3 Methods to Calculate Your Net Promoter Score in B2B Companies

Calculating NPS

Net Promoter Score (or NPS) has long been recognized as a powerful tool for organizations to assess customer satisfaction and loyalty, and it’s easy to see why. Studies by creator Fred Reichheld determined the “likely to recommend” question had the strongest statistical correlation with repeat purchases and referrals—a key component to the long-term success of an organization.

For those not familiar, the Net Promoter Score calculation is based on responses to a single question: “How likely are you to recommend [COMPANY] to a friend or colleague?” On a 0 to 10 scale, customer contacts who score a 9 or 10 are considered your loyalty enthusiasts, or “Promoters”. Satisfied but unenthusiastic customers, or “Passives”, score a 7 or 8, and unhappy customers, or “Detractors”, score from 0 and 6.

The final Net Promoter Score is determined by taking the percentage of Promoters minus the percentage of Detractors. Interestingly, while the calculation itself is simple, Business-to-Business (B2B) companies often employ different methodologies to arrive at a score. Each method is valid in its own right; it all depends on your organization.

 

Let’s explore the three most common and what may be best for calculating your company-level score.

Counting All Responses to Your NPS Survey

The most straightforward methodology: counting all the responses. At first blush, this seems like the obvious way to go. After all, why would you want to discount anyone’s answer? It makes sense that most consumer-oriented companies use this approach, but for B2B companies, not all survey respondents are equal in their importance to the company’s success. Consider it from this perspective: whose feedback is more influential, the End User of your product or the person (or people) making the decision to engage with your company, or renew?

The score generated by the “Count Everyone” methodology can often skew toward the larger population of End Users while deemphasizing the sentiment of less numerous Decision Makers who decide the future of your relationship with them. It’s a true conundrum, as the feedback from both segments are extremely valuable to your organization and should be considered when making decisions regarding your product roadmap, features/functionality, resource allocation, service delivery model, and so on.

Another challenge to overcome is the disproportionality of respondents. For example, maybe you have five people respond from one company but only a single response from a different organization. In such cases, your company-level Net Promoter Score would be skewed towards the customers with the higher contact response counts.

Averaging Net Promoter Score Survey Responses by Customer

If simply using all responses to derive your company-level Net Promoter Score isn’t the best approach for your company, what are other acceptable options? One is to group responses from a given customer – including Decision Makers, Influencers, and End Users – and simply average them. Using this approach mitigates the issue of skewing the results due to a higher contact response count at one customer versus another. Said another way, an average response to the NPS question is calculated for each unique engagement. Those average scores – which may be based on a single respondent from one customer or ten respondents from another – are used as the “ingredients” for your overall Net Promoter Score.

But we offer a note of caution. While each customer engagement only counts once, End Users may still heavily influence the score if their population size is significantly larger than the rest. With this approach, it’s also important that you put rules in place to govern whether fractional averages round up or down. For instance, if one two contacts from the same engagement respond – one with a score of 9 and the other with an 8, your Net Promoter Score for that customer is 8.5. Whether you round that up to Promotor (9) or down to Passive (8) should be determined and clearly stated in your internal methodology document before you launch your survey.

Calculating Net Promoter Score Using the “Waterfall” Method

To calculate your company’s Net Promoter Score another approach that is generally acceptable for B2B organizations is the “waterfall” method.

Here’s how it works. Like the “average” approach, the “waterfall” method counts only one response from each unique customer engagement toward your score. Since the Decision Maker is typically the most important contact in each customer account, it is that person’s response that is used toward your Net Promoter Score calculation. If the Decision Maker doesn’t respond, the waterfall kicks in and we look at the response from the next most “important” person from the organization. This is most often the Influencer.

While the waterfall approach only counts the response of a single contact at each unique customer account, this by no means suggests that the feedback from the other contacts at that account should be dismissed. In fact, every response to your survey should be reviewed, acknowledged and considered when exploring why your customers may be satisfied or dissatisfied. At Satrix Solutions, we have found that the level of commitment a company has towards the closed-loop follow-up process is one the biggest determinants of a successful Net Promoter program.

As noted above regarding the rules if you use the average method, a well-documented methodology is required when employing the waterfall method as well. Here, it is important to establish the contact role designation (Decision Maker, Influencer, End User, etc.) for each contact before launching your Net Promoter Score survey. If this step is taken after all your survey responses are recorded, some people may be tempted to count a contact who awarded a higher score. Therefore, it’s strongly advised that you establish the order of importance for all contacts from each customer account beforehand.

Remember – Net Promoter Score Is Only One Piece of the Puzzle

While Net Promoter Score is a valuable tool for gauging customer loyalty, establishing your company as a customer experience leader goes far beyond a single question.

Your Net Promoter program should be part of a larger customer experience strategy that paints a complete picture of how you’re performing in the eyes of your customers at every important touchpoint.

Whether you measure Overall Satisfaction, Customer Effort Score, Net Promoter Score, or create your own model, it’s vital that your voice of the customer programs are implemented thoughtfully and in accordance with best practices so your leadership team can rely on the data and insights to make important decisions for the future of your business.

By |2018-07-10T08:56:54+00:00July 9th, 2018|Categories: Net Promoter Score|