Which firms have the highest relationship NPS of all? is a finding based on the mining of beaton's datasets gathered in our large scale surveys of the clients of professional services firms in Australia and New Zealand. Which firms score highest? What's this mean? And why do I refer to 'relationship' NPS in the title?
NPS®: Net Promoter Score
In the corporate world, NPS is a much used metric. NPS became famous more than 15 years ago as the one (at the time some suggested the only) number an organisation needed to assess customer satisfaction and loyalty. Frederick Reichheld of Bain & Company pioneered the NPS concept and wrote books published by Harvard on the subject (i).
NPS was developed by testing a variety of questions to see how well the answers correlated with customers' actual behaviour. As it turned out, one question worked best for most mature, competitive industries: “What is the likelihood that you would recommend Company X to a friend or colleague?”
This question has a scale from 0-10, and respondents are grouped as follows:
Promoters (score 9-10) are regarded as loyal enthusiasts who will keep buying and refer others, fueling growth,
Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings, and
Detractors (score 0-6) are unhappy customers who can damage the brand and impede growth through negative word-of-mouth.
Subtracting the percentage of Detractors from the percentage of Promoters gives the NPS score.
NPS is used by many corporates for a wide range of well-documented applications.
How NPS is measured in the beatonbenchmarks annual study of professional services
In the beatonbenchmarks annual study, the question we use to gauge respondents’ likelihood to recommend a firm on a 0-10 scale is: "Would you recommend Firm X to a friend?"
We have collected this data for many years and reported it showing the full range of a firm's ratings, not simply the single NPS number. The reasons we report this way will be explained and illustrated in later posts by William Wong and Grant Hollings, both members of the Beaton Research team (ii).
Like many other researchers, beaton believes a number of metrics to gauge clients' satisfaction with overall performance, perceptions of value, propensity to recommend, probability of re-buy, and affinity with the firm. We report each of these and we combine them into 'one number' reported as 'Overall Client Service' (OCS).
Our data is readily converted to NPS and some clients do ask us to report NPS as well as in our standard charted way.
Which firms have the highest relationship NPS of all?
Using our 2015 datasets we calculated the relationship NPS for different categories of professional services firms in Australia and New Zealand.
The table shows each category's average score, highest score, lowest score, and the firm with the highest relationship NPS score. In addition, we show the firm with the highest OCS (Overall Client Service score) in the same 2015 survey.
There was insufficient data to report on NZ accounting and law firms in 2015.
Conclusions and Call-to-Action
NPS norms for professional services have not previously published, let alone at the level of granularity and precision that the beatonbenchmarks surveys make possible.
The table shows a wide range of relationship NPS scores for each category.
Firms gathering their own NPS data should not rely on published norms from other industries for competitive benchmarking purposes.
For information on how to obtain information your firm's NPS contact me.
(i) beaton is delighted to announce the introduction of beatondebrief, a world-class service for professional services firms to gauge how clients rate their performance on projects or matters using transactional NPS as one of the key measures. Click here for details and call me to put you in touch with a senior beaton adviser to show you the power and simplicity of beatondebrief.
(ii) While early claims of strong correlation, even causation, between NPS and company growth and profits have been watered down, NPS remains a very popular and useful metric. The main reasons for this are simplicity of measurement, ease of use, adaptability for various applications and the growing body of experience in interpreting the data. In this post we have not entered into the continuing debate whether there are links between customer loyalty (measured by NPS) and company growth, see this article and this one as examples.
(iii) NPS can be measured at the level of the relationship between a firm and its clients or at the level of a project undertaken. The latter form of NPS is commonly called a transactional NPS. The differences between relationship and transactional NPS are soon to be explored on Research. Reveal. by Grant Hollings, beaton's Research Manager.
(iv) The reasons behind differences in high NPS and high OCS scores are important and i. In the s explored in The NPS is no panacea for understanding client loyalty, but… by Grant Hollings, beaton's Research Manager.
(v) The NPS and beaton's equivalent measure of propensity to recommend are not used in the judging of the Client Choice Awards.
More from beaton on NPS
The NPS is no panacea for understanding client loyalty, but… is by Grant Hollings, beaton's Research Manager
This post was written by George Beaton, a partner in beaton. George is also on LinkedIn and tweets at @grbeaton_law, @grbeaton_psf and @NewLawNewRules.