that we tend to live with until it comes time for our strategic planning sessions. “What do our customers like about our competitors’ brands and how can we compete with them?” “What is the role of our customers’ purchasing department and how can we influence it?” “How many of our customers are planning to make major capital investments in the next three years?”

Then, we want those questions answered fast and, usually, there is no longer time or budget to get the research done properly to produce the answers we need. Research takes time to do correctly, especially in B2B companies. B2B samples are smaller, and respondents are very busy and time-constrained. It often takes weeks to collect responses to a B2B survey, unlike consumer research that can now be completed in a matter of days.

As a result, we make our “best guesstimate” about those unanswered questions and muddle through. And then we forget about them until Strategic Planning time rolls around again the following year.

This year, plan ahead to get those questions answered for your executives:

  • Determine the Questions. If you are not part of the planning process, interview executives who are and ask them what information was needed and not available? Do it now while memories are still fresh! This will also give you an opportunity to demonstrate how marketing research can be an important resource for all types of business questions.
  • Plan for the Budget. Figure out how you will get the answers to those questions, and what that will cost. Keep in mind there may be secondary research that can help you get this information cost effectively (link to Clear Market Trends).
  • Get Approvals. Communicate with those involved in Strategic Planning and let them know you’ll get them the information they need. Take this opportunity to confirm the information that is needed, and ask them for their support though the budget process.
  • Plan the Work. Keep in touch with the Strategic Planners so that you ensure you have the research results well in advance of the planning process start dates. Often, getting these questions answered before the planning process can influence how planning proceeds, so make sure you deliver in a timely fashion. And that is usually well before the fourth quarter!

This is the perfect application of marketing research in a B2B setting. By leading your company in providing information needed to answer key strategic questions, you showcase your organization’s ability to assist in other business decisions, both large and small.

Learn more today at reports.clearseasresearch.com