A good NPS score is one where you have more Promoters than Detractors. Detractors are unhappy customers who will likely not refer friends or colleagues and will cost you more through additional customer service interactions.
Some industries naturally have lower NPS scores – property management and debt collection companies, for example. Keeping up with industry averages can help you avoid falling behind.
It Measures Word-of-Mouth Traffic
NPS measures your customers’ willingness to recommend you on a 0-10 scale. Those who recommend you are called ‘promoters,’ and those who don’t are called ‘detractors.’’ NPS is calculated by subtracting the percentage of detractors from the percentage of promoters and dividing it by the total number of respondents.
Determining what is a good net promoter score involves assessing industry benchmarks and customer satisfaction levels to gauge the effectiveness of a company’s customer experience and loyalty initiatives.
A company’s NPS can be a powerful indicator of its ability to drive word-of-mouth traffic and grow its customer base. Companies with a good NPS are known to have high retention rates, lower customer acquisition costs, and higher average order values.
However, a good NPS isn’t just about beating your competitors; it’s also about improving your score over time. Knowing industry NPS benchmarks can help you contextualize your own NPS, but the best way to improve is by consistently tracking and optimizing your customer experience. NPS is an excellent tool for this since its simplicity and ease of implementation make it a reliable and actionable metric for businesses of any size.
It Measures Customer Satisfaction
When your customers respond with a 9 or 10 rating, they are considered Promoters who will promote your company to others and boost growth through referrals. Customers who rate six or below are Detractors who will churn and discourage others from buying your products or services.
NPS benchmarks can help you see how well you’re doing in your market and determine whether your customer experience gives you a competitive advantage. If you consistently outperform key competitors, your NPS score can become your USP (unique selling proposition).
Measuring your NPS regularly is essential for the company and each business unit, product, store, or customer service team. This will allow you to track changes and focus on the twin goals of turning more Detractors into Promoters and increasing the number of Promoters. You can start with NPS surveys by including one on your website, emailing customers after a purchase, or triggering an on-page study as they leave your site. Using NPS as your benchmark will allow you to make faster, more accurate decisions based on your customer feedback.
It Measures Customer Retention
NPS is a metric companies of all sizes use to measure customer loyalty. It’s based on a straightforward question: How likely would you recommend this company or product to a friend or colleague? Responses are evaluated from 0 to 10. An NPS of 50 or above is typically regarded as good. Companies can look at their NPS as an absolute marker of success compared to others, or they can look at it relative to industry averages to determine their growth drivers and motivate themselves to improve.
NPS reflects the proportion of promoters (score 9 or 10) customers minus those who are detractors (scores 0-6). A positive NPS is usually a good sign, depending on the industry; banking and healthcare tend to have lower NPS than digital marketing. Also, some industries have a low tolerance for bad experiences, like healthcare’s low patient satisfaction ratings versus the high tolerance of Netflix users who can deal with occasional connectivity issues for premium content streaming.
It Measures Customer Engagement
Customer engagement is critical to growing your business, especially in today’s crowded and competitive marketplace. The good news is that you can measure it with NPS.
NPS calculates the likelihood that your clients will refer you using a scale of 0-10, where 9-10 is considered a promoter and 0-6 is a detractor. It’s based on surveys that ask customers to rate how likely they are to recommend your product or service to others. A high NPS shows that your customers are loyal fans who will keep buying from you and fuel growth by guiding you to others.
A good NPS will depend on your industry, with some needing help getting over +30 (hello banking and healthcare). Focusing on continuous improvement is better than worrying about a specific number. Benchmarking your NPS regularly will help you refine your business strategies and ensure your NPS keeps improving daily. You’ll eventually see the results in your sales and customer retention numbers.
It Measures Customer Loyalty
NPS is a key driver of customer loyalty and, when coupled with a deeper understanding of the underlying reasons behind the overall score, can help companies grow through referrals and upsells. In addition to the standard question about the likelihood that clients will suggest your good or service, many NPS surveys include open-ended questions designed to reveal specific areas for improvement.
For example, if a customer in an Apple store scores low on the NPS survey, the store leader will call them and probe into why they were disappointed and what could have been done differently. These insights are then shared at the opening huddle and can be used to improve customer experience.
NPS is a global standard metric that allows companies to compare performance with other companies and industries. While absolute NPS rankings are essential, relative order is also crucial. If your company has the highest NPS in your industry, it can confer all sorts of growth benefits you may have yet to achieve otherwise. Keeping your NPS high isn’t easy, but it can be done with the right tools.