What is a ‘Good’ B2B Net Promoter Score?

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On October 9, 2014, By ,

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So what’s a good Net Promoter Score* for a B2B company?

It’s a question we get asked a lot. Sometimes the question comes in a slightly different form: “What NPS target should we set for the company? 25% seems low, so maybe 50%? Or should we push the boat out and aim for 70%?”

Well, it all depends. On a number of different factors. As we mentioned in an earlier blog posting, it can even depend on factors such as whether your customers are American or European.

We can’t state often enough how crucial it is to understand how these various factors (we’ll discuss them in detail below) impact the overall Net Promoter Score you receive, as the NPS calculation makes it incredibly sensitive to small changes in individual customer scores. Be aware of these factors when deciding on a realistic NPS figure to aim for.

HOW IS THE NET PROMOTER SCORE CALCULATED?

For the uninitiated, a company’s Net Promoter Score is based on the answers its customers give to a single question: “On a scale of 0 to 10, how likely are you to recommend Company X to a friend or colleague?” Customers who score 9 or 10 are called ‘Promoters’. Those who score 7 or 8 are ‘Passives’ while any customer who gives you a score of 6 or below is a ‘Detractor’. The actual NPS calculation is:

Net Promoter Score = The % of Promoters minus the % of Detractors

Theoretically, companies can have a Net Promoter Score ranging from -100% to +100%.

Most Europeans consider a score of 8 out of 10 as a pretty positive endorsement of any B2B product or service provider, but in the NPS world, a person who scores you 8 is a ‘Passive’ and therefore gets ignored when calculating the Net Promoter Score (see box above).

Here’s the thing. If you can persuade a few of your better customers to give you 9 instead of 8, then suddenly you’ve boosted your Promoter numbers significantly. We know more than a handful of account managers who carefully explain to their clients that 8/10 is of no value to them whatsoever and that if they appreciate the service they are getting they really do need to score 9 or 10. Sure, there’s always a little ‘gaming’ that goes on in client feedback forms, particularly when performance-related bonuses are dependent on the scores, but we find it intriguing to see the level of ‘client education’ that account managers engage in when the annual NPS survey gets sent out!

What Factors Impact Your Net Promoter Score?

We said at the outset that the Net Promoter Score you achieve is dependent on a number of factors. So what are they?

1. Which geographical region do your customers come from?
We’ve covered this point in an earlier discussion with Professor Anne-Wil Harzing – Americans will score higher than Europeans – probably 10% higher and possibly even more.

2. Do you conduct NPS surveys by telephone or face-to-face or by email?
In the UK and Ireland, we don’t like giving bad news – certainly not in a face-to-face (F2F) discussion. Even if we’re talking over the phone, we tend to modify our answers to soften the blow if the feedback is negative. Result: scores are often inflated. In our experience, online assessments give more honest feedback but can result in scores that are at least 10% lower than in telephone or F2F surveys. This gap can be smaller in countries like the Netherlands and Australia where conversations and customer feedback can be more robust. It’s a cultural thing.

3. Is the survey confidential?
Back to the point about culture – it’s easier to give honest feedback if you have the choice of doing so confidentially, particularly if the customer experience has been negative and you have a harsh message to deliver to your service or product provider. Surveys that are not confidential tend to give a rosier picture of the relationship than those that are confidential.

4. Is there a governance structure in place to determine which clients (and which individuals in those client companies) are included in the survey?
At Deep-Insight, we advocate a census approach when it comes to customer feedback – every B2B customer above a certain size must be included in the assessment. No ifs or buts. Yet we are constantly amazed by the number of companies that allow exceptions such as “We’re at a very sensitive stage of discussions with Client X so we’re not going to include them on the list this year” or “We’ve just had a major delivery problem at Client Y – they certainly won’t appreciate us asking them now what they think of us”. In many cases, it’s more blatant – customers are excluded simply because everybody knows they are going to give poor feedback and pull down the overall scores. In some cases, it’s a little more subtle, particularly where it’s left to the account manager to decide which individuals to survey in a particular account. A proper governance structure is required to ensure ‘gaming’ is kept to a minimum and that the assessment process has credibility. If a company surveys its Top 100 accounts annually, senior management must be given the final say over which clients are added to, or taken off, the list. It’s not feasible to have the MD to approve every single client, but at least make sure the MD understands which of the major accounts – and which individuals in those accounts – are to be included on the list.

5. Is the survey carried out by an independent third party, or is it an in-house survey?
In-house surveys can be cost-effective but suffer from a number of drawbacks that generally tend to inflate the scores. For starters, in-house surveys are rarely seen as confidential, and are more prone to ‘gaming’ than surveys that are run by an independent third party. We have seen cases where in-house surveys have been replaced by external providers and the NPS scores have dropped by a whopping 30% or more. Seriously, the differences are that significant.

So What Is a Good Score?

Now, coming back to the question of what constitutes a good Net Promoter Score in a B2B environment, here’s our take on it.

Despite the claims that one hears at conferences and at the water coolers that “we achieved 52% in our last NPS survey” or “we should be setting the bar higher – the NPS target for 2015 is going to be 60%” these types of score are rarely if ever achieved. We’ve been collecting NPS data for B2B clients since 2006 and we have customer feedback from clients across 86 different countries. Our experience is that in a well-run, properly-governed independent confidential assessment, a Net Promoter Score of 50% or more is almost impossible to achieve. Think about it. To get 50%, you need a profile like the one below, where a significant majority of responses are 9 or 10 and most of the others are pretty close to that level. In Europe, that simply doesn’t happen.

NPS Profile Slide - PowerPoint 12102014 181008.bmp

Our experience of B2B assessments is that a Net Promoter Score of +30% is truly excellent, and that means you are seen as ‘Unique’ by your customers. A Net Promoter Score of around +10% is par for the course – consider that an average score. A negative NPS is not unusual – approximately one third of our B2B customers are in negative territory and one in ten of our clients score -30% or even lower.

In fairness, Deep-Insight’s customer base is predominately European or Australian so we also need to be careful about how we benchmark different divisions within the same company that are in different regions or markets.

In our opinion, the best benchmark – for a company, business unit or division – is last year’s score. If your NPS is higher this year than it was last year, and nothing else has changed, then you’re moving in the right direction. And if your NPS was positive last year, and is even more positive this year, happy days!

* Net Promoter® and NPS® are registered trademarks and Net Promoter SystemSM and Net Promoter ScoreSM are trademarks of Bain & Company, Satmetrix Systems and Fred Reichheld