How’s your company culture nowadays? If you ask Eric Gregg, CEO and founder of Clearlyrated, you should start by checking your Employee Net Promoter Score (ENPS). Adapted from a survey designed to measure customer loyalty, this survey method measures the willingness of your employees to recommend their workplace to others. Listen in as we discuss how it all works, how companies should be using it and ways you can use the results to improve company culture for the better.
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Brandon Laws: Hello and welcome to the Human Resources for Small Business podcast. I’m your host Brandon Laws and I am very excited to be back with you. Really appreciate all the feedback recently on the podcast, the reviews on Apple Podcast and listeners connecting with me on LinkedIn and telling me about how the podcast has really helped your development.
So keep on doing that. I love hearing from listeners, love to connect. As I’ve mentioned previously, I’m in three or four different places. LinkedIn, definitely connect with me there. I’m on there frequently. Instagram, love connecting with people there as well. A lot more personal stuff on there, but definitely mixed some business with personal stuff and then Twitter as well. So active in those places. You’re welcome to connect with me and connect with Xenium too.
We push a lot of our new content out that way, whether it’s events, podcasts, articles, anything of that nature. So definitely go connect with us. Follow us there.
So today’s episode, is a unique topic.
Eric Gregg, he is the CEO and founder of a company called Clearlyrated. They’re in Portland, Oregon. They’re actually—full transparency—they’re a client of Xenium’s. We
help them with their payroll processing and HR.But what they do is they actually do surveys – customer-driven surveys. If you’ve heard of a term called NPS®, a Net Promoter Score®. It turns out they actually do employee surveys as well.
So, we spent a lot of the time really talking about that customer-driven survey and translating it over to the employee-driven survey, the ENPS score. Really, why you would want to – for one survey your employees. What a high score means from a culture standpoint and really how to use it for shaping the future and really driving that culture and driving your business ultimately.
You’re really going to love this episode. It was a really fun discussion with Eric. The guy is super smart and I hope you connect with him. I will provide links to Eric’s LinkedIn page and the ways to reach him. He’s a wealth of knowledge and as he mentions later on in the episode, he is glad to connect with anybody to talk about this. So enjoy the episode and we will talk with you next week.
Brandon: Hey, Eric. It’s so great to have you in the podcast. Welcome.
Eric Gregg: Thank you. I appreciate it, Brandon. Looking forward to it.
Brandon: Your company, Clearlyrated, you’re doing some amazing things. From a satisfaction survey standpoint, you do a lot of work for the NPS®, Net Promoter Score®. So that’s for customers. And I know you’re doing some work for employees as well. I wanted you to first define what the NPS®, the Net Promoter Score® concept is, where it came from and maybe some of the psychology behind the NPS® and how companies may be using it.
Eric: NPS® is Net Promoter Score®. It was developed in about 2003. That’s when it was launched. There’s a Harvard Business Review article written by a gentleman by the name of Fred Reichheld called “The One Number You Need to Grow.” Essentially what he found was that there was one question that you need to put in your customer satisfaction survey – and this was really focused on customer satisfaction at the time.
So there’s one question you put in your satisfaction survey that essentially tells you most of what you need to know about whether or not that individual is going to refer you, is going to reorder from you, is going to increase how much they spend with you and that question is, “How likely are you to recommend XYZ company to a friend or colleague?”
What they did is, instead of relying on the simple average, which only tells part of the story, they did the analysis to understand that if somebody gives you a nine or a ten on that, they act very differently than if they give you a different score on that.
They found basically three categories of responses. Nines and tens, the promoters, the people who love you. Sevens and eights, what they call passive. These are the people – the way you can think about it is that they’re satisfied, but not necessarily loyal to you. Then six or lower is what they call detractors. And the brilliance of this is that they took what was normally kind of an academic exercise on these customer satisfaction surveys with 40 or 50 questions and they pared it down to this one number, this one metric that was very easy to understand, very easy to interpret, very easy to take action on and they called it the “net promoter score”.
Since that time, it has really become the predominant methodology that’s utilized in both customer satisfaction and it’s now starting to – over the last say five or six years, it has started to really become a focus of internal employee satisfaction as well. As people try to understand metrics, you know, similar across their stakeholder groups, both internally and externally.
Brandon: So Xenium used Clearlyrated for the net promoter survey about – I want to say five or six years ago. So, I’m aware of what the number means and how it’s calculated. But for listeners who – maybe this is the first time they’re ever hearing about the Net Promoter Score®. What really goes into that whole number?
So, if your Net Promoter Score® is let’s say a 50. Let’s take an easy number. What is that made up of?
Eric: So actually, the best way to do this is to keep the math easy, so I don’t make a mistake, right? So let’s say you have 100 responses to your survey and 60 of those responses give you a nine or a ten. But 10 of those 100 responses give you a six or lower. So that would mean that you’re looking at 60 percent of the responses were promoters. Ten percent of the responses were detractors.
So a net promoter score of 50 percent then would be calculated because 60 percent minus 10 percent gets you to that 50 percent, right? So one of the big challenges truthfully with Net Promoter Score® is that a 50 is actually a really good score.
Brandon: Yeah.
Eric: It’s actually an exceptional score. A 70 is considered world class. But 50 is exceptional. Thirty is pretty average. Now those doing the math at home, right? You know that score could go from negative 100 to positive 100. I will tell you, I don’t see many in the negative camp, right? If you’re creating detractors at a faster rate than you’re creating promoters and you don’t turn that around quickly, you’re not around long – as a result of that. It just travels too fast.
So you really want to aim to be really in that 50 plus camp. If you’re 50 or higher, then what that’s telling me is that your service is actually helping to drive your growth. It’s not limiting your growth.
Brandon: So the three or four times that we’ve done in the survey with you guys are – so a score that’s hovering around the 70 NPS®. That’s pretty good?
Eric: Yeah, that’s truly world class and honestly, it’s not a surprise to me that you guys are in that mode. Because what we find is that there’s a difference between doing things well and providing good service and there’s a difference between providing the kind of service that people would put their reputation on the line to recommend a firm for.
That’s a big thing that people don’t often understand is that they say, look, we should be getting more referrals. We should be getting more word of mouth. We do a great job. We always call people back. We do what we say we’re going to do.
The reality is, that’s not what drives loyalty. Doing what you’re supposed to do doesn’t drive loyalty. That drives satisfaction. What drives loyalty is doing what you’re supposed to do and then find the opportunities to go above and beyond that and really exceed the expectations with the people that you’re working with. That’s really where you get into those nines and tens and you start to see that net promoter score drive upward overall.
Brandon: I imagine this would be different for –a customer-driven survey versus an internal employee survey. But what kind of response rate do you need to really kind of qualify or substantiate the data that you’re getting from these surveys? Like if you have a big – like a lot of volume in terms of customers but you only have 50 employees. How do you – what kind of response rate are you looking for in those cases where you say, “Oh, I got a 50 NPS®. That’s good because we got a really high response rate”? What do you kind of look for generally?
Eric: So I’m going to answer that a couple of different ways. It’s a really good question. Internally, if you’re not getting a response rate of around 70 percent or higher, then what that tells me is that internally, people don’t believe that you’re going to be taking action on what they give you for feedback.
That’s usually what happens or they don’t trust that they can give candid feedback as a part of that. So if you’re not above – certainly above 60 but I would argue even close to 70 or higher. That concerns me a little bit, separate of what your score is on the internal side.
When we’re looking at the customer side. You know, the average response rate in B2B surveys is about 15 percent. The average of our clients is about 34 percent and we work really hard on that. But also our clients work really hard on that and to make sure that they have that engagement high as a part of that.
What we do know from the analysis that we’ve done is that in financial terms, the customers that don’t respond essentially act the same way as a passive, a seven or an eight.
Brandon: Yeah.
Eric: So that means that they’re not frustrated enough to give you a bad score. But they don’t love you enough to give you a really high score as well.
Brandon: Do you find that when people – because with the NPS® and the way you’re sending these out, it’s on an individual basis. So there’s a custom link and then that way you know exactly who’s responding. Do people like to be known or do you think there would be a higher response if there’s some anonymity around it? Do you think that detracts people from – not to use the word “detractor” – but do you think it detracts people from actually filling out the survey and providing valuable feedback?
Eric: So, we actually tested that with Xenium’s sister company Express, back in the day, a while ago, and what was interesting is – yeah, the reason why we tested it was there was a fundamental question and a frustration actually of, “Hey, I don’t know who said this and it’s really frustrating, because I could easily fix this, if I knew who had said this one frustration. I could easily fix this.”
Well, let’s go and see. Yeah, right? Let’s go and see what that looks like and if that changes. So we did a random sample of 10 different locations where we took half of the audience and sent them an anonymous survey and the other half we sent a survey that they weren’t granted anonymity. What was interesting is that the actual – the response rate was slightly higher when they weren’t granted anonymity and the scores were identical.
Brandon: Wow.
Eric: And what I think happened, Brandon, with that is that if I’m engaged with a relationship where it’s an ongoing relationship such as Xenium would have or as most B to B firms would have, I really – if I’m going to give you feedback, I want that to be impacting the way you service my account, right?
I don’t want to just be thrown into the averages. I want it to impact how you service me and so that’s I think why people – and on the customer side, they’re in control, right? They’re the one writing the check that ultimately gets this side of the relationship continued. So, they’re empowered to give you feedback and to give you honest feedback.
It’s a little different internally. Internally, you do need to grant that anonymity because the power dynamic is different, right? If I’m submitting information and feedback on my manager, my manager has a disproportionate amount of control over my career, my life. So, if I feel like that’s going to be used against me in any way, I’m really not comfortable giving that feedback. So, you need to be anonymous on the internal.
Brandon: So, when you’re working with companies for this internal survey, you are completely doing the opposite. You’re doing anonymous surveys exclusively or do you ever –?
Eric: Exclusively.
Brandon: OK. That’s interesting to know.
Eric: Yeah, exclusively.
Brandon: I had no idea.
Eric: Yeah. One thing to keep in mind on that, Brandon, though is that when you’re looking at that, you still want to try to segment those responses, right? You still want to try to understand because the danger that you have with any feedback survey is making broad generalizations that don’t necessarily get at the core issue within a particular group.
So, if you look in – I will just use staffing firms as an example. You look in staffing firms and the issues that an account manager or a recruiter has are completely different than somebody working in the corporate staff.
So if you don’t at least segment down to that level, you run a real risk of overgeneralizing for most companies.
Brandon: Yeah. Well, context is everything, right? So I would worry about – somebody has a detractor response as an internal employee and then there – maybe there’s specific feedback or something. But that’s not enough to go off of necessarily and maybe it’s just a single outlier; whereas somebody receiving the feedback would be like, “Oh my gosh. We got to change everything that we’re doing from a culture standpoint. We need to get ahead of this,” whereas maybe it’s just one disgruntled person that had a weird one-off experience. How do you handle that when it’s anonymous?
Eric: Yeah. You just have to look at the overall amount of that data, right? For example, if you’re doing an internal employee satisfaction survey, let’s say you have 100 employees and you get 75 responses on that and 30 responses talk about a frustration with the communication at the organization. Well, that tells you that there’s an issue with the communication.
If three people tell you that, then you got to look at it a little bit differently, right? There has to be some judgment involved in that and I think that– you know, one of the key areas to keep in mind on that is that you don’t want to overreact to every single piece of feedback that you get and that goes for the client satisfaction surveys as well.
I will just give you a perfect example. Let’s talk money. So there’s not a single person in America that believes that they are fairly compensated for the value that they add to their company. There’s also not a single company that hires a vendor that wouldn’t be even a little more happy if they got the exact same level of service and the exact same product for less money.
So you want to be a little bit cautious and that’s where you need to really have the context and ideally some benchmarking to be able to see that OK, we had 10 clients that said that we should lower our rates. But those 10 clients, 8 of them gave us a nine or a ten and that was their only suggestion was to lower the rates. Well, that doesn’t mean that my rates are too high.
As a matter of fact, if we don’t see it at all, I would argue that you’re leaving money on the table. On the employee side of it as well, you want to look at the fairness of compensation, right? You don’t want to just ask NPS®. You still want to have a battery of questions. Not many. Ideally 10 or less. But you still want to have a battery of questions to get at other things that we know drive that employee engagement.
Brandon: Make your pitch from a why perspective. Why would an employer want to do an internal survey? At what point – size of company – either in terms of revenue or employees or whatever the benchmark is that you recommend people start doing an internal survey like this? Just make your pitch. Why do people need to do this?
Eric: Start doing it when you get to your 10th employee, in my opinion. Ahead of that, you probably are closely-knit. Start doing that when you get to your 10th employee. Don’t pay much. Use the best places to work survey or some other inexpensive options to get you a little bit of benchmarking, a little bit of context. But don’t pay much for it until you get up to probably around 50.
Then once you start to get at around 50 employees, it’s probably worthwhile to start to look at engaging a professional that can give you some context, that can give you the questions that you should be asking and that can give you that back in a digestible manner.
Here’s the reality, Brandon, as you look at this is that if you’re not getting that feedback, if you’re nervous about getting that feedback, then, ultimately, you’re sending a message to your internal team that you’re deemphasizing the importance of their experience with you. That can be a pervasive shock to the culture and it can open up wounds in all sorts of other areas, whether it be directly in turnover, whether it be in engagement of the team that you have on hand, whether it be in recruiting other people because they can see that there’s not the same passion for the company internally.
Now, we have that risk. We didn’t use to have the risk. But we also have the risk of it pervading your online reputation, which has a direct impact not only on your ability to recruit but also on people – how people perceive your brand out in the marketplace.
Brandon: From the customer-driven NPS® question, the “How likely are you to recommend our company to a friend or colleague?” versus the internal one for employees, how does that NPS® question change, if at all – that one question? I know you have other sets of questions you might recommend. But what about that one question? Does anything change about that?
Eric: Not much but we do tweak it. What we found early on when we were doing the internal employee NPS® or the ENPS, as it’s called shorthand-wise, was that we would have people that would take the question more literally than what we wanted. So, if we just ask them, “How likely are you to recommend Xenium to a friend or a colleague as a great place to work?” Well, already right out of the gate, “colleague” doesn’t make sense, right? Because colleague means that they’re already there.
So we changed it to friend and family, friend or family member. But then we ran into this other piece of it, which they said, look, I like working at Clearlyrated, let’s say. But I certainly don’t want my sister working here and –
Brandon: That’s a good distinction.
Eric: So yeah, so we start to look at – so we added one last piece to it, which was to say, “How likely are you to recommend Xenium to a friend or family member as a great place to work?” or a variation similar to that. We will tweak it a little bit if people prefer it one way or the other. But that’s the crux of what you’re trying to get.
If you were talking to somebody, would you say it’s a great place to work?
Brandon: How does that translate into the promoters, passives, detractors? Is the calculation the exact same one the customer side?
Eric: Yeah.
Brandon: OK.
Eric: Yeah. Calculation is the exact same, Brandon, because really, the reason why there even is sort of a growing market of ENPS is because you have leadership that’s running their organization based on their customer NPS® and they’re saying, look, we need to see what employees think of us and this is already a metric that the whole company understands, the whole company builds around. It provides one more layer of context and so they will want to keep as much similar there as possible.
The ENPS is going to be very different by industry. But again, you should be – if you’re not at a 50 percent or higher, then you’re probably – your internal culture is not doing work for you. If you’re below say a 30 percent, I would start to get pretty concerned.
Brandon: I like the point you made about the extra layer of context because if you sort of look at the NPS® score, the customer survey, and you’re sort of looking at it like, “Oh, we’ve got a low score,” or a high score or whatever, it’s – to me, it would be a by-product of whatever is happening with your people and it’s probably so downstream that you really can’t get ahead of it. But that extra layer, that ENPS score could provide context. Like oh, my employees are really engaged or they’re not engaged and that probably translates downstream, like a bad NPS® score or high NPS® score. Is that kind of your experience?
Eric: Yeah, it is. And it also is a leading indicator of financial performance. If you have a poor NPS® score, whether it’s on the internal employee or the customer side of it, that’s going to be a leading – it doesn’t happen overnight. On the customer side, there’s a lag of about six to nine months. I haven’t looked at enough data on the employee side to know for sure.
But I will tell you this from an employee side. A detractor on an employee side is 68 percent more likely to quit and they’re 47 percent more likely to get fired in the next six months.
Brandon: Well, that’s a striking metric.
Eric: It is, right? So – that’s also the argument. I think when I look at this methodology, Brandon, what stands out to me is not sort of the beauty of the metric or the simplicity of the calculation or anything like that. What I think they got right more than anything was this concept that instead of trying to know every detail with fine precision, once every two or three years, I want to get this on a regular basis. I want to flip the script a little bit and I don’t want to spend 80 percent of the time analyzing the results and 20 percent of the time taking action. I want to spend 80 percent of the time taking action.
Brandon: Yeah.
Eric: Right? And the only way you do that is by minimizing the distance between the analysis, so that you can be taking action more often and you can be getting the feedback more often.
Brandon: What are common traps that you’re seeing your customers fall into when they’re doing the survey, whether it’s the customer-driven one or the employee one?
Eric: Yeah. There’s a couple of things. I will talk employee first. Employee, the biggest trap in the world is not closing the loop. If you don’t have a really good-faith expectation that you’re going to get back at least in a summary form to your employees what you learned as part of that process, then don’t do it because you’re reinforcing a really bad habit, which is, oh, leadership doesn’t care about what I think, right?
Brandon: Yeah.
Eric: And if there’s any kind of that fear involved there to start with and then now you’re asking for feedback, they’re taking time to give me a bunch of thoughts and suggestions and scores and ratings and they never hear anything about it, how likely are they – how motivated are they to take that time and give that feedback next time?
So you need to close the loop. And that goes for the client surveys as well. On the client survey standpoint, a couple of mistakes that we see people make. The first of which is they get locked into – too locked into the score and we’ve talked a lot about the score. But don’t focus so much on that score that you lose sight of the really valuable context in sort of the comments and suggestions to the company. Every single survey that we do that has NPS® also has – what’s one thing that we could do to improve and what’s the primary reason behind the rating? So if they give you a high rating, why? If they give you a low rating, why?
Another mistake that we see people make is that they focus so much on the negative that they forget to learn from the positive. Yeah. Yeah. I mean I’m sure you guys have battled that a little bit, right? You get all these great numbers and you get the scores that you have. Like you said, you guys have a 70 percent NPS®, which is world class level. It means you’re doing way more right than you’re doing wrong. But I guarantee you, if I talk to you or any of the rest of the leadership team, they’re going to focus in on the three or four people that were upset.
Brandon: It’s so true.
Eric: You have to focus broadly and get credit for those that love you.
Brandon: I agree with that. It’s so funny because you could – a lot of people, when they get negative feedback, they go right to that, whereas let’s just celebrate the people that love us and who see the world the way we do. The negative ones, maybe it’s just not a fit or something. It could just be that.
Eric: Right, exactly, or we run into this space where we’re trying to fix something for a very small portion of our audience as opposed to continuing to amplify the things that the primary group loves about us as a part of that.
Brandon: So you mentioned opening up the feedback loop, keeping that going with employees. What else do people do with the results? Do you do these in recruiting? I’m just speaking about the internal employee survey here. What do people do with it?
Eric: Yeah. The internal one is kind of behind the customer one in terms of how people utilize that information. It’s still very much seen as behind closed doors. This is what we have. We’re not really sharing it that much and I think that that’s starting to change. You look at the impact that say Glassdoor.com is having on the employee experience. You guys see it more than most in your line of work, right? Dealing with your customers and how that impacts their ability to recruit and even to retain the people that they have, right?
It can work for you or it can work against you. But people aren’t telling their own story on that, right? They’re letting eight reviews on Glassdoor tell the story.
Brandon: Absolutely. That’s a really good way to look at that.
Eric: So I think you can do more about being transparent with that and say, “Hey, recruit, here’s – I could tell you how great it is to work here. But I’m actually going to share with you all the comments from our employee satisfaction survey and it’s all going to be anonymous. But you will get to see what people are frustrated with. You also get to see what people like.”
I think we’re moving towards ultimate service transparency and that’s happening with internal employees. I think it’s happening even more with the customer side of it, right? And that’s one of the things that we’re pushing to do and actually Xenium will benefit and starting in July, we’re going to take all of your scores and we’re going to help you tell that story on your behalf at a site called ClearlyRated.com. And our goal is to essentially do for client service what Glassdoor has done for employee satisfaction, which is to democratize that, so that you’re not having to say, “Look, we’re at Xenium. You should work with us. We’re great.”
Brandon: Yeah.
Eric: You can say, look, we’re with Xenium. We’re really proud of the work we do. Go read about it yourself at this independent third-party site.
Brandon: I love that. When you’re talking about the qualitative comments, you talked about sharing that with employees. This came up before because we’ve done some client-driven surveys and I didn’t know how to answer it. But some people asked, “Hey, do you share verbatim responses or do you summarize it in the themes or however?” I don’t know the answer and maybe you’re still testing that. But what do you see or what do you do for your clients and what do they do as far as sharing verbatim or summarized information?
Eric: Yeah. On client satisfaction surveys, unless you have a survey that is getting ongoing, 1000 responses a quarter, unless you’re getting quite a volume, I really recommend that you actually take the time to read through every response. As a leader of the company, you read through every response that comes in, good, bad and otherwise because there’s something to be said for the color that gets provided, right?
When you come in – let’s say that there’s a timesheet issue that comes up with a particular customer of yours and oh, that came up three different times. OK. Well, that’s interesting. But that tells part of the story. Well, that doesn’t seem like a lot, right? There’s a lot of survey responses. That only came up three times. But then if you actually read the verbatim responses and you see that – the amount of emotion charged with it or maybe all three of those people gave you a zero, the absolute lowest score that they could, that’s context that you can’t get by summarizing.
Brandon: Yeah.
Eric: So I’m a big fan of sharing the verbatim within the entire leadership team, share the themes out to the next layer from there.
Brandon: Yeah, that makes sense. Yeah. When we think about the internal employee survey, what is it about like a high NPS® score, ENPS score? What does the culture look like? What kind of attributes do they have? What are they doing that gives them that high score or earns them that high score? If you could just sort of throw some words or attributes out, I would be curious to know what you think.
Eric: Yeah. I will tell you exactly what it is. Paid fairly.
Brandon: OK.
Eric: Optimistic about the future, empowered, connected to the why behind the work and the last but certainly not least is given the flexibility to manage my work within my life.
Brandon: So is this a growing theme for you, doing these internal employee surveys? Because I really – I didn’t know you did them until probably a few months ago when somebody was like, “Hey, they’re doing some internal surveys,” and wow. OK. I could see this NPS® thing working for companies as well. That’s why I wanted you on the podcast. How long have you been doing it?
Eric: Yeah. So we’ve actually been doing it for, gosh, six or seven years.
Brandon: Oh, wow.
Eric: We focus on the client side and to be honest, we didn’t even house the employee ones on our website until recently.
Brandon: Yeah.
Eric: So we didn’t even really talk about it until recently and part of that was that the – you know, the market demand for the ENPS is sort of evolving on this, whereas it’s pretty well-established for the client side. So we’ve only recently been starting to really focus in on those types of efforts.
Brandon: Well, I love the work that you’re doing and obviously Xenium has used you year after year and I think we’re going to launch here in the next few weeks actually. From a customer standpoint – and you guys do great work and you guys really handhold us through the process. You have a great backend technology that provides really good data and reports. I love the work that you’re doing. Where can people learn more about you, your work? Anything that you want to share with people who are listening?
Eric: Yeah. I think the best place to start is Clearlyrated.com to take a look at what we’re writing there. We try to be really transparent with what we learn. We don’t hold it close to the vest in terms of getting a high response rate, protecting yourself against people perceiving that there’s not enough anonymity or confidentiality, helping to understand how to take action on the responses. We try to live the life that we try to get people to live, which is a transparent one. So that’s a really good place to start. Some great resources there. And then, honestly, have a conversation. If you want to pick our brain on something, we will talk to you and the reality is we might tell you, “Look, send us through your survey. You should be doing it on your own,” or “Hey, utilize this tool. You’re not ready for us,” or we might say, “Look, we might be a really good partner on this because we can add a lot of context. It’s an industry that we understand and we know some things already going into it.” But we’re happy to have those conversations.
Brandon: Awesome. Eric Gregg, CEO/founder of Clearlyrated. Thank you for joining us for the podcast. I’m better for it. I really enjoyed this discussion. I think it’s great.
Eric: Yeah, absolutely. Thanks a lot, Brandon and thank you for everything that Xenium does for us as well. You know, we will both be sending your client survey and receiving your client survey. So we look forward to continuing to give you guys feedback as well.
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ClearlyRated provides ratings for the best HR service providers across the US and Canada collected directly from their actual clients.