One of the most frequently asked questions that we get about Net Promoter Score® is “Do I have a good NPS® score?” or “What is a good Net Promoter Score?” And even though we repeatedly tell our clients and readers that Net Promoter Score 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 10. Taking in 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 are variety of factors you need to look at.
General NPS benchmarks
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 within your industry
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 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 with 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 scores 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 highly or too poorly, 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 US.
CheckMarket wrote a compelling article were 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 NPS as your own benchmark
Since Net Promoter Score 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 10-15% 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.
Compare apples to apples
Pay attention to the NPS survey channel (email, in-app, phone) and process the company used to conduct the survey, since it can have a big impact on the score. Big companies may have the financial means to do an independent survey, whereas small companies will most probably measure it on their own.
Frederick C. Van Bennekom have examined the impact of survey mode responses, and found that responses for telephone surveys were significantly higher than for web-form surveys.
Telephone surveys also created more response bias due to the presence of an interviewer as wells as the willingness of certain demographic profiles, such as age, to be more or less likely to take a survey.
If you don’t run your survey the same way as the benchmark you found, then the comparison will simply not give you valid 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 feedback you get from it and what you do with it to make sure you’re improving your customer experience.
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 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 positive effect on your client satisfaction.
Retently NPS 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 customize your NPS survey template, import your customers and send the survey. Learn more about Retently and send out your first client NPS survey today.