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.
But where does your NPS stand? What’s your NPS benchmark indicating about your business’s customer loyalty?
‘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 not just you, but our customers too, who have similar doubts about 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 who has turned out to be your promoters, your hardcore supporters, who are super happy with your product and are ready to recommend it to anyone out there.
But then, if it’s 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 on the verge of leaving you for your competitors.
Ideally, the aforementioned were the best and worst NPS scores a company could have. Well, for 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.
How is NPS Measured?
Essentially, two methods can aid you in figuring out if your score is good or meager.
Absolute Method
From this point of view, if your score dips below 0, i.e., if you procure an overall negative NPS, you have more detractors. Most 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 have 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. Create a free NPS survey with SurveySparrow and benchmark the results.
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Evidently, since you have your scores in hand, you are contemplating which method to choose. Well, then, let’s consider two scenarios before taking the plunge.
The average NPS score of the Rental car industry is 28, 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 keep 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 2023
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 2023.
- Hospital & Health Care – The average NPS of the Hospital and Health Care industry is 58. The main player in the industry is MedAvail, with an NPS score of 90.
- IT Services – 40 is the NPS benchmark for those in a particular industry. The highest NPS is 94, which belongs to Nutanix.
- Communication and Media – The NPS Benchmark for the industry is 29, while the highest NPS score, 82, belongs to T-Mobile.
- Financial Services – The average NPS of the Accounting sector is 56, the highest being 98 owned by Princeton Mortgage.
- Apparel & Fashion – The NPS benchmark of the industry is 72. The highest NPS score in the industry is Amour Vert’s, which is 88.
- Broadcast Media – The 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 81, belonging to Cali Bamboo.
- Education – The average NPS of the educational sector is 42. E-learning has the highest NPS of 64.
- Real Estate – NPS Benchmark of the real estate industry is 30. The highest score in the industry is 82 by Virtuance.
- Luxury Goods and Jewellery – The industry average is 45. Tiffany & Co. has the highest NPS score of 51.
Factors That Affect NPS Benchmarks
Here are the key elements that can impact NPS benchmarks:
1. Industry Standards:
The benchmark varies across industries. It depends on customer expectations, competitors, and market dynamics.
2. Company Reputation:
A company’s brand image and reputation significantly affect NPS. Brands that have been around for a while and are well-known tend to have higher Net Promoter Scores (NPS) than newer or less-known entities.
3. Customer Experience:
The quality of customer interactions directly affects NPS. Positive experiences raise scores, while negative ones lower them.
4. Product or Service Quality:
Customers’ perception of product or service quality is crucial. High-quality offerings often lead to satisfied customers who are likelier to promote the brand.
5. Customer Expectations:
NPS benchmarks are based on customer expectations. Meeting or exceeding these expectations leads to higher NPS scores, while unmet expectations can result in lower scores.
6. Competitive Landscape:
The competitors’ benchmarks provide context. Outperforming competitors in NPS can indicate a strong customer base, while scoring below competitors may signal areas for improvement.
7. Market Trends:
NPS benchmarks should be analyzed in the context of prevailing market dynamics. Customer sentiments depend on market trends, economic conditions, and industry shifts.
8. Demographics and Customer Segmentation:
Demographic factors such as age, location, income, and cultural preferences influence NPS benchmarks.
9. Customer Loyalty Programs:
Loyalty programs can have a positive impact on NPS. Customers engaged in loyalty initiatives often exhibit higher satisfaction and are likelier to recommend the brand.
10. Social and Environmental Responsibility:
Companies that prioritize social and environmental responsibility tend to have higher NPS scores due to increased customer appreciation for positive contributions to society.
11. Employee Engagement:
Engaged employees provide better customer service, enhancing the overall customer experience. Positive employee interactions can elevate NPS benchmarks.
12. Technological Advancements:
Companies with seamless digital experiences often achieve higher NPS scores.
How do you 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 analyze 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 rating standards, eight is often considered good, and ten 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 for 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 in doing so, then you have an NPS score that is not just good but really good, and that’s the number that 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 making 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 three main steps.
- The first and foremost is to collect feedback (NPS scores) and thereby listen to their opinions.
- Secondly, you analyze 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, 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, analyzing, and taking appropriate actions to address the concerns of your customers. You even have online survey tools with NPS features and dedicated NPS software to help you automate the process of closing the feedback loop.
Wrap Up!
Understanding the NPS benchmark is highly crucial to setting your goals.
Here’s a pro tip: when you have successfully resolved a customer issue, notify them. This shows your customers how much you value them. And, oh yes, brace yourselves to earn some brownie points too!
Analyzing the benchmarks provides insights into customer sentiments. This gives you the power to identify strengths, address weaknesses, and enhance overall customer satisfaction. Plus, continuous monitoring and adaptation to market dynamics ensures that companies maintain strong customer relationships and stay ahead of the competition.
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.
