Are you ready to see how your brand holds up against the competition in the wild and wacky world of Net Promoter Scores?
NPS alone might show how pleased your customers are, but it doesn’t tell you how you stack up in the whole context of your industry or whether your best customers are satisfied with your brand.
Enter benchmarking – the safest way of understanding where you stand and the direction you need to take.
By comparing your company’s NPS score against industry NPS benchmarks, you can determine how you measure up in the eyes of your customers.
This article will get you through NPS benchmarking, the factors affecting NPS benchmarks, and the NPS benchmarking by industry. By the end, you’ll eliminate every last doubt about your NPS.
The Net Promoter Score in a Nutshell
If you’re unfamiliar with the NPS, here’s a quick recap.
The Net Promoter Score (NPS) is a widely used metric that measures customer satisfaction. It calculates customers’ willingness to recommend your brand to friends, family, and anyone else who will listen.
It works like this: companies ask customers to rate their likelihood of recommending the company on a scale of 0 to 10 through an NPS survey.
The NPS questions can be either close-ended (where customers only need to rate an answer), or open-ended (customers are asked to explain their choice).
Customers’ responses divide your customers into three categories:
- Promoters – scored 9 and 10 in the survey; these customers love your brand and are willing to shout your company’s praises from the rooftops.
- Passives – scored 7 and 8; these people are just kind of there, neither happy nor unhappy with your brand.
- Detractors – scored 1 and 6 in the survey; these customers are disappointed with your brand and very passionate and vocal about it.
To identify your NPS score, you need to subtract the percentage of Detractors from the total percentage of Detractors – this process is known as the NPS formula.
The resulting score can range from -100 (all customers are detractors) to 100 (all customers are promoters). However, it’s almost impossible to calculate NPS and get such an absolute result.
The NPS metric isn’t just another customer satisfaction survey that captures the voice of the customer. It can become much more than that, a crucial instrument for improving your customer satisfaction overall.
When you use it wisely and combine it with RFM analysis, it becomes a valuable tool for understanding and improving customer satisfaction and loyalty.
By regularly measuring and tracking NPS scores, you can identify areas for improvement and make changes to meet your customers’ needs better. If you’re determined to improve your Net Promoter Score, you ultimately improve your business model.
These actions lead to reduced customer churn and improved customer satisfaction and loyalty.
And, in case of high Net Promoter Scores, the NPS can be used for bragging rights. Who doesn’t want more satisfied customers? And what marketer will give up on the opportunity to provide solid social proof and watch customers flock to a business like moths to a flame?
Benchmark your Net Promoter Score
Since NPS measures customer satisfaction, you not only want to know your score, but understand the score benchmarks by industry. Rightly so, seeing how the NPS can determine and influence your company’s future success.
There are two methods for creating your NPS benchmark reports:
- Absolute NPS
The absolute NPS method entails comparing your NPS with a generally accepted scale of good and bad NPS standards, regardless of the industry.
Here’s a rough interpretation of the absolute NPS scores.
- If it’s close to -100, unhappy customers make up most of your customer base. Consider changing your business model.
- If it’s close to 0, you have neutral customers who could be more loyal. You should survey them further and see how you can help them achieve customer success and bring more value so that the scores will rise.
- If it’s close to 30, your customers might love you, but they aren’t in any hurry to tell their friends about you. You should provide incentives to trigger recommendations.
- If the score is above 30 and close to 100, your customers are brand evangelists and will tell anyone who will listen about how great you are.
Keep in mind that, ultimately, your goal is creating positive customer experiences that lead to increased loyalty and advocacy for your brand. No matter your score, there’s always room for improvement and getting more knowledge about what a customer wants.
- Relative NPS
Relative NPS refers to comparing your NPS with the Industry average.
Some industries are more friendly or customer-centric, and brands operating in these markets tend to connect and communicate better with their customers.
Think of the entertainment or hospitality industry and how they communicate with their audiences.
On the other end of the spectrum, you can find banking or service industries that are more rigid in communication.
These subtle but essential differences affect the average Net Promoter Scores inside these industries. Suppose you compare the average NPS between the two types of industries. In that case, you’ll see the hospitality industry scoring higher than the banking one.
This is why you must analyze and understand the market you are operating in and compare your score with Net Promoter Score benchmarks inside your industry.
When benchmarking your NPS against your peers and brands playing in the same field as yours, you will get an obvious image of where you stand.
You can look at the Net Promoter Scores by the industry as a set standard – something to aspire to and even surpass.
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Factors affecting NPS Benchmarks
Your industry and communication preferences aren’t the only factors that affect NPS benchmarks.
Here are other elements that influence industry standards that you should keep in mind when evaluating Net Promoter Scores and working to improve customer loyalty and satisfaction.
- Customer expectations
Customers with higher expectations are quickly disappointed and give low Net Promoter Scores. For example, customers expect quick and effortless customer service in the service industry (cable, internet, electricity).
At the same time, in the medical industry, customers are focused on experience and the end results. In contrast, customer service isn’t a priority in evaluating the service.
Be mindful of customers’ feedback and needs. Deliver the things that bring value to them, and you can avoid disappointing them.
- Product / Service Quality
There’s a saying that no amount of marketing can save a poor product.
It doesn’t matter how proactive your customer support teams are or how seamless the delivery process gets. If products are of low quality, customers will give low scores.
Remember that first-time customers don’t buy the product per se; they believe the marketing around it, the promise you made. If you don’t deliver on that promise, customers will be disappointed and won’t recommend or return to your brand.
- Customer Service.
Good customer service will significantly impact NPS.
People lack the patience to wait through automated calls or go through dozens of steps before talking to your representatives.
On the other hand, customers with positive experiences with the customer support team are likelier to give higher scores.
- Price points.
Loyal customers are okay with paying a higher price for a product as long as it meets their expectations and helps them progress.
But first-time customers who still need to be nurtured expect fair and competitive prices.
If a customer feels he was over-charged and didn’t get the value he expected, he’s more likely to give a low score on the NPS survey question.
The bar is lowered if your brand is notoriously known for delivering poor customer experiences. Therefore, customers aren’t as quickly disappointed and quick to give low scores.
Think of the cable industry, where customer support teams are overwhelmed and can’t prioritize their customers.
Marketing is the promise you make about the value of your products. The more bombastic the promise, the higher customer expectations will be.
This is why you should strive to under-promise and over-deliver instead of the other way around. Under-promising ensures you will surpass customer expectations, delight them, and influence them towards giving you a higher score in the NPS survey.
NPS Benchmark by the Industries
Fortunately, various industries are open and transparent about their Net Promoter Scores, and the numbers are easily accessible. Therefore, it should be easy to identify the NPS benchmarks inside your industry and use them as an assessment tool for your performance.
Here’s a list of the biggest industries and their Net Promoter Scores for 2021, according to Statista.
While analyzing the scores, observe how much the value varies from Industry to Industry. This variation only proves that the absolute NPS may be misleading, and you should always try and benchmark inside your industry.
Department & specialty stores – 56 NPS
Brokerage & investments – 49 NPS
Hotels – 49 NPS
Credit cards – 45 NPS
Airlines – 45 NPS
Drug stores/Pharmacies – 43 NPS
Smartphones – 43 NPS
Computers and tablets – 43 NPS
Online entertainment – 42 NPS
Auto insurance – 41 NPS
Software & apps – 41 NPS
Online shopping – 40 NPS
Life insurance – 39 NPS
Grocery/supermarkets – 36 NPS
Home/Contents insurance – 35 NPS
Banking – 34 NPS
Cell phone service – 34 NPS
Travel websites – 32 NPS
Rideshare & food delivery – 31 NPS
Shipping services – 27 NPS
Health insurance – 27 NPS
Cable & satellite TV service – -2(negative two) NPS
Internet service- -3 (negative three) NPS
What if there’s no NPS Benchmark for your Industry?
As you can see, the list above only encompasses some existing industries and niches.
Maybe your industry is just now emerging, and no definite numerical values are available yet. Or the industry is small, and companies inside it aren’t sharing their scores publicly.
In this case, where a benchmark for your industry doesn’t exist, you should look for alternatives in evaluating your NPS.
One way to achieve this is by looking at your company’s performance and benchmarking against yourself.
For example, you can track NPS over time and look for patterns and ways of boosting your scores.
If you do so, you should set clear objectives. For instance, you can set out to improve the NPS by a monthly percentage. Ensure you include open-ended questions in your survey template to better gauge customers’ needs and expectations.
Identify what matters to them and what they value in a business, then strive to deliver accordingly.
You can also look at similar industries. For example, if you work in entertainment, look at hospitality. If you work in marketing, look at sales. If you work in primary education, look at non-formal teaching and lifelong learning.
Benchmark against industries related to yours and see how you score compared to these industries.
The last idea is benchmarking against companies famous for creating stellar customer experiences, like Amazon or Hubspot. Look for customer-centric companies inside your industry (but not exclusively) and steal like an artist.
Replicate their processes and approaches to improve your own services and customer relationships.
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The magic of NPS is that, when used correctly, it can become more than a simple metric. You can transform it into a solid system, driver, and methodology to significantly improve products and customer experience.
Moreover, the NPS helps you identify ongoing issues inside your company and close the loop with unsatisfied customers by addressing and solving their problems.
The NPS isn’t a vanity metric. Yes, it’s satisfying to see the numbers go up or receive awards for your efforts.
However, the Net Promoter Score ultimately boils down to customer feedback and satisfaction – regardless of your industry’s benchmarks that may or may not exist.
Tread carefully – the NPS is a fickle beast, and you must watch it constantly.
Last month’s scores might not tell you anything helpful today, so be sure you’re measuring and benchmarking in time with clear objectives in mind.
Constant vigilance of the NPS increases your chances to identify opportunities and challenges and to improve the experience you provide to your customers.
The NPS can become your guiding compass in improving your products and customer experiences. Customer feedback is precious in this regard, as it gives insights into the scores.
At the same time, customer comments show you what needs to change or improve, so your overall scores can spike.
Frequently Asked Questions about NPS Benchmarks
If you look at the absolute NPS, regardless of Industry, you see that any score above 50 can be considered “Excellent” and anything above 75 “World-class”.
Anything about 0 is considered “good”, as it proves your Promoters outnumber your Detractors. If your score is close to 30, your customers might love you, but they aren’t in any hurry to recommend you. Anything above 30 shows your customers are brand evangelists and will happily recommend your brand.
A positive (above zero) NPS is realistic to obtain, as long as you care about meeting customers’ needs. Since a score approaching 50 is considered “excellent”, you can view any score under that area realistic. Anything higher requires extraordinary efforts.
NPS varies by industry. In the Department Store Industry, the average NPS is just about 50, while in the Cable Industry the average score is below zero. You should benchmark your score against Industry benchmarks.