Bookcheck | Transform your Profitability

What are net promoter scores and are customer surveys worth the effort?

Posted on July 24, 2020

We’ve just run a Customer Survey and the scores on the doors were +83. But what does that actually mean and are the results worth the effort? We answer both these questions in this blog.

You know what it’s like when you’re faced with a survey. All too often it's going to take far longer than you would guess or have been told. It’s also very likely that some of the questions will either be unanswerable or won’t give you a relevant choice. We all know how frustrating these things can be which is a shame because there’s a valuable place for surveys for both the surveyor and the responder. The surveyor is trying to determine some sort of score or opinion as to the product or service, to enable them to illustrate to potential clients how good they really are. The question is, does the survey achieve the objective? There’s a possible benefit to the responder in that suggestions can be asked for changes or improvements or even register a complaint, which hopefully will benefit them and others in the long run.

Of course, surveys vary enormously in length and arguably most are too long. A long time ago we discovered the Harvard University work in the 1930s which produced the theory of asking just one question in place of many more in a normal survey. That one question is “Out of 10 how likely would you be to recommend X”. And that’s it. It may not look enough or sound enough but there’s a massive amount of research and evidence to suggest that overall this is the one to ask.

It’s very simple to calculate your NPS on your results.

All of the 10s and 9s are Promoters. All of the 6s and below are Detractors. The 7s and 8s are neutrals.

You take the % of Promoters less the % of Detractors and that simple result is your NPS.

If you’re not familiar with this concept you might imagine that a good score would be maybe 70% but you would be very wrong. A good score is from zero to 30%. So how is this?

Let’s look at a few examples with 50 responders shown against a score up to 10:

Example 1

10 0 (0%)
9 0 (0%)
8 10 (20%)
7 10 (20%)
6 30 (60%)

The NPS is 0% (9 & 10) minus 60% (6 and below) = -60. The NPS range is from -100 to + 100

Example 2

10 0
9 5 (10%)
8 15 (30%)
7 20 (40%)
6 10 (20%)

The NPS is 10% (9 & 10) minus 20% (6 and below) = -10

Example 3

10 4 (8%)
9 12 (24%)
8 20 (40%)
7 10 (20%)
6 3 (6%)
5 1 (2%)

The NPS is 32% (9 & 10) minus 8% (6 and below) = +24 On the face of it those numbers look pretty good but the result is only +24. So you can see the challenge of achieving a score over +30

So what is a good score?

Generally speaking, a NPS that is below 0 would be an indication that your business has issues to address. This news may not be welcome, but it could be just the early warning you need that will enable you to prevent customers leaving at a later stage.

A score between 0 and 30 is a good range to be in, however, there is still room for progress. If your NPS is higher than 30 that would indicate that your company is doing great and has far more happy customers than unhappy ones.

An NPS over 70 means your customers love you and you are generating a lot of positive word-of-mouth from their referrals. The higher your NPS is, the more likely it is that your customer referrals will convert into new leads and more revenue.

Even though an NPS of -10 might be higher than others in your niche, finding yourself below zero might be discouraging and it should definitely ring a bell as to the provided customer experience.

So how would you compare with other sectors

Satmetrix NICE 2018 average NPS by industry report

BookCheck’s NPS
Our own score, based upon a survey of all our clients in June 2020:
Payroll +74 [60%x10s and 18%x9s minus 4%x6s] (with 18%x7/8)
Book-keeping with Management Accounts +92 [84%x10s and 8%x9s] (with 8%x8)

Is it time your business benefitted from this kind of service?

Cash is always King, especially now!

Posted on July 3, 2020

Cash is always King, especially now!

As book-keepers we never cease to be amazed at how lax businesses can be in collecting what's due to them. In our widespread experience this is very common, if not normal. As we emerge from lockdown there has never been a more important time to be right on top of sales receipts.

If your customers are slow at paying or defaulting then follow these 8 simple steps.

1. Clear procedures

Ensure you have clear written procedures in your credit management system that your staff can follow. Starting from the moment a customer places an order through to the payment of the invoice. This will improve efficiency and allow your accounts team to be accurate, professional and prompt. Check that your terms and conditions are clearly shown to the customer. Review your Aged Debtor list at least weekly - ensure it is up to date and accurate.

2. Know your Customers

Before engaging with new customers perform credit checks (buy into a service). This will suggest a credit limit so use it. If you want to trade beyond that ask for a payment upfront for the excess. Follow this also for existing customers.

Because of Covid-19 and as often happens anyway some businesses are very stretched so it’s important to monitor for any adverse changes. If a customer becomes a late payer, be prepared to take a firm stance and put them on a 'stop list'. Keep in contact with customers to become aware of any potential problems. Profile your customers to distinguish the ones to watch carefully.

3 Know what is Owed to you

Check that your debtor information is really accurate and prompt. This will include a bank reconciliation, accurate allocations of receipts to invoices and complete posting of all sales invoices.

4 Accuracy and Speed of Invoicing

The sooner your invoice is on the customer’s system the sooner it is likely to be paid. Ensuring all information is accurate will prevent delays and excuses.

5 Make payment easy

Offer your customers prompt and easy payment methods such as BACS or credit card. Direct Debit is brilliant, now easily available linked to Xero - this is a major breakthrough and means you collect the funds on time, under your control. Ensure the accepted payment methods and your bank details are clearly displayed on your invoice.

6 Chase promptly

At least weekly reviews will enable you to identify promptly when credit terms have been exceeded. Acting quickly will improve the chances of payment in full. A polite and professional approach, whilst remaining firm, will demonstrate that you are in control. Send statements where required as some customers won't pay otherwise. Then follow the steps of your credit control procedure. Follow up on tell tale signs if customers dispute your statements – maybe such are wrong which really upsets prompt payment.

Maintaining the relationship with your customer whilst trying to get your money in may be tricky. Tapping into the resources of an outsourced debt collection agency enables you to distance yourself from the process. Credit control should be an everyday business task, however, with so many demands on time, collecting money can be a drain on internal resource. Outsourcing your credit management can free up this time, allowing it to be better used elsewhere.

Recognise that you will be in competition with other suppliers also chasing for their payment – it’s usually the most persistent ones that are paid first.

7 Use Software

Xero links to a number of add-ons which automate the debt chasing process, saving a lot of time or more likely doing the job you’re not currently doing very well.

8 Say thank you

Customers that pay on time are worth their weight in gold. Thank those that do as this will help to build relationships and sales.