The Sound of Silence: Part 2 - Are Non-respondents Truly Detractors?

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.

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.

Comments

[bob]

Once I have enough stratified customer responses and have done the analysis, the hard part is to convince our company leadership to take action.
Can you offer any advice??

[chris]

Good article. Could you help me better understand the definitions of SMB, mid, and enterprise? Are there specific revenue categories associated with each of these?