What is a Good Net Promoter Score? (2018 NPS Report Update)
One of the most frequently asked questions that we get is “What is a good Net Promoter Score®?” And even though we repeatedly tell our clients that the score itself is irrelevant, we do understand the idea that comparing performance to other companies can help them show a more accurate picture of where they are standing at in a competitive landscape.
To be honest, benchmarking NPS® is a complicated process. To prove that let’s look at the Verizon NPS score, which is 32. Taking into consideration that the maximum score you can get is 100 (which no company ever did by the way), you might think that it is pretty low.
As a matter of fact, Verizon has one of the best scores in the ISP industry. United with an NPS score of 10, on the other hand, ranks as one of the worst companies in the Airlines. While both of these companies have a somewhat similar score, their performance among their peers differs considerably.
So from what you can see, Net Promoter Score can vary dramatically, and if you want to figure out whether your NPS score is good or bad, there is a variety of factors you need to look at.
What is a good NPS score?
Generally speaking, a Net Promoter Score that is below 0 would be an indication that your business has a lot of work to do to improve its customer satisfaction levels.
If your NPS is higher than 50 that would indicate that your company is doing great and has far more happy customers than unhappy ones.
NPS of 75 or more means your customer love you and your company is generating a lot of positive word-of-mouth from their referrals. The higher your NPS is, the more likely it is that your customer referrals will convert into new leads and more revenue for your company.
But all of the data above is very relative, truth be told, there are markets that never get an NPS higher than 20. And if you are one of them, there are several steps you need to go through to compare your scores against competitors.
Step 1: Compare it with your industry average
To understand your Net Promoter Score better, start by comparing it with the average scores within your industry, and compare it against both direct and indirect competitors.
When comparing NPS scores, it’s important to understand what market you’re operating in. Some businesses have a more positive image than others. Department stores, for example, bring more happiness to customers than banks and insurance companies, thus they tend to have higher NPS.
If you are in a travel business you can’t compare yourself to a company that provides internet or TV services. It will simply give you the wrong idea.
NPS shouldn’t be the end point of your benchmarking process, conduct a competitive analysis. It will significantly broaden your ideas and inspiration base, pinpoint your weaknesses and strengths.
Step 2: Compare NPS score within a region
Not only NPS varies by the industry, it also varies by geographical areas and countries. Cultural differences can influence NPS scores a lot. There is a tendency for different regions to rate companies with varying degrees of enthusiasm.
Anyone who has ever compared NPS scores in the US and Europe probably knows what we are talking about. Europeans rate company’s performance very conservatively and they are less likely to give you 10 or 9.
In Europe, children are graded on a scale of 0 to 10 and it’s almost impossible to get a 10. In Europeans minds – 8 is good, 9 is great and 10 is genius. So when confronted with a classical 1-10 scale in NPS survey respondents give you 8 even if they are satisfied.
In Japan, too, customers tend to give lower ratings, since it is considered poor etiquette to rate any business too high or too poor, regardless of their performance.
Americans, on the other hand, give higher ratings than just about anyone else. And it’s not at all surprising since Net Promoter System was originally developed in the US.
CheckMarket wrote a compelling article where it suggested that maybe there needs to be another NPS survey format for European countries, where respondents who give you 8 are also considered promoters? We think it’s a great idea, but for now, if you’re not happy with your NPS score read step three.
Step 3: Use your baseline NPS as your own benchmark
Since the score alone is nothing but vanity, it’s impossible to give you a certain number that shows you what a good NPS is. The only number that’s good, is the one that’s better than your own scores in the past. That’s the most important benchmark.
The best way of measuring progress would be to compare your NPS against your score over the last three or six months. If you notice a 5-10% increase in score, you’re going in the right direction and progressing towards building a successful business.
On the contrary, if you notice a significant decrease in the number, treat it as a warning sign that something went wrong and there’s certain measures or actions that need to be taken. If you are continually improving your own NPS, then you’re likely to be continually improving your customer satisfaction, growth, and revenue.
Measure and Improve Your Net Promoter Score
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Compare apples to apples
Pay attention to the differences in the survey channel (email, in-app, SMS) and the methodology used to conduct the survey, since it can have a big impact on the NPS score. Big companies may have the financial means to do an independent survey, whereas small companies will most probably measure it on their own.
There is much discussion on the surveying methodologies favored by respondents. Fueled by the growth of the internet, web surveying seems to take the lead. However, criteria such as approach, outreach method, cost, demographics allow some of the channels to outperform in particular cases.
For instance, the social interaction proper to a phone call may determine more engagement from the respondent since he is assisted in the discussion. It may also affect their answers as people tend to present their opinion in a more positive light to a real person. Web surveys (in-app) turn to be less expensive, less intrusive, but, at times, they might have a weaker impact on enforcing customer dialogue.
Whatever channel you go for, make sure you run your NPS campaign using the same method as performed by the benchmarked competitor, otherwise, the comparison will simply not give you accurate results. Don’t try to compare apples to oranges.
What’s more important than NPS
Ask yourself, if you find out in your benchmarking process that your score is lower than your competitors’ will you stop attempting to improve it? And on the flip side, if you find out that you are doing better than your competition, will you stop then?
The most important aspect of NPS that many companies miss is that the number is just a metric, what’s more important is the qualitative feedback you get from it and what you do with it to make sure you’re improving your customer experience.
The main purpose of Net Promoter Score lies in helping you track and maintain the relationship you’ve created with your customers. And your main goal should always be to listen to the Voice of a Customer and act on it.
Instead of asking “What is a good Net Promoter Score?”, focus on understanding what drives the score and how to improve it day in day out, month in month out to produce long-term customer success.
Besides, when all departments work together to improve your customer satisfaction level, it unites everyone in the company around a common goal. So once you reach your goal, it keeps the whole team motivated.
Use NPS as a driver for feedback
The qualitative feedback you receive is even more valuable as the score each client gives you. The reason is simple – this feedback explains what each client thinks of your product or service.
By digging into the qualitative feedback you receive from each respondent, you can identify weak points that affect customer retention, as well as good aspects of your business that have a positive effect on your client satisfaction.
Retently will help you sort both your feedback and feedback sources into categories, you’ll learn which customers love your company and which are on the edge of leaving your company.
It is very easy to set up and get started with. All you need to do is create an NPS survey template, import your customers and send the survey. Learn more about Retently and send out your first client NPS survey today.
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