What is a ‘Good’ B2B Net Promoter Score?

What is a GOOD B2B Net Promoter Score? It’s a question we get asked a lot. Sometimes the question comes in slightly different formats. For example:

“What Net Promoter Score 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 depends on a number of different factors. As we mentioned in an earlier blog, it can even depend on factors such as whether your customers are American or European.

Customer at the Heart
 

It’s crucial to understand how these various factors impact your overall Net Promoter Score. Your NPS result can be very sensitive to small changes in individual customer scores. Be aware of these factors when deciding on a realistic NPS figure to aim for. Most Europeans consider a score of 8 out of 10 to be a pretty positive endorsement of any B2B product or service provider. However, 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 below).
 

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%.

 

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 and that if they appreciate the service they are getting they really need to score 9 or 10.

Sure, there’s always a little ‘gaming’ that goes on in client feedback programmes, particularly when performance-related bonuses are dependent on the scores. However, we find it intriguing to see the level of ‘client education’ that account managers engage in when the quarterly or 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. American companies generally get higher NPS results than Europeans – typically 10% higher and often much 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 results but can result in scores 10% lower than in telephone or F2F surveys. This gap can be smaller in countries like the Netherlands, Germany and Australia where conversations are 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 can do so confidentially. This is particularly the case if the customer experience has been negative or if you have a harsh message to deliver. Surveys that are not confidential tend to paint a rosier picture than those that are confidential.

4. Is there a governance structure in place?

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 often amazed by the number of companies that allow exceptions. For example: “We’re at a sensitive stage with Client X so we’re not going to include them”. In many cases, it’s more blatant. Clients are excluded because everybody knows they will give poor feedback. A proper governance structure is required to ensure ‘gaming’ is kept to a minimum. This gives the survey process credibility.

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. The main drawback is that they generally result in inflated 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 NPS result for B2B companies?

Now, let’s get back to the question of what constitutes a good B2B Net Promoter Score. Here’s our take on it.

Despite the claims that one hears at conferences and on the Internet that “we achieved 52% in our last NPS survey”, such scores are rarely if ever achieved. We’ve collected NPS data for B2B clients across 86 different countries since 2006. Our experience is that in a 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. In Europe, that simply doesn’t happen.

B2B Net Promoter Score
 

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 ABOUT +10 IS PAR FOR THE COURSE. Consider +10% to be an average NPS score for a B2B company.

Note that negative Net Promoter Scores are not unusual. Approximately one third of our B2B clients have negative scores. One in 10 has a score of -30% or even lower.
 

Benchmarking

One final comment about benchmarking. Deep-Insight’s customer base is predominantly northern European or Australian. However, many of our clients operate in eastern or southern Europe – or in Asia or North America. We need to be careful about how we benchmark different divisions within the same company that are in different regions.

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, 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

Do Americans REALLY score more positively than Europeans?

In a previous blog, I wrote that Europeans were more stingy than Americans when it came to customer feedback. Or words to that effect.

 
Since then, people have been asking if this is REALLY true, and where is the evidence for this claim.

Well, yes it IS true and while I’m not an expert in the area, I do know somebody who is: Anne-Wil Harzing, Professor of International Management at Middlesex University, London.

In 2006, Professor Anne-Wil Harzing conducted an analysis of different response styles across 26 different countries.

We recently sat down with Anne-Wil Harzing to discuss these differences.
 
 
 

John: Professor Harzing, if I look at our own clients – which are mainly headquartered in Europe, USA and Australia – their customers can be based anywhere in the world. When we often report results back by country, we often identify differences from country to country in Customer Relationship Quality (CRQ) or Net Promoter Score (NPS). How should we interpret those differences?

Anne-Wil: Good question – let me answer that in two ways. First, there are characteristics at a country level such as power distance, collectivism, uncertainty avoidance and extraversion which all have a major influence on the way people respond to questionnaires and surveys. This is particularly true when you use Likert scales – you know, the 1-7 scales that you use, or the 0-10 scale that’s used in Net Promoter Score surveys. Second, there are differences based on whether the respondent is replying to a questionnaire in his or her native tongue. Also, English language competence is positively related to extreme response styles and negative related to middle response styles.

John: Can you explain the difference response styles?

Anne-Wil: The main styles that people talk about are Acquiescent Response Style (ARS) where respondents are more likely to agree or give a positive response to a question, and Extreme Response Style (ERS) where the response is more likely to be highly positive or highly negative than Middle Response Style (MRS) where there is a greater tendency to go for an ‘average’ response. High ARS implies better/higher scores while ERS gives you more varied or extreme (and possibly higher) scores than MRS.

John: Can you give us a few examples of those country differences?

Anne-Wil: Sure. Respondents from Spanish-speaking countries show higher ERS and ARS while Japanese and Chinese respondents tend to be far less extreme in their response styles. Across Europe, the Greeks stand out as the highest levels of acquiescence and ERS. Countries across Northern and Western Europe – where many of Deep-Insight’s clients are based – tend to exhibit fairly similar response patterns.

John: And Americans?

Anne-Wil: High ERS and high ARS – you’ll generally get a more positive response from an American audience than from a Western or Northern European audience.

John: That’s very much in line with our own findings. We also see it in a lot of discussions around Net Promoter Scores (NPS). On some American websites, you will read that the average NPS for B2B companies is between 25% and 30%, yet our experience at Deep-Insight is that the average NPS score is closer to 10% and this may well be related to the fact that the majority of our customers (or more important, their clients) are European or Australian, rather than American.

Anne-Wil: It just goes to show that you need to take great care when interpreting cross-country scores. When people complete a survey, their answers should be based on the substantive meaning of the questions. However, we know that people’s responses are also influenced by their response style, so differences between a company’s geographically-based divisions might simply reflect differences in the way clients respond to surveys, rather than picking up real differences in the ways those divisions are going to market.

 

So Europeans ARE more stingy than Americans!

Our own research – although more anecdotal than Professor Harzing’s – backs up her results. Apart from the higher NPS scores I mentioned in the discussion, I also see Americans give higher Customer Relationship Quality (CRQ) scores than Europeans. We pick this up on the standard deviation figures from our results as well. This often results in fewer “Rationals” in the customer base of American clients. (Rationals are good, but not extremely loyal, customers who typically make up 50% of a typical customer base for any of our clients.) In contrast, American clients tend to have more “Ambassadors” and sometime more “Opponents”, which reflects the ERS and ARS styles that Professor Harzing describes.

In her paper, Harzing concludes that:

“Regardless of what remedy is used to eliminate or alleviate response bias, the first step towards finding a solution is acknowledging that response bias can be a serious threat to valid comparisons across countries. We hope this article has provided a step in that direction and that in future response bias will receive the attention it deserves from researchers in the area of international and cross cultural management.”

Good advice!
 
 

* 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