“F” is for feedback: Understanding the BBB rating system

At BBB.ORG, the Better Business Bureau provides free information on businesses to consumers through its BBB Business Reviews. A typical review, or report, will include the company’s contact information, when the business was started, its ownership structure, complaint history, and its rating according to BBB files. This last bit of information is the most important to both consumers and business owners since it condenses all of the BBB file information into one letter. For a company with an “F” rating, the BBB rating system may feel like a thorn. However, understanding that an “F” represents valuable “feedback” for improving your relationships with customers can put your company on a journey toward success.

A company’s letter grade is not unlike a child’s report card grade. Just like a child’s grade, the BBB letter grade for a company can give consumers a sense of how hard that company is trying. Most likely, a company with an “A” rating is working harder to make its customers happy than a company with a “C” rating. If your company has a rating that you’re not happy with, it’s time to look closer at how the BBB rating system works. Understanding the weight of what’s included in BBB’s ratings can help you better manage your customer service and improve your company’s rating.

First off, the BBB rating system is an algorithm based on many weighted factors and it reflects the BBB standards of trust. In order to improve your company’s rating, check to make sure you’ve got these standards covered:

  • Build trust — Building trust means establishing and maintaining a positive track record in the marketplace. Unfortunately, this takes time. If you’ve just opened your business, you won’t be able to prove yourself until you’ve consistently served your customers for a few years. The BBB ratings system considers your time in business, the number of complaints, how quickly you respond to them, and how willing you are to resolve the issue. Being responsive and listening to the concerns of your customers year after year will help build your great reputation, and your rating.
  • Advertise honestly — The BBB Code of Advertising outlines specific guidelines for building trust with your customers by fairly and specifically explaining offers in your advertisements. Making sure you can substantiate your claims is key to building great customer relationships and the BBB ratings system reflects this philosophy.
  • Tell the truth — Seems simple enough, right? But, honestly representing your products and services, including clear and adequate disclosures of all material terms, is critical to a great customer relationship and a great BBB rating. Businesses that operate in illegal (or scam-ridden) industries are docked points in the BBB ratings system, as are businesses that operate without proper licensing.
  • Be transparent — Potential customers deserve to know who you are and where you operate. That’s why the BBB asks you to openly identify the nature, location, and ownership of your business, and clearly disclose all policies, guarantees, and procedures that bear on a customer’s decision to buy. Its ratings system will take points off for being deceptive about your products or services, company ownership, or location. Because let’s face it, wouldn’t you rather buy from a local retailer you know rather than a faceless identity on the Internet?
  • Honor promises — BBB ratings will also reflect your company’s willingness to abide by all written agreements and verbal representations. In addition, if you’ve made a commitment to the BBB such as a settlement through mediation or arbitration, its rating system requires you to honor that commitment.
  • Be responsive — The BBB understands that complaints are filed against even the strongest companies. However, how quickly you respond to complaints is reflected in your rating. Improve your rating by addressing marketplace disputes quickly, professionally, and in good faith.
  • Safeguard privacy — Your customers need to be able to trust you. Because of this, ensuring that their information and privacy are safe is critical to your success. Protect any data collected against mishandling and fraud, collect personal information only as needed, and respect the preferences of consumers regarding the use of their information. This will help to prevent breaches of data and breaches of trust.
  • Embody integrity — Aldo Leopold said, “Ethical behavior is doing the right thing when no one else is watching — even when doing the wrong thing is legal.” And while we know that people are watching, we should approach all business dealings, marketplace transactions, and commitments with integrity.

If you’re starting to see a causal relationship between trust and a good rating, you’re on your way to understanding how exactly the BBB rating system works. But remember, trust is not a line item on your annual budget. You cannot buy trust, no matter how hard you try. Trust is earned day after day, year after year, one customer at a time.

Kimberly Hazen serves as the regional director for the Southwest Region of the Wisconsin Better Business Bureau. She holds a B.A. from University of Wisconsin–La Crosse and an M.A. from Marquette University. She has spent much of her professional career in the field of advertising and understanding buying behavior. Now, as the regional director at the BBB, she’s working to advance marketplace trust between buyers and sellers and to promote informed buying decisions. Her community activities have included past service on the boards of Big Brothers/Big Sisters of Waukesha County, The Topeka Advertising Federation, The Dane County Humane Society, and Madison Country Day School’s Board of Trustees.

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