Measuring NPS for B2B
Measuring NPS for B2B
As a B2B company, measuring customer satisfaction is crucial to maintain a healthy business relationship with your clients. Net Promoter Score (NPS) is a widely used metric to measure customer satisfaction and determine if they are likely to recommend your product or service to others. In this article, we will discuss how NPS works for B2B companies, how to measure it, and the benefits of using it to improve your business strategy.
What is NPS and how does it work for B2B companies?
What is NPS?
Net Promoter Score, or NPS, is a powerful customer feedback metric that was developed by Bain & Company. It's designed to measure the likelihood of customers recommending your product or service to others. The simplicity of NPS lies in its single-question format, which asks, “On a scale of 0-10, how likely are you to recommend our product or service to a friend or colleague?” The responses to this question can provide a wealth of insight into customer satisfaction and loyalty.
How is NPS used for B2B companies?
In the context of B2B companies, NPS serves as a valuable tool to measure customer loyalty and satisfaction. It can help identify areas in the customer journey that may need improvement, thus providing a roadmap for enhancing the customer experience. Additionally, NPS can be used as a benchmarking tool, allowing B2B companies to compare their performance against competitors and evaluate the effectiveness of their marketing and sales initiatives. It's a versatile metric that can provide actionable insights to drive business growth.
Why is NPS an important metric to measure for B2B companies?
NPS is a particularly important metric for B2B companies because of its strong correlation with customer loyalty, retention, and ultimately, revenue. By regularly measuring NPS, B2B companies can identify both promoters (happy customers) and detractors (unhappy customers). This allows them to take actionable steps to improve overall satisfaction, whether by addressing specific issues raised by detractors or by learning from the positive experiences of promoters.
In the complex world of B2B relationships, where contracts are often large and long-term, maintaining high customer satisfaction can have a significant impact on the success of the business. Therefore, NPS is not just a metric, but a strategic tool that can help B2B companies build stronger relationships with their customers and drive sustainable growth.
How do you measure NPS for B2B companies?
Measuring Net Promoter Score (NPS) for B2B companies involves a process that is slightly more complex than its B2C counterpart. Given the intricate nature of B2B relationships, where multiple stakeholders are often involved in the decision-making process, it's crucial to ensure that the NPS survey reaches the right people. This means identifying key decision-makers and influencers within the customer's organization who have significant interactions with your product or service.
What is the best way to conduct an NPS survey for B2B companies?
There are several methods to conduct an NPS survey for B2B companies, including via email, phone, or even in-person meetings. The choice of method largely depends on the nature of your relationship with the customer and the communication channels that are most effective for them.
Regardless of the method chosen, it's essential to keep the survey concise and straightforward. Respondents are more likely to complete the survey if it doesn't take up too much of their time. It's also important to clearly communicate the purpose of the survey to the respondent. This not only helps to set expectations but also underscores the value you place on their feedback.
Moreover, the survey should be tailored to the B2B customer and their specific touchpoints with your product or service. This could involve asking questions about different aspects of the customer experience, from product features and customer service to billing and support.
What response rate is considered good for NPS surveys in B2B?
The response rate for NPS surveys in B2B can vary significantly depending on factors such as the industry, customer base, and the method of survey delivery. However, as a general rule of thumb, a response rate of 30% or above is considered very good. Companies are usually shy about sharing their real response rates as they tend to disappoint. The reliable and objective sources we have found as well as during our discussions with hundreds of managers that have used the NPS methodology have typically reported NPS response rates around 7-11% for B2B relationships.
Achieving a high response rate is crucial for ensuring that the NPS score is representative of the overall customer base.
How can you measure NPS for B2B companies?
To calculate your NPS score, subtract the percentage of detractors (customers who gave a score of 0-6) from the percentage of promoters (customers who gave a score of 9-10). Passives (customers who gave a score of 7-8) are excluded from the calculation. The result is a score between -100 and 100, with a higher score indicating higher customer loyalty and satisfaction.
What are the benefits of using NPS for B2B companies?
How can NPS help B2B companies build customer loyalty?
NPS can help B2B companies build customer loyalty by identifying unhappy customers and taking actionable steps to improve their experience. By closing the loop with customers, B2B companies can show that they are actively listening to their feedback, which can help build trust and loyalty over time.
What role does NPS play in a B2B company's business strategy?
NPS can play a significant role in a B2B company’s business strategy by providing insights into areas for improvement and opportunities to differentiate from competitors. By consistently measuring NPS and benchmarking against competitors, B2B companies can align their business strategy with their customers’ needs and preferences.
What are some alternatives to NPS for measuring customer satisfaction in B2B companies?
While NPS is a widely used metric for measuring customer satisfaction, there are other alternatives such as Customer Satisfaction Score (CSAT) and Customer Effort Score (CES). However, NPS is often preferred due to its simplicity and customer-centric approach.
How can B2B companies benchmark their NPS scores?
What is a good NPS score for B2B companies to strive for?
A good NPS score for B2B companies to strive for varies depending on the industry and customer base. However, a score of 50 or above is considered excellent, while a score of 70 or above is considered world-class.
What are some examples of B2B SaaS companies with high NPS scores?
There are numerous examples of B2B SaaS companies with high NPS scores, including HubSpot, Slack, and Zoom. These companies prioritize customer satisfaction and regularly measure and act upon their NPS results.
Why is it important for B2B companies to benchmark their NPS scores?
Benchmarking NPS scores against competitors and industry benchmarks can provide valuable insights into areas for improvement and opportunities for differentiation. It can also help B2B companies set realistic targets and track their progress over time.
How can B2B companies take actionable steps based on NPS results?
What are some common reasons why B2B customers give low NPS scores?
Common reasons why B2B customers give low NPS scores include poor customer service, product or service issues, and not meeting expectations. Understanding the root cause of low NPS scores can help B2B companies take actionable steps to improve their customer experience.
How can B2B companies use NPS feedback to improve customer experience?
B2B companies can use NPS feedback to improve customer experience by identifying specific areas for improvement and taking measurable steps to address them. This can include improving customer service, fixing product or service issues, and enhancing the overall customer journey.
What are some examples of B2B companies that have successfully acted on NPS results?
One example of a B2B company that has successfully acted on NPS results is Salesforce. After receiving feedback from unhappy customers, they implemented changes such as improving customer support and providing more training resources to customers. This resulted in a significant increase in their NPS score.
In conclusion, measuring NPS is an essential metric for B2B companies to evaluate customer satisfaction and loyalty. By consistently measuring and acting upon NPS results, B2B companies can increase customer retention and drive revenue growth.
Ask yourself what do you want to achieve from your Net Promoter Score program for your B2B
Before implementing a Net Promoter Score (NPS) program in your B2B organization, it's crucial to define what you aim to achieve. Are you looking to gauge overall customer satisfaction, identify areas for improvement, or predict customer churn? Perhaps you're interested in understanding how your NPS correlates with contract renewals or lifetime value. By clearly defining your objectives, you can ensure that your NPS program is tailored to provide the insights you need to drive your business strategy and enhance customer engagement and satisfaction.
What are the drawbacks of using NPS (especially for B2B)
While the Net Promoter Score (NPS) can provide a quick snapshot of customer sentiment, it has several drawbacks, particularly for B2B companies. Firstly, NPS offers a rather simplistic view of customer satisfaction, boiling it down to a single number. This can overlook the complexity and nuance of B2B relationships, where multiple stakeholders and touchpoints are involved.
Secondly, NPS surveys often suffer from low response rates, limiting the quantity and quality of feedback received. Lastly, NPS doesn't provide diagnostic insights or actionable recommendations. It tells you 'what' the score is, but not 'why' it is that way or 'how' to improve it. In contrast, a more comprehensive, dynamic feedback system can provide real-time, diagnostic, and actionable insights, taking into account the multifaceted nature of B2B relationships and driving higher response rates.
The Limitations of Net Promoter Score (NPS) in B2B SaaS Companies
In the realm of B2B SaaS, the Net Promoter Score (NPS) has been a widely used benchmark to gauge customer loyalty. However, while NPS can provide a snapshot of overall sentiment, it may not fully capture the complexity of B2B relationships. Unlike B2C brands, B2B companies often deal with multiple decision-makers within a single customer account, each with different touchpoints in the customer journey.
Moreover, the NPS survey, typically a single question about the customer's willingness to recommend, may not yield a comprehensive picture of customer satisfaction. The response rate can be low, and the metric doesn't provide diagnostic insights into why a customer gave a certain score or how to improve it.
In addition, while a high NPS can indicate reduced risk of churn and potential for sales growth, it doesn't necessarily correlate with contract renewals or lifetime value in the B2B context.
Therefore, while NPS can be a useful tool in the CX program, it's important for B2B organizations to complement it with other metrics and methods that provide a more nuanced understanding of customer engagement and satisfaction. This can help drive customer-centricity in daily operations and inform a more effective business strategy.