No matter how stellar you believe your customer service and support is, it all boils down to how your customers view it. After all, they're the ones with the power to make or break their relationship with your company. Even more so, a single experience can determine how they speak of your company to their friends, family, and colleagues.
Your customers can do your best, free marketing by spreading love and brand awareness through word-of-mouth. So, it makes sense that you should be tracking how many of them are so happy with their experiences that they want to selflessly promote them.
How to Calculate NPS
NPS is calculated based on one, simple question: "On a scale of 1-10, how likely is it that you would recommend us to a friend or colleague?" Based on the number a customer selects, they are placed into the following categories:
- Promoters: Those who give a score between 9-10. They are loyal customers with a high lifetime value who will also refer prospects to help the company grow.
- Passives: Those who give a score between 7-8. They are relatively satisfied customers who may stay or move on to a competitor if the offer is right. They wouldn't go out of their way to refer prospects.
- Detractors: Those who give a score between 0-6. They are dissatisfied customers who may damage your brand reputation by writing negative reviews or spreading negativity through word-of-mouth.
Ultimately, the NPS is the difference between the percentage of promoters and percentage of detractors. The lowest possible score is -100 -- if every customer is a detractor -- and the highest possible score is 100 -- if every customer is a promoter -- but both of these scores are unrealistic and rare.
No business can fully satisfy every customer to the point of making them all promoters. While that would be the dream, it's not a reality. No matter what practices, beliefs, or objectives you follow, someone in the world will disapprove. As Taylor Swift once sang, "And the haters gonna hate, hate, hate, hate, hate, baby." The point of NPS is to focus on doing the best you can do for your customers and hoping that most will come out as promoters or, at least, passives.
It would waste time and energy to try to change the minds of every detractor. You can typically determine which detractors are stuck in their mindset and can never be swayed. However, there are also some who might have had just one bad experience and are still on the fence or who could be passives or promoters but haven't gained enough value yet. Those are the detractors on which you can focus your energies.
NPS Scores by Industry
In order to calculate what is a good NPS, it makes sense to first look at what is the average NPS in each industry. Theoretically, any score that is higher than the average competitive set is considered good. By prioritizing customer experience more than your competitors, you are growing faster and, probably, having more success with customer relationships. While it's not a direct correlation, it can be assumed that customers who are having better experiences will stick around longer and tell their friends about it, too.
Source: NICE Satmetrix
Based on the competitive sets outlined in the above chart, you can get a sense for what the average NPS is in each of these popular industries. We've listed them out below for your convenience.
- Department/Speciality Stores: 58
- Tablet Computers: 47
- Brokerage/Investments: 45
- Auto Insurance: 44
- Home/Contents Insurance: 42
- Grocery/Supermarkets: 39
- Hotels: 39
- Online Entertainment: 39
- Online Shopping: 39
- Smartphones: 38
- Credit Cards: 37
- Laptop Computers: 37
- Shipping Services: 35
- Banking: 35
- Airlines: 35
- Life Insurance: 31
- Cellular Phone Service: 30
- Drug Stores/Pharmacies: 28
- Software & Apps: 28
- Health Insurance: 18
- Travel Websites: 16
- Cable/Satellite TV Services: 7
- Internet Service: 2
I know what you're thinking -- that seems scarily low. Well, according to a study done by Colloquy, 75% of the general population claimed they would share a negative customer experience with friends and family, but only 42% would recommend a product or service with which they had a positive experience.
Perhaps detractors are just more likely to score a company than promoters and passives. Whatever the case may be, most of these industries definitely have some room to grow. The light at the end of the tunnel for you is that there is a growth opportunity. If your business restructures itself to be completely obsessed with improving customer experience and measuring Net Promoter Score, you can rise above the competitive set.
What is a good Net Promoter Score?
Technically, any score above zero can be considered a "good" score, since that implies that you have more promoters than detractors. 50 and above is excellent, and 70 and above is the best of the best, although achieving either of these is both outstanding and rare.
Clearly, based on the competitive set analyzed above, getting a score that's good -- let alone excellent or more -- is difficult. It's an accomplishment to be in the positives. For example, it's extremely rare for a U.S. presidential candidate -- even one who ends up winning -- to ever break zero since there is so much negativity revolving politics. That doesn't mean they're all bad.
NPS should definitely be taken with a grain of salt. There are a lot of factors that are out of your control. Sometimes, it might be that your best, loyal customers simply forget to score your company, while one dissatisfied customer decided to give you a whopping zero.
As long as you're either in or above the competitive set, you're clearly making the customer experience one of the main concerns in your company. Having a customer-centric mindset can ensure you set clear goals and values for your customer support, service, and success teams, which then can lead to happier customer interactions, and, hopefully, more promoters.
Next, read this post on Net Promoter Score benchmarks.
Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.