What is a good Net Promoter Score (NPS)?
What is a good Net Promoter score (NPS) to have? These are the golden questions that many have asked, and you’re not alone. In fact, this is one of the most frequent questions that we get asked. The answer is not as simple as it sounds, albeit that NPS is just a number.
The truth is that when NPS is by itself, the number is meaningless. However, there are various ways to measure your company’s performance and to compare it in a competitive landscape. The most effective customer experience metrics which are used to understand customer loyalty and customer satisfaction are Customer Effort Score and Net Promoter Score.
The Net Promoter Score (NPS) Scale
Remember that Net Promoter Score (NPS) measures the loyalty that exists between your company and your customers. By now, you probably already know that NPS can be as low as -100 or as high as +100.
Simply put, any positive score means that you have more advocates (promoters) willing to recommend you than critics (detractors). -100 means that every one of your customers is a detractor. On the other end of the spectrum, +100 means that everybody is a promoter. NPS is an indication of your company’s health and whether it’s going north or south.
So, what is considered a strong NPS?
There are a few ways that you can measure your NPS and have a general understanding of what your NPS goal should be.
General NPS Benchmark
Given the NPS range of -100 to +100, a “positive” score or NPS above 0 is considered “good”, +50 is “Excellent,” and above 70 is considered “world class.” Based on global NPS standards, any score above 0 would be considered “good.” This simply means that the majority of your customer base is more loyal.
Generally, if Net Promoter Score (NPS) is below 0, that is an indicator that your company needs to start understanding and improving your customer satisfaction levels.
If your NPS is above 50, you are doing great! This indicates that your company places customer satisfaction high in priority and has a lot more satisfied customers than dissatisfied ones.
An NPS of 70 or more places you in the list of top customer-centric companies. This most likely means that your customers love you and your company generates a lot of positive word-of-mouth referrals.
Now that has been broadly defined, let’s put this into context. Here are the companies with the highest NPS in 2016:
The stronger your NPS is, the more organic growth your company will experience. This is because your customer referrals will convert into new leads and more revenue for your company.
Here is a report based on TV and Internet service providers. You can see that the CX leaders in this space make almost 8x as much revenue than CX laggards.
Using Competitive Landscape as Your NPS Benchmark
Now that you have a better understanding of what the Net Promoter Score ranges mean, the better way to measure your NPS is by using your competitor’s score as a benchmark.
This is a better method to measure your NPS because this takes your industry into consideration. Airlines, for example, bring more happiness to customers than banks, thus they tend to have a higher NPS. Because of that nature, it would not be helpful to compare a department store to an insurance company.
Below is the range of Net Promoter Scores across industries:
As you can see, there are Net Promoter Score ranges for each industry along with an average NPS.
The Airline industry has a typical NPS range between -4 to +57. United Airlines has an NPS of 10, ranks as one of the worst companies in the Airlines space. On the other hand, Verizon, for example, has an NPS of 7 which is considered one of the best in the industry.
In industries where the market is more dynamic, and customers have more freedom to switch to competitors, Net Promoter Scores have become a critical benchmark for measuring growth.
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NPS Global Standards vs. Competitor Benchmarking
You certainly can compare your NPS across global standards, but it is critical to note that scores will vary across geographic markets. If you have ever compared NPS in the US and Europe, you probably know the cultural and demographic differences when rating a company’s performance. For example, European customers are more conservative with rating a company’s performance, making them less likely to rate you a 9 or 10. In other regions, you may find customers using the lower end and higher end of the scale, but skipping in between. Because of these differences, the absolute Net Promoter scores in one industry can vary dramatically. This is another reason why a good Net Promoter Score is subjective.
Compare Your NPS Against Your Own
Since NPS is nothing but a vanity number on its own, it is impossible to give you a single number that represents a good Net Promoter Score, especially when you are starting out. The best way to find out if your number is “good”, is the one that’s better than your own scores in the past — your most important benchmark.
The best way to start measuring progress would be to compare your NPS against your score over the last quarter or six months. If you are noticing an increase of at least 10%, you are heading in the right direction and progressing toward building a successful business driven by organic growth. On the other hand, if you notice a significant decrease in NPS, this indicates that there is something wrong and you must quickly identify to discover the cause and take appropriate measures.
Instead of asking “What is a good Net Promoter Score?”, focus first on understanding the drivers of NPS and how to improve it on a daily to produce long-term customer satisfaction. Remember, a good Net Promoter Score by itself is not a quantifiable metric to grow, rather your main goal should always be to listen, analyze, and act on your customer feedback. Taking the right action will ensure you convert your detractors into promoters.
What do you consider as a good Net Promoter Score for your company?
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