A stellar Better Business Bureau rating for your business will give you star power. The BBB rating is a measuring stick that tells the consumer what to expect from businesses. Peer members of your business community read the ratings.
How does the Better Business Bureau calculate the number for a business rating? Why are BBB ratings so important for businesses?
“BBB ratings are based on multiple elements, including how the business responds to complaints, transparency, truthful advertising and more,” said Paula Fleming, Chief Marketing and Sales Officer, BBB of Eastern Maine, Rhode Island, and Vermont. “Having a good BBB rating is important as it reflects the BBB’s opinion of how the business is likely to interact with customers.”
In other words, a top letter grade rating from the BBB is a direct reflection of the BBB’s degree of confidence in a business. As such, the BBB ratings system can make customers much more likely to choose your company, which the BBB has judged as operating in a trustworthy manner. And this is why you should find out how to get BBB accredited once you establish your business.
What Factors are Included in my Better Business Bureau Rating?
Want to learn what specific elements and background information go into determining your company’s BBB rating? Here are the main considerations going into the score the Better Business Bureaus used to calculate a rating for businesses:
Your Record on Complaints Registered with the BBB
The Better Business Bureau keeps tabs on a business’s complaints history based on marketplace activities. The complaints lodged against businesses can initiate from people unhappy with a product or service. The BBB keeps a record of the business’s complaint history with the BBB.
The BBB doesn’t just look at the complaint history. It also factors in the size of the business, and both the business’s response to complaints and resolution of complaints.
Even if a customer wasn’t satisfied, the Better Business Bureaus consider the business’s efforts to resolve the issue, as part of its complaint history with BBB. The BBB may be satisfied as long as the business can demonstrate that it made a good faith effort to resolve a complaint in some manner and will make adjustments to the business’s ranking accordingly.
In terms of importance, the BBB looks at the nature of the complaint against businesses. Is the complaint volume and history tied to an underlying issue? Did the business address or ignore the underlying issue?
For more information, take a look at the BBB’s process of complaints and reviews. From there, you can search BBB to answer specific questions that you have.
The Type of Business You Run
Your BBB rating could be lower if the BBB perceives concerns about the type of business you run. And of course, the better business bureau will lower the rating if it believes the business operates in violation of law.
The Amount of Time You’ve Been in Business
You can’t do much about this one, especially if you’re a recent start-up. All you can do is let those days of operating as part of the community continue to add up.
You may be able to “lengthen” the amount of time you’ve been in business if your current business previously existed under a different name or in a different location (state). You’d have to contact a better business bureau account specialist to discuss options.
Transparency of Business Practices
This is an important component of the rating system and may involve just simple fixes to company information on your part. It may be as easy as making changes or additions to your web page or to business information that you supply to consumers.
To increase your BBB rating, make sure you provide customers with a complete description of products and services that you offer.
Here are some examples of what the better business bureau wants a business to provide customers:
- Location and ownership of the business – Do the business name and location match?
- Refund/return policy
- Information about any possible recurring costs (such as automatic renewals)
- Info about stock delays or shortages
- Shipping costs of a product
Your History of Honoring Commitments to the BBB
Sometimes a matter between a business and a customer winds up going to mediation, with a decision rendered by the BBB. When that’s the case, the business absolutely must abide by the decision, and honor all terms of a settlement or award.
Any Government or Other Actions Reported to the BBB
It’s important to remember that the BBB is not a policing agency. It doesn’t super cede or override government actions and enforcement of regulations involving a business. It isn’t involved with business licensing.
But if and when there are government actions, or a licensing organization takes action against a business, the BBB can take action to reduce the business rating. Here are examples:
There are finalized government actions that raise questions about a business’s ethics or reliability. The key term here is “finalized.” The BBB does not take action based on any pending issues.
There are also actions that involve competency licensing. The BBB defines competency licensing as licensing that can be taken away due to misconduct by a business.
Any Advertising Issues Reported to the BBB
A foundation of the BBB rating system is truth and accuracy in all business dealings. This is especially important in regard to advertising claims.
Here’s an interesting stat: Most of the complaints registered with the BBB against a business, regarding advertising issues, are lodged by competitors of a business.
Many advertising issues stem from misuse of common phrases. As a consumer, you may commonly see such phrases, but not give much thought to their literal meaning. Here are examples:
Wholesale or At Cost. These words can only be used in advertising if the item is offered for sale at the same price it was obtained by the business.
Factory to You, or Factory Outlet. These words can only be used if the advertiser is the manufacturer of the product.
A less common advertising complaint is the misuse of the BBB name or logo by a business which is not qualified to do so.
For more information, take a look at BBB code of advertising.
How Points are Assigned
It’s not just an opinion. The Better Business Bureau uses a 100-point scale to assign a business rating. The 100-point scale is matched to a letter grade scale. An A rating is the top level in the BBB rating system.
There are 13 categories where points are calculated by the BBB and businesses must excel to get to that A rating. In 5 of those categories, points can be earned or deducted on the letter rating scale. In the remaining 8 categories, points can only be deducted. If you lose 11 points in any of those categories, you’ll be knocked out of the A rating.
Let’s talk first about how to earn points. The Better Business Bureau will look at complaint volume (while considering the size of the business or company and the age of the complaints), unanswered complaints, unresolved complaints, delays in complaint resolution and length of time in business.
How does your business earn points? Let’s say that your business has zero unanswered complaints. You would earn 40 points for that. Does your business also have zero unresolved complaints? That would earn you 30 more points.
Points can be deducted in eight categories, as detailed in the table below. To indicate that points can only be deducted, the point value starts at zero and goes to a negative number. For example, for failure to honor mediation or arbitration decisions, your business or company can lose up to 41 points.
What the Rating Scale Means
Those points translate to a letter grade system with the BBB. To foster confidence with customers and consumers, an A rating is the goal of businesses.
Let’s use the A rating as an example. For an A+, you’d need an overall score of 97-100. For A, you’d need 94 to 96.99. For A- you’d need 90 to 93.99.
Of course for the B, C and D ratings, the numbers mirror those ranges, but lower. For example, B ratings are in the 80s, C ratings are in the 70s and D ratings are in the 60s. Anything lower than 60 points is an F. Obviously, a potential customer will form an opinion about your business based on its letter grade.
How can I improve my BBB Rating?
The best way to improve your Better Business Bureau rating is for business owners to act quickly regarding customer complaints and resolve any customer concerns.
“A business can improve it’s rating by making sure all complaints are answered,” Fleming said. “Make a good faith effort to quickly and completely address all complaints.”
For more information about improving ratings, see our article on: How to Handle a BBB Complaint Against your Company, which will also teach you how to dispute a BBB complaint.
What is the International Association of Better Business Bureaus?
The International Association of Better Business Bureaus is a network of Better Business Bureaus in the US, Canada and Mexico. It is headquartered in the US, in Arlington, VA.
The goal of the International Association is identical to the goal of each of the state or regional Better Business Bureau organizations – to promote and support honest and responsive relationships between businesses and consumers.
Want to Join the BBB?
It is free to register your business with the BBB, which is one of the most respected organizations in the US. The membership fee to belong to the BBB is $39 per month. The BBB membership fee is tax-deductible as a business expense. About 400,000 businesses are accredited through the BBB.
The BBB was founded in 1912 and has been serving our business community ever since. Better Business Bureaus Inc. was founded in 1920. It consists of 106 separately incorporated Better Business Bureaus throughout the US, Canada and Mexico. Each incorporated better business bureau is organized by zip code into a regional BBB.
The BBB Institute for Marketplace Trust is the 501 (c)(3) of the BBB. The BBB Institute for Marketplace Trust is comprised of a network of BBBs, with the purpose of providing educational programs and information about the BBB.