#TDSU Episode 168:

⏱️ Timestamps:

00:00:00 - Intro

00:02:03 - Unpacking net promoter score: The love-hate metric

00:05:45 - Turning net promoter score into actionable insights

00:07:20 - Crucial net promoter score principles for B2B success

00:09:10 - The power of trends over scores

00:10:20 - Comparing NPS to product market fit

00:11:18 - Boaz’s invitation for a deeper dive into NPS

00:11:48 - Wrapping up

📺 Lifetime Value: Your Destination for GTM content

Website: https://www.lifetimevaluemedia.com

🤝 Connect with the hosts:

Dillon's LinkedIn: https://www.linkedin.com/in/dillonryoung

JP's LinkedIn: https://www.linkedin.com/in/jeanpierrefrost/

Rob's LinkedIn: https://www.linkedin.com/in/rob-zambito/

👋 Connect with Boaz Maor:

Boaz's LinkedIn: http://il.linkedin.com/pub/boaz-s-maor/0/10b/848

[Boaz] (0:00 - 0:15)

The main reason NPS is not useful for people is because it's not implemented well. So the problem is not the core metric. It's the way people deploy it.

The famous saying, garbage in, garbage out, right? If you don't use it well, you shouldn't expect to get good results.

[Dillon] (0:24 - 0:37)

What's up lifers and welcome to the Daily Standup with Lifetime Value, where we're giving you fresh new customer success perspectives every single day. I got my man, JP with us. JP, can you say hi, please?

[JP] (0:37 - 0:38)

Hey, what's going on folks?

[VO] (0:39 - 0:49)

And we've got Rob with us. Rob, can you say hi, please? Make some noise lifers.

And we've got Boaz with us. Boaz, can you say hi, please?

[Boaz] (0:49 - 0:50)

Good morning. Thank you.

[Dillon] (0:52 - 0:56)

Good morning. We don't date the podcast. Maybe we're doing this at midnight.

Who knows?

[JP] (0:56 - 0:57)

That's not dating, technically.

[Boaz] (0:57 - 0:58)

We timing, we don't date.

[Dillon] (0:58 - 0:59)

Timing, timing.

[JP] (1:00 - 1:02)

All right, all right, all right.

[Dillon] (1:02 - 1:13)

Oh, Boaz corrected you. And I am your host. I stand corrected.

My name is Dillon Young. Boaz, thank you so much for being here. Can you please introduce yourself?

[Boaz] (1:14 - 1:38)

Sure. My name is Boaz. I run customer success teams.

I'm a, you can say a startup person that loves customer success. I've been doing this for many years, nine different startups, never been a founder, not interested in being a founder, but really, really love building and running customer success teams as part of this machine called a company that builds a product, sell it, and then try to give customers value from it.

[Dillon] (1:38 - 2:02)

Very cool. I like that distinction. I'm a startup person, but don't want to be a founder.

I think there's a lot of beauty in knowing exactly where you sit and like what you want to do and how you want to serve. So that's super cool. Well, Boaz, you know what we do here?

We ask one simple question of every single guest, and that is what is on your mind when it comes to customer success? So I'd love to hear what that is for you.

[Boaz] (2:03 - 9:09)

Sure. In the last few months, I've been thinking a lot about NPS, net promoter score. One of those metrics that everybody loves to hate.

It's one of the most used one. It's one of the most contentious one. It's been developed, you know, 25 years ago by Setmatrix and Bain Capital and Bain Consulting, and when I encounter something that a lot of people use and a lot of people don't like, it spurs my interest, like what in it works or doesn't work.

And so I spent some time, obviously I used it in the past, but really in the last few months, I spent more time thinking through it. And I found that what makes NPS really powerful is it's a single question, which means you get very high response rate. That's fantastic in a survey.

At the same time, it's very rigid structure, which makes it very easy to compare to others. That's why NPS is so powerful. There are two problems.

One, when you have only a single question in a survey, you get very limited data and a lot of people say, well, it's just not actionable. It's a vanity number. It's wonderful.

I have 35, 67, whatever number I can make use of it. So what's the point? The second problem is that research has shown that there is actually not a very strong correlation between NPS and other metrics such as retention and churn.

If you have a metric that doesn't correlate with the business, what's the point? So I went to dig deeper and I found that my conclusion is the main reason NPS is not useful for people is because it's not implemented well. So the problem is not the core metric.

It's the way people deploy it, the famous saying garbage in, garbage out, right? If you don't use it well, you shouldn't expect to get good results. So working with Sara Buccino and my team at TALEC for the last almost five years, we developed a methodology that we found to be fantastic.

And when I say fantastic, I look at is it useful? Well, we got between 22 and 25 percent response rate, which is just about 10x what normal surveys get. That's a measure of success.

We got a lot of great feedback when we did reviews monthly or quarterly with stakeholders. The room was filled. And one thing that I found about updates, if the room is empty when you do an update, your update is not very valuable to people.

But when a lot of people want to join and listen and contribute, you probably do something well. So I'm gauging based on how much response I get and what people say about it. And it feels like this is the right thing.

So we distilled it to a very unique, specific methodology, which, again, bounce at a lot of people in the industry that I have connections with. I truly believe is best in class. Not that it's the first time it's done this way, but it's distilling a lot of best practices and insights from other people into a methodology which I think everybody can use.

Literally everybody. There's nothing here that's like, oh, my God, I cannot do that. So here's the methodology or here's maybe I'll start with like a few guiding principles to understand what we're trying to achieve.

One trend is more valuable than score. NPS is a number, but the number in and of itself. Hey, JP, you get 34.

Doesn't mean anything. It's just a number. But if I know that that number is going up or down, if I know that when I take a certain action, it changes.

If I know that one segment is better than another, then I can start to distill insights that I can put into actions to do. So trend over score is one. Second, response rate is king.

When I hear people show results and the response rate is 2 percent, I'm like, who cares? Two of every 100 people gave you feedback. How is that representative of anything that you do?

It's not. So unless you get to like 20 percent. Or more, it feels very minimized.

Right. So how do we focus on getting response rate? Third, NPS was initially developed for B2C right company.

So end results and end users. In a B2B, you need to be a little bit more thoughtful on how you deploy it and really target the right persona. Right.

We operated, we provided a point of sale solution to small businesses. The person at the front desk that is using the application with customers has a very different perspective than the owner that is using a completely separate part of the application. If you're not thoughtful about who you target, you're probably not going to get the right data.

So focus on your persona. Fourth, timing is everything. If you just ask randomly, most questionnaires, if you think about it, I'm sure you all get questionnaires from people.

They normally arrive at a time that makes sense for the vendor to send it, which makes no sense to you. I wake up in the morning, there are three surveys, not related to anything, not contextual to anything. I normally say no.

And even if I say yes, who knows what my mind, my set of mind is relative to it. So you need to be very specific, contextual to the user if you want to get the right sentiment, the right feedback for them. Number five, comments are gold.

We want the number from the customer. Is it an eight or a six or a ten? But I also want some feedback on text because those texts can be really empowering to the numbers.

And then the last two points, very quickly, one is NPS in and of itself is just one data point. You need to have a voice of customer program with maybe some interviews with CSAT on your customer support, with a bunch of other metrics to really understand the customers. NPS in and of itself, as much as I love it, is one piece of the pie.

And the last thing which is critically important is if you collect data but don't act on it, what's the point? You keep hearing me talking about what's the point. Collecting data and not act on it doesn't give you anything.

By the way, if you're a customer, if you're a user, if you provide feedback to a survey and nothing comes back, you will not provide it next time. So you need to respond to your customers and take action. You also should use this information with other stakeholders.

Empower sales, empower product, empower support, empower marketing. Take the information and share it. And then third in that action, one is the customer, two other stakeholders, three executives.

Set the stage, provide them the right perspective. Executives love NPS generally, predominantly because they love comparing to others, other competitors, other companies in the space. Give them the information, but do it smartly with the right context.

So it's not just, again, a vanity number, but actually something that makes sense.

[Dillon] (9:10 - 9:34)

All right. With the time we have left, Rob, I want to come to you first because I think there were a lot of topics in there that you think about a lot around methodologies and standardization and how to properly measure and iterate. And we may only have time for one of you.

Rob, maybe what I'd like to hear is what your biggest takeaway or your one question is from everything that Boaz just shared.

[JP] (9:35 - 9:45)

I have a lot. Boaz, that was really cool. That was like a level of depth that I haven't heard.

So I'm going to try to boil this down as much as possible.

[Boaz] (9:46 - 9:48)

And I haven't even shared with you the actual methodology.

[JP] (9:49 - 10:20)

I know. I was waiting to hear it. But you haven't released part three of your study yet, right?

Maybe you will by the time this podcast comes out. I don't know. But I have a hypothesis.

I'll just share this. We can discuss it on a future episode, I'm sure, that there's a question that I've come across. It's the product market fit question, so to speak.

It's how disappointed would you be if you could no longer use this product? I have a hypothesis that that's more predictive of churn than the NPS question, but I don't know. And I'm excited to find out what.

[Boaz] (10:20 - 11:17)

I don't know. It's a good it's a good question. I think for the purpose that I'm trying to use NPS, I don't think there's a big difference because what you want is to get a trend and insights and then correlate to something.

Right. So, for example, in the minute we have the methodology that we have is a single question, the NPS question asked three times along the life cycle of a customer at the completion of onboarding, 90 days later and then annually. And the insight here is we then compare that it's the same question to the same person three different times.

Now I can compare and the comparison is what gives me the insight. So the actual question, I don't think is that, you know, critical. I like to use NPS because I like to compare it to others.

That's why I'm so focused on the rigidity of the question. But I think the reverse one can also be valuable and should be explored.

[Dillon] (11:18 - 11:40)

And we should explore it in a new episode. But for now, we've got to say goodbye, Boaz. We are out of time.

This is a fantastic. I love all of the data you brought. There were some really awesome points that you called out that I want to double click on, but we just don't have enough time.

So why don't you come back? We'll expound on this a little bit more, but for now, we do have to say goodbye.

[Boaz] (11:40 - 11:42)

Fantastic. Thank you so much for the opportunity.

[Rob] (11:48 - 12:19)

You've been listening to The Daily Standup by Lifetime Value. Please note that the views expressed in these conversations are attributed only to those individuals on this recording and do not necessarily reflect the views and opinions of their respective employers. For all inquiries, please reach out via email to Dillon at lifetime value media dot com.

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