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Net Promoter Score (NPS) Benchmarks

6th Sep 2022
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Net Promoter Score is one of the most popular CX metrics organizations use to measure Customer Loyalty. It involves a simple survey asking customers to rate their experience on a scale of 0 to 10 on the basis of their likelihood to recommend the business to their friends and known ones. 

Based on the customers’ responses, they are divided into Promoters (9-10), Passives (7-8), and Detractors (0-6). NPS is calculated by subtracting the percentage of Detractors from that of Promoters. The 
Net Promoter Score can be any score lying between -100 to 100.

While using NPS to measure Customer Loyalty, you would be wondering questions like What is a good Net Promoter Score? What is the ideal NPS you should attain? How you can use NPS to measure the organization's success and how it depicts the position of a company in the market.

By the end of this article, you will get answers to all these questions. We will explore how NPS is good or bad, NPS benchmarks, and the factors that affect NPS benchmarks.

What is a Good NPS?

The Net Promoter Score can lie anywhere between -100 to 100. Generally, a positive NPS score is considered a good NPS because it directly implies that you have more promoters than detractors. Similarly, a negative NPS score is undoubtedly bad because it means that you have more detractors talking ill about your business in the market than promoters. 

As per the Absolute method, a score from -100 to 0 is a bad score, a score from 1 to 30 is considered fair, a score from 31 to 50 is considered good, from 51 to 70 is regarded as an excellent score, and 70 above implies being best in the industry. These are the international standards of NPS.

However, you must look into the relative NPS to know your exact position in the market.

‘Good’ and ‘Bad’ are relative in NPS

In our view, an NPS score can be considered ‘Good’ or ‘Bad’ after considering the NPS standards of your particular industry rather than reaching a conclusion just on the basis of general criteria.

For instance, if the average NPS of your industry is 70, you cannot enjoy an NPS of 55 and let go considering that you have gained a good NPS. Similarly, even if you get a score of 25, you can consider yourself performing well in the market if the average NPS of your industry is just 15.

You should also consider comparing your Net Promoter Score with your competitors to know where your business stands in the market. Also, you can consider your own previous NPS to compare and track whether your NPS is improving or declining. 

NPS Benchmarks by Industry

As stated above, in order to set the right benchmarks, you should consider the average NPS in your particular industry. Below is given the average NPS for various industries.

Industries

Average NPS

Departmental/Speciality Stores

52

Tablet Computers

51

Brokerage/Investments

46

Online Entertainment

43

Online Shopping

43

Airlines

39

Auto Insurance

39

Software and Apps

30

Laptop Computers

36

Hotels

36

Home/Contents Insurance

35

Smartphones

34

Banking

34

Grocery/Supermarkets

32

Health Insurance

14

Source: Satmetrix

Factors that affect NPS Benchmarks

NPS Benchmarks depend on industry standards. Average NPS can be different among various industries and countries. Here are some prominent factors responsible for this variation.

1. The difference in Cultural Tendencies

The difference in cultural tendencies of people of various countries affects the Net Promoter Score. For instance, customers in the US tend to give better scores in NPS Software. This automatically improves the NPS and increases the average NPS of the industry, thus creating a high benchmark for all. 

On the other hand, customers in European countries are somewhat conservative while giving rating scores, so the average NPS remains low there.

2. Customers’ Expectations

Customers' Expectations vary from industry to industry. In some industries like the Hospitality and Food industry, people expect to receive a very high level of satisfaction. They appreciate memorable experiences in these industries and give the highest scores only to those brands which are able to help them build beautiful memories.

On the other hand, in the sectors like finance, banking, and insurance, people are there for a perfect solution and a good service. If they get them, they give good scores.

However, bad experiences or simply finding something that they do not like can cause people to become detractors. A very common method to increase detractors is to use plagiarized content in campaigns and marketing.

That is a surefire method to garner distrust and ruin the reputation of a company amongst its customers. Thus to make sure that such dishonest activities do not take place, you should perform a plagiarism check for your content.

Plagiarism however is not an issue in sectors like finance, banking, and insurance. People are only there for a perfect solution and a good service. As long as they get both, they will give good scores.

3. Level of Competition

The level of competition is one of the most significant factors that affect NPS benchmarks. Where the competition is high, businesses strive to deliver the best experiences, thus getting a better NPS. Accordingly, the average Net Promoter Score goes up. 

Whereas, if there is less competition, businesses tend to ignore some aspects of business and get a lower Net Promoter Score, thereby decreasing the average NPS of the industry too.

4. External Factors

External factors are those factors that are beyond the control of the business. They can be economic, social, political, or environmental factors. For instance, a downfall in the stock market makes many investors dissatisfied. They tend to give low NPS scores, thereby reducing the average NPS of the industry collectively, thus lowering the benchmarks.

5. High Experience and Skills

The level of skills and experience also affects the NPS benchmarks to a large extent. Industry leaders who have good knowledge and skills bring in new innovations in their businesses to satisfy their customers. Because of this, other brands in the industry also have to bring in better innovations or features in their products and services to stay competitive in the market because people start expecting new features from all brands and can even consider switching to a different brand for a particular feature.

For instance, Nokia showed resistance to switching to the Android platform. As a result, its loyal customers switched to other brands, and it failed.

Conclusion

Net Promoter Score benchmarks vary from industry to industry and among different countries. When deciding on a benchmark for your NPS or judging your NPS to be good or bad, you need to consider the average NPS of your industry and then set the right NPS benchmarks for your business.

However, you can also consider international NPS standards with the Absolute Method, but only to a limited extent.

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By mehraroshni983
10th Sep 2022 10:55
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