So, what is a good Net Promoter Score? The short answer is: it depends. There are 2 methodologies that explore what a good NPS score is. The first examines the strength of your NPS score regardless of industry. The second method determines what a good NPS score is with respect to your industry.
We’ll explore both methods below, but first, let’s take a quick look at how an NPS score is calculated.
Net Promoter Score surveys measure customer loyalty by identifying customers as promoters, passives, and detractors. Essentially, NPS data is captured by asking:
“How likely are you to recommend ABC Company?” Customers then answer on a scale of 0-10 (0 being the lowest, and 10 the highest) which is then used to calculate your NPS score and identify the promoters, passives, and detractors of your brand.
Promoters are those who answer 9 or 10 on an NPS survey. Promoters are considered brand advocates and have the potential to grow the lifetime value (LTV) of your brand by 1400% through referring your products or services to friends and family.
Passives are customers who answer 7 or 8 on an NPS survey. They’re not likely to harm a business with negative word-of-mouth, nor are they likely to recommend the business. They’re just unenthusiastic and may switch to a competitor who offers something new or more interesting.
Detractors are customers who rate your brand between 0-6. Detractors are not happy with the company and are likely to share their negative experience online and with friends and family.
Consistently measuring NPS over time can provide your business with some important insights, as NPS scores usually correlate to things like revenue, brand affinity, and likelihood to refer your goods or services to others. NPS also inversely measures things like returns, dissatisfaction, costs, and customer churn. Getting a score assigned to your business, brand, product, or service is wonderful for measurement and tracking purposes, making it easier to quickly identify customer experience trends that may need further probing.
That said, one of the most common questions we hear from companies first embarking into NPS is “How do I know if my NPS is good?”
Deciding if your NPS score is “good” can be done quickly with two simple methodologies: the absolute method and the relative method.
- The absolute NPS method involves comparing your score to a loosely agreed-upon standard for what a good score is, across all industries.
- The relative NPS method involves comparing your score to other companies within your industry.
We’ll go into both methods (and our own take on how you should think about your NPS score) below, but for the relative method, we’ve created a simple NPS benchmarking tool that allows you to compare your NPS with others in your industry.
Simply enter your NPS score, select your industry, and we’ll show you how you stack up. You can also get a bird’s eye view across all industries and see how they compare with each other.
The absolute NPS method
On a scale from -100 to 100, the absolute NPS method deems any Net Promoter Score greater than 0 as “good,” since it means your promoters outnumber passives and detractors. While 0 is a positive NPS, companies with scores of 0 probably aren’t providing a good experience in actuality — they’re doing the minimum. Your NPS score generally needs to be greater than 50 to be considered above average in an absolute sense.
Here’s a breakdown that can help you approximate how well your business is actually doing with regards to the absolute method:
– 100-0: The majority of people interacting with your product or brand are having a bad experience. They are not happy with your company and are spreading the word that your goods or services should be avoided.
1-30: This an acceptable range to be in as you have slightly more promoters than passives and detractors. However, most companies in this range have a lot of opportunities to improve.
31-50: This is where most companies tend to live. A company in this range places value on a quality customer experience and is generally delivering it with a solid group of promoters ready to refer others to your brand.
50-70: A company in this range is doubling down on customer experience — and it shows. Some of the most beloved brands have an NPS in this range, and it means that they have a larger than average group of promoters sharing their positive perception with their personal networks.
71-100: This is the Holy Grail of NPS, and rarely attainable. A company with a score in this range is considered to be among the absolute best in their industry.
The relative method based on industry average NPS scores
The second way to know if your NPS is good or not is to compare your score relative to industry benchmarks.
This helps you understand where you stand in the marketplace. Some companies have also been known to publicly advertise their NPS score with shareholders as evidence of their company’s success.
If you choose to benchmark yourself against others, be aware that average scores vary widely across industries.
Some industries are notorious for providing less than stellar customer experiences, but they continue to thrive in spite of their low scores. This can happen when a company provides a critical service, or has very little competition – think utilities, cable providers, etc.
Other industries live and die by their NPS and could not exist without delivering a high-quality differentiated experience. These companies are either in highly competitive markets and must compete on a differentiated experience, or their core product is inherently experiential – think luxury consumer products, hotels, etc.
Let’s take a look at some of the highest and lowest average industry scores. To provide more context, we’ve also included the range of scores observed.
Here are the average 2018 NPS scores collected by the Temkin Group for a variety of industries:
Auto dealers NPS benchmarks
GM, BMW, Honda, Cadillac, Ford, Buick, Chevrolet, Nissan etc.
Software NPS benchmarks
Adobe, Microsoft, Google, Intuit, Sony, McAfee, Activision, Apple, Symantec, Blackboard, etc.
Computers and tablets NPS benchmarks
Lenovo, Sony, Compaq, Gateway, Dell, eMachines, Barnes & Noble, Acer, Hewlett-Packard, Toshiba, Amazon, Apple, etc.
Health plans NPS benchmarks
Aetna, Anthem, Humana, Coventry Health Care, Blue Shield of California, Health Net, etc.
TV and internet service NPS benchmarks
AOL, AT&T, Verizon, Cablevision, Charter Communications, Comcast, Time Warner Cable, Cox Communications, DirecTV, etc.
How to tell if your NPS score is good: What Delighted recommends
No matter your industry, we believe it is worth striving to deliver a perfect experience to every customer, turning them into avid promoters of your company. The best companies focus on continually improving their own customer experiences – benchmarking against themselves vs. peers or industry standards.
“While it can be useful to consider the industry NPS benchmarks that can help compare your company to similar ones, it’s important to keep in mind that benchmarking with NPS can be difficult. Different companies measure at different parts of the funnel as well as different customer subsets. For example, customers who have been with your company for a year or more will have a typically higher NPS than those in a trial period.
Because of this, the most important Net Promoter Score benchmark is a company’s own score last month, last quarter, and last year. Driving to improve NPS within one’s own business is the most important point of focus, as the variables that impact the score (ex. customer subset, recent product changes, etc.) are more transparent and controllable. Using Trends, properties, and other Delighted features can help offer granular insight into the trending of NPS over time.
Along this vein, it’s important to not place too much focus on small or insignificant changes in NPS. This is why Delighted displays NPS calculated based on the last 30 days of responses, rather than a daily or weekly score. If you receive 10,000 responses a month, a 20-point change month over month would signal a significant difference. However, if you receive just 10 responses in a day, a 20-point change over the previous day isn’t necessarily something to sweat.”— Ellie Swiger, Customer Concierge at Delighted
Acting on the feedback collected by NPS surveying is the ONLY way to turn detractors into passives, and passives into promoters.
Benchmarking brand loyalty aside, having a grasp on the trajectory of your NPS scores is essential to making the business decisions needed to increase the perception of your brand or products.
A word of caution about NPS benchmarks
NPS industry benchmark comparisons are great for knowing how you stack up against your competition and can help you understand the amount of incremental investment you should be making to improve the customer experience.
However, anchoring on your competitors’ scores will place an artificial ceiling on your potential. Breakthrough companies often compete on a differentiated experience, allowing them to grow through word of mouth while stealing market share. If you stop improving your customer experience, a competitor will inevitably seize the opportunity to surpass you. Just because customers have tolerated a poor experience to date, doesn’t mean they will forever.
That said, here are a few things to take note of while putting together a comprehensive NPS strategy and drawing comparisons to your competitors:
How you collect NPS feedback can affect your score
The differences in survey delivery channels may impact your NPS scores. While large brands can afford to pay an outside organization to collect data for them, the preferred way to survey customers for most businesses is to do it yourself via web, SMS, email, link, or kiosk.
Sometimes, these different survey methods can influence the responses of those taking your survey. For example, respondents to a phone survey may be more inclined to rate your company higher with a representative of your brand on the phone with them.
The important thing here, especially for using the second methodology above, is to try to measure your brand’s NPS consistently and correctly over time. There’s nothing wrong with changing up survey distribution methods or timing of the surveys every once in a while (some of our customers, like Rakuten, have had some positive results doing this). However, you must understand that doing this on a whim can skew the results.
Moreover, since you don’t know exactly how your competitors are calculating their scores or if their scores are in fact accurate, the only true thing your brand can rely on is how you collect feedback from your customers and monitoring these results over time.
Good NPS scores can be inflated in a niche industry
Niche industries tend to be dominated by a large incumbent with little to no competition. These businesses dominating the space tend to have inflated NPS scores because they are essentially the only player in that niche space.
Take Tesla for example. Their NPS score has been rated as high as 96. 96! That’s close to near perfect. Does this mean their cars and services are perfect as well? Not likely. It’s just that customers surveyed have no other long-range electric car builders to compare with.
Customer tolerance levels can drastically lower NPS scores
Different verticals have different tolerance levels. Customer tolerance is essentially the likelihood of your customers getting angry with your brand if you can’t address their needs on an immediate basis.
Healthcare, for example, has a low customer tolerance. Not being able to immediately meet the needs of sick patients with quality care every once in a while will have more impact on an NPS score than a streaming service with occasional connectivity issues.
Vendor switching costs can boost NPS scores
For this example, let’s compare cars and software. A decent car will tend to have a higher NPS than many personal SaaS services. Why is this the case?
Buying a car takes a lot of leg-work (there’s a high switching cost). The typical car purchase journey is something (more or less) like this:
- Prospect researches makes and models
- Prospect takes car for a test drive
- Prospect haggles with sales-guy for a good deal
- Agreement is made and the prospect has to fill out paperwork for financing and purchase
- Prospect gets approved for an auto loan and becomes a customer!
Now, let’s compare that to the customer journey for buying personal SaaS software:
- Prospect researches software
- Prospect goes to website
- Prospect downloads software and becomes customer
As you can see, purchasing software is WAY easier than purchasing a car. It’s a classic case of vendor switching barriers mentioned above. Even if a car gives you problems, it’s expensive to switch to a new model, while switching software can be as easy as downloading a competitor’s free trial.
Because of the car’s financial burden, most customers are likely to stick with their vehicle and develop confirmation bias. This confirmatory bias is a subtle reassurance that their expensive purchase was the right one, making consumers more inclined to rate the NPS of their car brand higher.
Conversely, the product tolerance of personal SaaS is incredibly low and the barrier to switching can be quite low as well. Both attributes contribute to consistently lower NPS scores.
Improve your NPS score today
Improve your NPS by implementing an easy to manage customer experience program like Delighted. Collecting feedback from customers is the first step to establishing a baseline NPS score. From there, you can use the data obtained to address the areas that are lagging which, over time, will improve your NPS.
Start improving your CX by acting on customer feedback with a free Delighted trial.