What is a Good Net Promoter Score®?
It’s no secret that all types of businesses benefit from surveying their customers. In fact, in today’s digital world where face to face contact is limited, it’s the only way to measure customer satisfaction. Consider an eCommerce business where the entire customer interaction and transaction occurs online. Asking them to compete an online survey is the best and potentially only way to find out how their experience was.
One of the more popular customer loyalty metrics is Net Promoter Score® (NPS®). It’s designed to determine how likely a customer is to recommend your business to others. In a world where personal recommendations carry a lot of weight, NPS is an excellent metric. However, you first need to understand how to use it, and more importantly what a good NPS score actually is.
Firstly, what is Net Promoter Score®?
NPS is a customer loyalty metric obtained by asking customers one single question: ‘How likely would you to be to recommend this company to others? A key questions arises from the survey: What is a good Net Promoter Score?
The results give you an indication of how many people are satisfied enough with your product or service to promote their experience to friends and family. Customers are asked to give a rating between 1-10, and their responses are grouped as follows:
- 9-10: Promoters
- 7-8: Passives
- 0-6: Detractors
As you can see, the ‘detractors’ are given a wider spectrum here, because it’s accepted that only people who are extremely satisfied with a service will promote it. When calculating your NPS score, the passives are essentially ignored when using this simple equation:
% of Promoters – % of Detractors = NPS Score
It sounds simple, but the real key is in interpreting the results and acting on the feedback, which you can read more about here.
Who uses NPS®?
NPS can be used in absolutely any business across any industry. It doesn’t matter whether you sell primarily to businesses or individual customers, loyalty and referrals occur everywhere. While any company can use NPS, we should stress that it’s more of a guide and a starting point for measuring the customer experience.
Because NPS requires an answer to just one question, you won’t gain any specific information about what your customers like or dislike. That’s where other surveys (like CSAT and CES) are necessary to drill down more into your NPS results. Having said that, businesses who have lengthy and varied customer interactions can use NPS surveys to measure customer satisfaction at certain points of their journey, and this can highlight areas for improvement.
For example, a building company dealing with new homes may survey customers at the end of the planning stage, at the end of construction, and again after final handover. This would allow them to isolate which points of the journey are working well, and which ones aren’t.
What is a Good Net Promoter Score (NPS Score)?
There’s no definitive answer to what a good Net Promoter Score is, because it will vary from business to business and industry to industry. In fact, the score can range anywhere from -100 to 100. Naturally, scoring -100 tells you that all customers surveyed would not recommend your services, while a score of 100 indicates total customer satisfaction.
It’s in between these numbers where it can get a little murky. For example, if you had 80% passives, 20% detractors and no promoters, your score would be -20. It’s not great to have no promoters, however you do have 80% of people who could be steered towards becoming promoters.
Alternatively, you may have no passives, 60% detractors and 40% promoters. You still get a score of -20, but the gap between happy and unhappy customers is wider.
Regardless, the table below provides a guide to NPS scoring.
- -100 – 0: Definitely needs improvement
- 0 – 30: Good
- 30 – 50: Very good
- 50 – 70: Excellent
- 70 – 100: Great
Please note this is only a guide, because the most important part of assessing your NPS score is how you benchmark it.
Benchmarking Your NPS® Score
Although your NPS score gives you a good guide, looking at the numbers in isolation is somewhat irrelevant. That’s because as we know, there’s only a certain amount of market share out there, and you’re constantly fighting against competitors for your share. You might have an NPS score of 50 and think you’re doing great. While you probably are delivering great products and services, what if all of your competitors are scoring 80?
Here’s some ways to benchmark your NPS score to give you more insight into your performance.
Compare by Industry
If you want to reach the top of your industry, you’re going to want higher NPS scores than your competitors. We’ve discovered that different industries have very different benchmarks for NPS scores. So, if you’re a clothing retail store it makes no sense to compare yourself to businesses in the legal industry. The customer experience is so different that the comparison isn’t useful. However, comparing your score with others in the retail industry will show exactly where you sit for customer loyalty.
Compare by Region
Regional differences in NPS scoring also need to be considered during analysis. Culturally, people rate their experiences differently. For example, in Japan it is considered impolite to rate a business too poorly or too highly. In Europe, customers are less likely to give something a 10 out of 10 rating. These differences need to be taken into account.
If you’re a global company, you may even consider it good practice to survey different regions separately.
Compare Against Yourself
While all other comparisons give you a great indication of where you sit in the market, there’s perhaps one comparison that trumps them all. Comparing your current NPS score against your previous NPS score. Ultimately, you can’t influence how people feel about their experience with other companies. You can only improve their experience with you. So, at the end of the day, looking internally can be best in deciding what is a good Net Promoter Score?
So, this is why regular NPS surveys are crucial when analysing your long-term performance and growth. Most importantly, you can look for specific movement in the numbers rather than just the total score. If your previous result was 20, but you had a lot of passive scores, you would love to see more of those passives turning into promoters and more of your detractors turning into passives or promoters
As you can see, NPS can be a terrific customer loyalty guide, but the facts behind the data should always be considered and analysed thoroughly. Your score alone won’t tell the whole picture, and you need to dig deeper into the results. Also, make sure you consider other types of customer surveys to really explore your strengths and areas for improvement.
Acknowledgement
Net Promoter®, NPS®, and Net Promoter Score® are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld.
