Blog

Driving Referrals with NPS

Referrals are fantastic leads for new customers, revenue and even hires. We’ve all experienced referrals working out nicely. But -alas-, it doesn’t scale… it seems impossible to drive word-of-mouth and referrals. But is it now?

Successful B2B Startups & Scaleups have one thing in common: they know how to generate leads. They have to, because there’s no “Coca Cola” or “Salesforce” brand yet. Let’s delve into the 3 strategies we already know, before I show you an alternative.

leadgen strategies

the 3 common ones

  • inbound strategy where content & thought leadership drive both search engine and social traffic. That traffic converts to leads on-site and then to revenue by self-service or with activation by a Business Development Rep (BDR) or Account Executive (AE)
  • (modern) outbound strategy where prospecting & outreach are done online. Only in lead qualification or demo phase there’s voice or video interaction with a BDR and/or AE.
  • boiler room outbound strategy where prospecting, outreach, lead qualification and selling are all done by phone by men in suits wearing headsets in a cheap office somewhere in a B-location.

Reading the above bullets you probably went something like…: “Yeah… Uhuh… WUT?!“. Because -you know- we’ve been in the 21st century for a while. But this boiler room strategy is exactly what is going on in a traditional industry like (tech) recruiting agencies. Many Scaleups & Startups still (have to) rely on those agencies to get their vacancies filled. This is unfortunate, because the majority of time and energy within these agencies is spent on cold calling companies and convincing of candidates. Not on the actual finding & matching of talent. But I digress!

An alternative strategy for intimate ecosystems

LevelUp provides in-house tech recruiting capacity for fast-growing tech companies in the Netherlands. Digital Marketers evolved into Growth Hackers by borrowing from adjacent specializations, dropping aspects (print/tv/radio ads) and radically changing mindset. We see that next generation of tech recruiters popping up now too. And again, borrowing from adjacent specializations, dropping aspects (cold calling), and radically changing mindset.

Two things about our business, that enables us to scale word-of-mouth:

  • It’s a tight, homogenous group of clients tend to know and talk to each other
  • Having some sort of Customer intimacy strategy.

So if you sit in your client’s office for a few days a week, I guess we’re quite intimate.

100% of our new business is from referral leads

Our reputation and the referrals that come from it are our single source of new business. We’ve tried outbound strategies, both growth hacking and calling. We spent a lot of time with almost no results. Now we rely solely on inbound leads from referrals and network. The referrals come from investors, from existing clients, from former clients, from government agencies, from freelance recruiters, it’s quite heart-warming actually. Oh boy, It’s beautiful… (ಥ﹏ಥ)

Customer Loyalty drives referrals

A referral strategy needs happy, loyal customers.

If referrals are the single source of new business, then that requires two people talking. Reputation is what others tell about your company when you are not in the room. So you better make that a positive gossip. To get positive gossip, you need a happy customer. So you deliver an excellent service or product (you do that right?). Of course, but that’s not enough. It needs to be better than expected.

So we could go into all kinds of dark influencing techniques to change expectations while overdelivering. But in our case, the recruiting agency industry has done it for us. The bar is set quite low. (Side note: I do believe it’s very hard to consistently deliver results in hiring when the product you are delivering is a sentient being with an own opinion.)

Zappos experimented with purposely delivering the wrong shoe size to clients, but stocking the right size in a depot close by. Once clients received the right size within 30 minutes… they were blown away and more happy than they would ever be with the right size immediately. This strategy is untenable and I would advise against it. The point is, that customer happiness is unpredictable and irrational.

The other point is, Zappos wasn’t optimizing for one happy customer on one single transaction. They were optimizing for customer loyalty.

Net Promotor Score measures Customer Loyalty

So we know that it’s not just about the quality of your product or service, and we know that we are all inherently irrational and unpredictable beings. But we know as well that customer loyalty is key to getting in referrals. Instead of throwing our hands up in the air, screaming “It’s no use!”, let’s see how we can measure customer loyalty.

Enter Net Promotor Score (definition Wikipedia):

Net Promoter or Net Promoter Score (NPS) is a management tool that can be used to gauge the loyalty of a firm’s customer relationships. It serves as an alternative to traditional customer satisfaction research and claims to be correlated with revenue growth. NPS has been widely adopted with more than two thirds of Fortune 1000 companies using the metric.

It has to do with the question: “would you recommend us?” that we’ve all received so often already. And it’s no coincidence that these massive companies use it structurally. Because science shows a positive Net Promotor Score is a leading indicator for long-term sustainable growth and shareholder value creation.

Calculating NPS

The Net Promoter Score is calculated based on responses to a single question: How likely is it that you would recommend our company/product/service to a friend or colleague? The scoring for this answer is most often based on a 0 to 10 scale.

The thing is, that the average grade doesn’t tell you a whole lot. Have a look at our customer grade over the past quarters… it fluctuates, but what does it tell?

 

customer grade (left) fluctuates somewhat… but what does it tell? [#surveys (right) for significance purposes]

Well, it doesn’t. However, it is intuitive. Especially if you are in a country with the metric system and you school is as well (thanks Napoleon!).

 

 

The Dutch suck but Adjusted-NPS is for pussies

NPS for us
why it’s great
why it scares us shitless