If there’s any loyalty metric that has become insanely popular over the years, then it is definitely the Net promoter Score. Companies are increasingly adopting the metric to dodge the cut-throat competition and stay ahead of the curve.
Well, we assume you are no exception. You are probably conducting NPS surveys religiously to know if your customers would indeed recommend you to their family and friends. But then you have certain questions lurking in your mind.
‘What should be my NPS to know if I am on the right track?’
‘ Is the NPS of my organization good enough?’
How do we know it? Well, it’s just not you, but our customers too, who have similar doubts as to this. So, let’s clear all the dilemmas, ‘cause you know, they are never good until sorted nice and neat. So, here’s addressing the crux of all the questions mentioned above.
What is a good NPS to have?
Now, let’s take it from the top.
As you know, NPS is basically a metric that tells you how loyal your customers are with the help of a question as simple as ‘ On a scale of 1- 10, how likely are you to recommend the product/service to your friends and family?’. Your final scores can range from -100 to +100.
If your NPS survey reports show you a 100, then you can truly rejoice for every one of your customers have turned out to be your promoters, your hardcore supporters, who are super happy with your product and is ready to recommend it to anyone out there.
But then if its a -100 that you see, try not to flinch because you may be facing the wrath of your detractors. None of your customers is even close to being happy with your brand and is at the verge of leaving you for your competitors.
Ideally, the prementioned were the best and worst NPS scores a company could have. Well, for the good or bad, such instances are few and far between.
Since the chances of obtaining -100 or +100 are minimal, we need to delve into answers that are more practical in finding out if your NPS is good enough. Essentially there are two methods that can aid you in figuring out if your score is good or meagre.
Absolute Method: From this point of view, if your score dips below 0, i.e if you procure an overall NPS that is negative, you have more detractors. The majority of your customers would not prefer recommending your brand to anyone they know. This could only mean that your scores are not up to the mark and has room for improvement.
Relative Method: When it comes to the relative outlook, you can compare your scores with the NPS benchmarks of your industry and then decide accordingly, if your NPS score is good enough as compared to your peers.
And these were our two methods to find out the reliability of your score. Hold on! Are you done with your net promoter score calculation yet? If not, you can use our NPS calculator to find your scores.
Evidently, since you have your scores in hand, now you are contemplating on which method to choose. Well, then let’s consider two scenarios before taking the plunge.
The average NPS score of Rental Cars industry is 34 wherein the lowest score recorded is 22 and the highest, 49. So, procuring an NPS of 29 or 30 does not mean much to your organization. When that’s the case the average NPS of the property management companies by itself is a -3! So, obtaining even a score of -2 helps you get the better of the industry!
Now, would you say that you can completely rely on the absolute method for deciding the effectiveness of your score? Umm..not really right? You can’t make a proper analysis of a company’s NPS score unless it is relatively benchmarked against the industry average.
The trends in NPS benchmarks across industries keeps varying. It shouldn’t come as a surprise since every company and every industry is in the race to deliver the finest experience to its customers. So, you need to continuously monitor and keep track of the average scores of your industry competitors.
Net Promoter Score Benchmarks by Industries in 2020
We’ve contextually cherry-picked some of the most happening industries to emphasize the importance of benchmarking your NPS scores. Here’s looking into the NPS Benchmarks by industries as per the latest trends of 2020.
- Hospital & Health Care – The average NPS of the Hospital and Health Care industry is 75. The main player in the industry is DPC Health Care with an NPS score of 98.
- Computer Products & Network Security – 34 is the NPS benchmark for those in a particular industry. The highest NPS is a 98 that belongs to Fractal.
- Marketing & Advertising – The NPS Benchmark for the industry is 44 while the highest NPS score, 82, belongs to Ruddocks.
- Accounting – The average NPS of the Accounting sector is 72, the highest being 93 owned by Equity Method.
- Apparel & Fashion – NPS benchmark of the industry is 72. The highest NPS score of the industry is Amour Vert’s which is 88.
- Broadcast Media – NPS benchmark of the industry is 15 and the highest NPS score, 21, belongs to Univision.
- Building Materials – The sector has an average NPS score of 81. The highest NPS score is also 81 belonging to Cali Bamboo
- Education – The average NPS of the educational sector is 66. CrossKnowledge has the highest NPS of 93.
- Real Estate – NPS Benchmark of the real estate industry is 30. The highest score of the industry is 82 by Virtuance.
- Luxury Goods and Jewellery – The industry average is 45. Tiffany & Co. has the highest NPS score of 51.
You can also take a quick glance at the pictorial representation of NPS benchmarks by industries.
How to benchmark your NPS score?
Benchmarking NPS scores is not as easy as it sounds. In fact, the process is quite sophisticated. But if you get through it well enough, you will get every last doubt regarding your NPS score cleared. Let us walk you through the main steps for benchmarking your NPS score relatively.
1. Differentiate your NPS score with your Industry Average
To get a comprehensive and clear picture of your NPS score, it is always advisable to benchmark it against the industry average.
As mentioned earlier, this method is called the relative method.
Why does it prevail over the other methods?
You should always know and analyse the market you are working in. For instance, you can’t compare the NPS of an Entertainment enterprise with that of the banking sector. Some businesses tend to interact and connect with customers more like the entertainment industry and they are bound to have an average NPS greater than the banking sector, whose connection with the customers is a little less strong.
When you benchmark your NPS score against your peers belonging to the same industry, you get a clear perception of where you stand in terms of customer loyalty and you can always work accordingly to reach or even surpass the standards set by your industrial competitors.
2. Compare Your Scores Geographically
Some of you may not have seen this coming, but yes, NPS scores can vary from region to region. Cultures can affect your NPS scores.
While some countries are enthusiastic about giving high scores as per the product or service, there are some other countries who do not score beyond a particular number.
European countries are good examples of the aforementioned. As per their standards of rating, 8 is often considered good and 10 is considered exemplary.
So, if you were to conduct an NPS survey in the region, you can expect an ‘8’ if they like your services and might as well consider the scorer somewhere close to being a promoter. In fact, CheckMarket suggests a different format for NPS surveys in such countries due to the same reason.
3. Benchmark against your own NPS Score
Growth is the goal and thus the bottom line is to beat your own NPS score with each survey you conduct. When you succeed to do so, then you have an NPS score that is not just good but really good and that’s the number which will lead your company through the right path.
Here’s what you can do. Compare your current NPS score with that of the one obtained during the previous survey. If you notice a 5-10% hike in the scores then you definitely deserve a pat on the back for you are indeed traversing through the track leading to your goals.
But if the converse were to happen and your NPS score shows a dip, then you will have to take it as a warning and start taking dedicated efforts to improve the score.
Closing The Feedback Loop
Be it improving your own NPS score or hitting the industry average, it all boils down to this one question, ‘Did You Close the Feedback Loop?’
Closing the feedback loop comprises of four main steps. The first and foremost is to collect feedback (NPS scores) and thereby listen to their opinions. Secondly, you analyse your overall NPS score and discover the factors that can drive loyalty. Then you act on the conclusions drawn from the NPS feedback, take necessary measures and finally improve your experience.
When you close the feedback loop you are indirectly responding to your customers and solving their issues and better still, you succeed in delivering them a stellar experience.
But sadly, many of the businesses leave their feedback loop open. They conduct a survey and collect feedback and put a halt to the continuity of the process. Well, let me warn you that it’s a grave mistake.
Your customers have taken some time out of their busy lives to provide feedback and they expect you to take the right measures to provide them with a better experience. When you fail to close the feedback loop they tend to lose their trust in you and when that’s the case expect a lower score in the next NPS survey. No miracle can save your score then!
So, remember to close the feedback loop by listening, analysing and taking appropriate actions to address the concerns of your customers. You even have online survey tools with NPS feature and even dedicated NPS software to help you automate the process of closing the feedback loop.
And here’s a pro tip. When you have successfully resolved a customer issue, do notify them. This shows your customers how much you value them. And, oh yes, brace yourselves to earn some brownie points too!
Net Promoter, Net Promoter System, Net Promoter Score, NPS, and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.