How to calculate the Net Promoter® Score: Why… | CustomerGauge How to calculate the Net Promoter® Score: Why factoring in differences isn't as important as you think

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How to calculate the Net Promoter® Score: Why factoring in differences isn't as important as you think

Within the b2b industry there has been more and more talk about the different ways to calculate your relational Net Promoter® Score (NPS).

One of NPS’s greatest strengths though, is its simplicity. Seeking new ways or parameters to construct a score is done because companies feel they need to have a score that is as representative and accurate as can possibly be.

responses-white-bgHowever, although this has good intentions, it overlooks the fact that NPS is not about knowing an absolute score, but is instead about what the score is telling you. Knowing precisely whether your score is 0, 1 or 2 is irrelevant and time wasted, when more pressing is the fact that your customers are telling you they are not satisfied.

Here we outline common concerns raised and new calculation methods we have come across, and why they might not be so important in the long run.

1) Excluding responses

For b2b companies, including every response can skew your NPS towards the larger population of end users.

Having to exclude the results of end users should not even need to happen because they should not have been surveyed in the first place.

When surveying customers, B2B companies should apply the 3x3 model, meaning 3 decision makers, influencers and end users. And while you may have a few more end users and influencers due to their greater numbers, one or two more will not skew the result. Ultimately though, you should only be surveying people that impact future buying decisions; be that end users or decision makers.

2) Equal weighting between customers

For b2b companies, your resulting NPS score can be disproportionately influenced by customers who simply responded to your survey in greater numbers. Make sure each customer has equal weighting against each other.

This is another issue that is the symptom of a large problem. Within b2b your response rate should be up around 60%, and once you have a response rate this high disproportionate influence (such as one company having a response rate of 60% and another 70%) will not matter. You will most likely see that your NPS score including all responses and the average of company scores will be roughly the same.

However, it is true that if you have a poor response rate and you let each company have the same weight you certainly will skew number. But a poor response rate is not something that should be simply resolved in your calculation, for it is most often an indication of poor relationships as non-respondents are usually detractors more than promoters.

3) Average score per customer

Instead of creating equal weighting, derive an average score per customer in order to calculate your overall score. This will mitigate skewing the score toward customers with more respondents.

Almost the same as 2) Equal weighting between customers, except you are calculating your NPS on the averaged scores from each customer. However, this raises a different problem, as it requires you to decide whether 6.5 and 8.5 represents respectively a detractor or a passive and a passive or a promoter

However, as this is the result of the same problem as in 2), you risk skewing your results. As a lack of responses will most likely be in your favor, as non-respondents will mostly be detractors.

4) One customer = only one response

Count only one response from each customer towards your overall score. Start with the decision maker, as they have the most influence over a continued relationship. If the decision maker doesn’t respond, the score from the next most important person should be counted. This type of approach avoids overweighting concerns.

This one is particularly erroneous, as neither a b2b relationship nor a company’s score should be based upon the feedback of one employee .

Here, the desire to create a precise score forgoes an understanding of the health of each customer relationship. No b2b relationship should be based on one decision maker, for the future of any continued relationship (contract renewal, upsell) is also dependent on influencers and even end users.

Furthermore, decision makers are often not initiating purchases so by using only a decision maker in your calculation, the NPS does not reflect your likelihood to sell again.

5) All differences are important

In general, no matter what type of differences exist in your surveyed customer base; your Net Promoter Score should take all nuances into account when calculating your score.

This is really not as critical as you think. Relational NPS is an indicator of the health of your business. It is a great way to track customer satisfaction trends, be used as a KPI, and be shared amongst a company as a means of motivation, but these have nothing to do with the calculation method.

What are the customer experience facets you are falling behind on, what can be done to improve the experience and have your previous measures made the experience better? Complicating your NPS with new calculations doesn’t make it anymore accurate and fails to answer the questions above.

Remember!

Remember, calculating relational NPS only includes the latest survey results from each customer. So, if you score poorly with a client this should act as an incentive for employee buy in, to work harder to improve the relationship and measure this in the next round of surveying. Not get bogged down in whether there is something skewing the result or not.

As a vendor ourselves we know that many companies are always looking for NPS benchmarks. If you wish to compare yourself to vendor benchmarks, stick to NPS’s standard calculation otherwise any comparison between yourself and other companies has no meaning.

However, if you really do find yourself in need of choosing a different method of calculating NPS, then stay true to it. Benchmarking yourself against other companies may not be possible, but more important is the fact that you can compare your own result year-to-year.

To find out more about how NPS’s simple score can get you on the right track to improving your customer relationships, watch our case study series.

Next Up: 6 Tips for Your Next Survey Campaign

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