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Blog: Alex Elliott explains why Net Promoter Score (NPS) and Feedback can be the trigger point for recruitment business growth

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You can only connect the dots looking backwards

When people ask me what the secret to growing a recruitment business that can truly scale, I usually laugh off the question and say it depends…. 

There are many things you have to do to successfully scale a recruitment business and none of them are exactly secrets. But utilising NPS to measure customer experience and drive business improvements was definitely a very important part of the puzzle. More broadly speaking: a meticulous focus on managing every experience your business creates. Measuring, analysing, identifying the growth opportunities, and implementing the necessary change. 

The reality is there is no single button to push or magic lever to pull that can guarantee success for any type of business at any given moment. But as Steve Jobs said “You can only connect the dots looking backward” and when I look back over the growth trajectory of Liquid Personnel – the recruitment agency I founded back in 2006, it becomes very clear to me that starting to track this simple metric was the single most impactful agent of change within our business.

Alex Elliott - Director at Strive and Angel Investor

Having co-founded Liquid Personnel and led them to over £100million in revenue, Alex and his business partner Jonathan Coxon made a full PE exit in 2016.

What is NPS?

NPS – or Net Promoter Score is known as the ‘gold-standard’ customer experience metric. First developed by Bain and Company, NPS is now used by millions of businesses to measure and track how they’re perceived by their customers. NPS scores determine segmenting between poor and positive feedback, by asking customers one simple question – 

“On a scale from 0 to 10, how likely are you to recommend this product/company to a friend or colleague?”

For me, the value of asking this basic question is not just about the actual answer but more about what the practice and process of asking it means, internally and externally.

The difference between good and bad profit

Before I explain what I mean by that, let’s determine the difference between good and bad profits as a business. Growing Liquid Personnel into an enterprise turning over a hundred million in revenue as one example, was not a straightforward journey to profitability. I and my co-founder made some good decisions early on, which eventually helped scale the business over 10 years. But there were moments when I’d say that we were generating some bad profits too. Yes, we were growing pretty fast – but, counterintuitively, was some of this short-term profit going to negatively impact our ability to keep growing? (and at the fastest rate possible.)

Most recruitment businesses hold financial and operational metrics as their most important measures of success internally. Consultants are KPI’d on activities such as calls made, emails and CVs sent, etc. These activities lead to objectives such as interviews, new logos on our customer’s page, average margin, etc.
The financial results then come from those objectives: deals made and the value of those deals. So recruitment companies tend to be quite good at reverse engineering and then tracking and measuring all those activity metrics. The result is how much consultants bill each quarter or each month, which becomes the “spotlight” target that team members are aiming for and celebrating amongst each other.
This is a dangerous cycle to get into because it leaves out the impact of service levels – the quality of service that consultants are delivering to clients and candidates. In an industry that relies heavily on client retention, account expansion, and client/candidate referrals – it is essential to examine service levels and identify how they will impact well versus bad profits.

A team that is solely and aggressively focused on financial metrics, is going to breed a culture of short-termism. With laser focus, recruitment teams will chase the biggest deal on the table at the time and be in danger of making decisions with a purely short-term, financial return mindset. An approach that has the potential to negatively impact their long-term relationship with both clients and candidates.
This approach may result in the right candidate being placed in the quickest time, but it will come at the cost of building a trusted, long-term partnership (and all the benefits that bring.) Over time, this harms the business overall in numerous areas, such as client retention, account expansion, average customer value, client referrals, candidate referrals, brand recognition, and reputation.
Whilst it may lead to profit in the short term – this approach is an example of “bad profit” and long term, business done this way is set to dry up and cause irreparable damage to the growth of any recruitment business. It’s one of the reasons why we see so many recruitment businesses never able to scale beyond 20-30 heads.

The cowboy approach (short termism and brand damage)

“Measurement is the first step that leads to control and eventually, improvement.” John McMahon
When my co-founder and I started to see the organic growth of Liquid Personnel gain traction: profits growing month on month, deals getting bigger, and the team growing from 5, to 10, to 50 and eventually 140 heads, it was exciting and almost a little intoxicating. We were young entrepreneurs and in retrospect, far too focused on the hunt for immediate revenue. 
We were growing in profit and that was all that mattered. When we reached 50-60 heads, I started to feel I was losing visibility of what was really happening on the sales floor and the quality of service we were providing for our clients and candidates. 

Suddenly we started to notice some clues that our profitability may have been coming at a cost. Complaints increased, our churn rates started to rise, and we almost lost one of our biggest clients. Something had to change.  

Liquid Personnel

We were growing in profit and that was all that mattered. When we reached 50-60 heads, I started to feel I was losing visibility of what was really happening on the sales floor and the quality of service we were providing for our clients and candidates.

Suddenly we started to notice some clues that our profitability may have been coming at a cost. Complaints increased, our churn rates started to rise, and we almost lost one of our biggest clients. Something had to change.

The farmer approach (long termism and sustainable growth)

So, how to build long-term growth as a recruitment business and ensure “good” profits? Take the farmer approach and till the soil before going out hunting. In other words – make sure the customers you’ve already got are happy and well-cared for before you focus on acquiring new ones. After all, it’s much easier to expand an existing account than it is to win a new one (and studies have shown that a 5% improvement in retention can lead to boosts of 25-100% in profit.)
Make sure you’ve got a read on your current customer satisfaction levels every step of the way to ensure everyone in the business is on the right track. Here is where the value of NPS tracking and measurement is shown. Intent and sentiment data are common metrics for marketers to measure when it comes to moving the needle on deals won, but NPS is a really simple and easy way for sales and marketing heads to work together without the need for expensive martech tools.
As soon as myself and my co-founder learned that we were starting to lose clients on account of service that was coming across as aggressive and deal-hungry, the penny dropped and we realized there was no point going out hunting for fresh and shiny new customers when we weren’t taking care of the existing ones.

We started to make it a habit to ask for feedback on service levels at every opportunity. This shows everyone in the business that service matters, which automatically makes them start to care about it too.

As soon as we started doing this, we immediately saw a 42% upturn in candidate referrals at Liquid Personnel – purely because it gave the consultants a perfect trigger point to know when to ask for referrals when they were placing people in their dream jobs. Simply asking a happy candidate to rate the quality of service they’d received and planting the idea of a referral in their heads, means they are far more likely to bring 5 more quality candidates through the doors.

Asking for feedback didn’t just improve our candidate pipeline though, our client churn rates dropped, average customer value increased and both our client and candidate referrals grew considerably which in turn saw our profits grow. Over the next few years, our headcount then doubled. More importantly – our culture transformed and our consultants started to understand the importance of providing exceptional service levels throughout the entire customer journey, treating candidates and clients with care and empathy, pays off long term. Looking at all these factors – I see it all very clearly driving back to the tracking and measurement of NPS.

The trigger point

HubSpot recently reported that 42% of businesses do not survey their customers or collect any sort of customer feedback. I don’t have the stats for recruitment businesses but I would hazard a guess it is a lot higher! Those that do elicit feedback often do not ask the right questions. And even fewer business owners take any action based on the responses they receive.

This to me, is pure madness. If you want to grow your business – not tracking NPS/Feedback is like planting a seed in a field and expecting it to grow without water or fertilizer. But it doesn’t have to feel like extra work. Leveraging the power of new technologies that can automate the collection of CX data means that recruiters can get back to what they’re good at – building exceptional relationships and enabling delightful customer experiences. My latest project, Talent Analytics has been built specifically by recruiters, for recruiters to enable powerful performance, learning, and marketing insights with this very data.

At the end of the day, serving customers with good, consistent service leads to repeat business and more referrals. Eventually, and pretty quickly with new technologies like Talent Analytics, this allows you to have an ongoing, sustainable recruitment business that will grow in a healthy profit.

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