Why the KORE Score Framework will Retire the Net Promoter Score

Are we ready to say goodbye to the NPS score? Stephen Fulkerson, VP of Research and Advisory at TSIA, shares his groundbreaking framework, the KORE score, designed to assess various aspects of customer success and provide insights into organizational performance, customer satisfaction, and retention.

The KORE Score - Keeping Organizational Outcomes, Retention, Renewals, References, and Reputation Excellent

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◾ Discover TSIA's groundbreaking research on monetizing customer success and industry performance trends.
◾ Learn effective strategies to boost survey response rates and achieve forecasted targets for customer success metrics.
◾ Dive deep into the KORE Score framework and its potential to revolutionize customer success metrics for businesses of all sizes.

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Stephen Fulkerson is the Vice President of Research and Advisory, Customer Success at TSIA.  Stephen is best known for his thought leadership in customer success by taking hard and complex issues in customer success and simplifying them with innovative processes and frameworks.  In today’s discussion, Stephen will be revealing his latest framework called KORE SCORE which he believes will go head to head with Net Promoter Scores (NPS).

🔗 You may connect with Stephen via LinkedIn: https://www.linkedin.com/in/stephenfulkerson/

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Transcript

NPS is such a controversial metric these days. We don't see a lot of correlation between NPS scores and renewals or churn. Sometimes we're very confused about what we're going to do next when we receive a lower-than-eight score on any given survey response. And what are we going to do about it? Well, today I may have the answer to what is the complex index that we in customer success need to start looking at and potentially replace the NPS score altogether.

Well, I have a special guest today for us. His name is Stephen Folkerson. He works at TSIA, which is a research organization. We'll talk a little bit about what is this organization and why you should know about it and who is it for? But I can tell you that Stephen is a very, very smart guy. He heads the customer success research practice at TSIA and he came up with a new methodology called the core framework. I want to dedicate the session to explore what this framework is and potentially give you an alternative way to figure out how strong your renewal, retention, and expansion relationship with your customers is that can completely replace the NPS score and give you the benchmark you need to see how you are doing versus other companies in your industry.

Stephen, welcome to our show. There he is. Stephen, how would you frame TSIA? It's a long-standing organization. How long has it been out there and how would you define it? Yeah, we're well over 20 years, we're in on 25. So yeah, our fearless leaders, JB Wood, and he and Thomas Law lead our research department and all assets and aspects of research. Yeah, we are a for-profit research company. We try to provide organizations with research and data and insights so that they can make real-time decisions with unbiased data and the hopes of saving you millions of dollars in mistakes.

A great example, last year I did a big research study on monetizing customer success and I was trying to look at the behavior of the market from 2023 to when we did the study in 2020. In 2020, we were a profitable organization, not we as in TSIA, but customer success writ large on the industry was very profitable. When I looked at the performance of the industry in 2023, we were doing a terrible job. So what that meant is people were not reading my research, people were not joining TSIA and reading what we were subscribing and what we were proposing and what we were saying is the truth in the market. We try to make sure that the data is unbiased. It's coming from members, it's coming from non-members for those that participate outside of TSIA membership, and it's insightful. I would be scared to be an executive in customer success in this market and be making decisions gambling that I'm doing the right things. And I think the best way you talked about it where you said one of your customers was looking at how they were under or overfunded. Yeah, it's like the benchmark, regardless of the membership, if you're a TSIA member, you get a benchmark, and it's kind of like going to the doctor. They listen to your pulse, look at your eyes, look up your nose, look in your ears, listen to your heart. Yeah, they get a cursory view of your overall appearance. It doesn't mean much until they get the blood work. Then when you start looking at HDLs and LDLs and triglycerides, and you start getting into the weeds here, that all of a sudden your health takes a different perspective, and that's what we try to do with our members as we dig in, look through the benchmark, and how they're performing. We give guidance and directions so they're not spending millions of dollars on activities that yield no value.

100% just one word about monetizing customer success. I worked with a few TSIA members, obviously large companies, enterprise companies, and one of them became a client of mine, and we set up the customer success organization. I bet she just read your research and your recommendations, your framework, and she decided on the first year that she set up the customer success function that she's going to monetize it, and I believe she literally followed your framework to the letter. Her organization was able to recoup millions of dollars in revenue in year one. So that propelled giving her a budget for customer success technology, which we probably know what most enterprise companies choose without giving them too much of a commercial here. She was able to get so many more people to join her organization because she was self-funded. And I don't think she would have been able to do that with so much confidence if she didn't have those guidelines. So thank you because it was absolutely an awesome moment. Yeah, I love those stories and that that's what keeps you coming back every day or more. It's like what are we doing that helps executives to be successful. So thank you for sharing that's a great story.

Awesome. Alright, so segue this is kind of like the stuff that Stephen does every year. You meet with awesome executives. You find out what are the things that they struggle with and you come up with solutions. We talked about monetizing customer success. But this year, you actually doubled down on a real problem that you've heard from several members of yours. What was the problem? Metrics. And it's more specifically voice of the customer metrics. So one of the things we ask on our benchmark is do you use net promoter scores? Do you use customer satisfaction scores? Do you use customer effort scores? And what's been interesting is just listening to executives complain about specifically net promoter score. So I don't know about you when it came out in mid 2000s. I was excited. I was like, you know, this is a great metric. Holy cow, you know, because we were kind of starting our as a service journey, the company I was with at the time. And we were like, how do you measure companies' success? And we didn't have much in terms of metrics. And when that came out by Fred Reicheld, who's at Bain and Company, we were like, this is the Holy Grail. But you fast forward now into 2024. It's not the Holy Grail anymore. Tech companies have become pretty mature. They've got good metrics now that can help them run the business. And what we are hearing day in and day out is that NPS is one of those metrics that just won't go away. Executives are like, I don't use it. I can't run the business off of it, but because my executive suite or marketing or sales likes it, we have to use it. It's just not cutting it anymore. There's a lot of ambiguity. There's a lot of people that say, no, we shouldn't even track it anymore, but there's nothing else that can replace it potentially, or actually allow for these results.

So Stephen, what did you do about it? You came up with something. I did. I came up with something that I think may scratch the itch. So I've come up with what I've called the core score. I got to thinking about what is it that executives in customer success are trying to figure out? And they're trying to figure out basically four things because they have to run the business. So what I had to do is I had to put aside data and telemetry and metrics that are about customer health, how they're benchmarking, how they rack and stack against other companies, how they're doing. I had to put that aside, and I had to think about what the executives in customer success are asking, and they're like, we're trying to figure out outcomes. Are the customers getting their outcomes? Are they going to stay with us, which is retention? Are they going to spend the same amount of money, which is renewal? And would they be a positive reference? So Core Score came about, and it is an acronym. And the acronym stands for keeping organizational outcomes, retention renewals, references, and reputation excellent. When I started looking at trajectory because we just wrapped up 2023, so when you look at the decline, you can see that NPS is on its way down. It kind of peaked in 2021 as the metric that's being used. And you can see customer effort scores on the increase, which was a little bit different. It's not a relationship score like NPS. NPS is a relationship score. Would you refer us to a friend, family, or colleague? That's the question. That's the Fred Reicheld from Bain Company. Customer effort score is more transactional. So we see that one rising predominantly because people are figuring out, we're asking the wrong questions. We're asking the wrong question at the wrong time in people's journey. I'll give you an example. My bay windows in my house are leaking profusely. And it's raining today. We had window companies come over to our house to give us quotes. And the guy from one of the companies at the end of giving me a quote said, hey, you're going to get a survey and I want you to fill it out. And if you don't give me a 9 or 10, I'm going to lose my job. I'm like, wait, what are we talking about the net promoter score? And he goes, what is that? And said the question of what's the likelihood that you would recommend me to a friend, family, or colleague? Yeah, that's the one. So give me a 9 or 10, I'm going to lose my job. I'm like, OK, thanks. Wrong question at the wrong time in the journey. I haven't given them my business. I haven't said I'm gonna do business with you. I'm just trying to collect a quote and then I'm being blackmailed, pushed up against the wall and said, hey, give me a nine or ten or I'm gonna lose my job. Wrong questions, wrong time in the journey. Tech companies are no different. You can't broadcast renewals or retention. I loved it when you were talking about how when the score came in that you had