The Net Promoter Score (NPS) is a key metric in customer experience management used to measure customer loyalty and satisfaction within a company. By utilizing the NPS calculator and the NPS formula, businesses can enhance their performance and outputs. NPS scores help address various issues, including product/service quality, support, delivery, and communication. However, their primary function is to retain customers and expand business opportunities.
NPS is calculated using the formula: NPS = % of Promoters - % of Detractors. This calculation categorizes responses into three groups: Detractors (0-6), Passives (7-8), and Promoters (9-10).
The final NPS ranges from -100 to 100. A negative score indicates more detractors than promoters, while a positive score signifies more promoters than detractors.
-100-0
is a bad NPS score0-30
is a good NPS score30-70
is a great70-100
is an excellent NPS scoreClick here to learn more about the basics of NPS scoring and calculation.
In our deeper exploration of the Net Promoter Score, we will cover NPS benchmarking and the factors that influence it.
Net Promoter Score (NPS) Benchmarking
As we discussed in the previous blog, Net Promoter Scores vary by market and industry. You can’t determine what is appropriate for your industry without examining your competitors. Some markets, for instance, may never exceed an NPS score of 20. So, how do you benchmark your Net Promoter Score?
- Comparison
To effectively benchmark your Net Promoter Score (NPS), use the relative method, which involves comparing your scores against industry standards and competitors. This helps you understand what constitutes a good NPS score in your market. Your NPS score will vary depending on the industry you operate in; for instance, a retail store is likely to have a higher NPS score than a finance company due to the nature of their services. Therefore, it’s crucial to compare your NPS with companies within your market. For example, Verizon's NPS dropped to 19 in 2019, which might seem low, but it was the highest in its industry, only surpassed by AT&T Fiber with a score of 20 in 2020. If you aim to identify your company's strengths and weaknesses to improve customer satisfaction, customer journey, and customer needs, conducting a competitor analysis is essential.
- Regional Comparison
Geographical location plays a crucial role in NPS, so compare your score by both industry and location. Cultural differences significantly impact scoring tendencies. For instance, Europeans often avoid giving extreme scores and tend to stick to middle values, even when satisfied. In Japan, it’s considered bad etiquette to rate someone too poorly or too highly, leading to middle-value scores as well. Conversely, Americans, the originators of the NPS score, are more likely to give extreme scores when satisfied or dissatisfied. According to an industry leader in NPS, customers in the United States, Brazil, India, Indonesia, and Mexico typically give a median score of 9 when satisfied, while similar satisfaction in South Korea and Japan results in scores of 7 and 6, respectively. CheckMarket has even suggested developing a new European scale for NPS, considering 8s as Promoters.
- Survey Channel
The method of survey distribution can significantly affect NPS results. Larger companies often have the financial resources to outsource surveys, using various channels such as email, in-app, and SMS, while smaller businesses might measure NPS independently, leading to variations in results. When comparing your scores, ensure that your competitors use the same survey methods. For instance, web surveys, which are less interactive, cost-effective, and non-intrusive, may yield different results than on-the-call surveys with direct human interaction, where customers might provide more positive feedback. To accurately benchmark your performance, ensure your competitors use the same methodology.
- Individual benchmark
"You are your own adversary." Consistently improving your own score is crucial. After each NPS calculation, aim for a 5% to 10% increase. Identify areas for improvement and work towards achieving the best results for your company. An increase in your NPS score indicates that your customers' needs are being met, which should be your ultimate goal.
What are the factors affecting Net Promoter Score?
The Net Promoter Score (NPS) is calculated on a scale from -100 to 100. A negative score signifies that there are more detractors than promoters, while a positive score indicates the opposite—more promoters than detractors.
- Customer Support: Customers worldwide, regardless of industry, expect seamless and error-free services. Effective customer support, comprising both automated and agent-assisted services, can significantly influence your NPS score positively. Whether through social media platforms or helplines, your customers should have accessible avenues to reach out to you. Failure to provide such accessibility can result in a diminished NPS score.
- Security: Customers demand data security and must feel confident in your brand. Transparency in your operations assures customers of the highest levels of security, fostering promoter behaviour. Ensuring there's no possibility of data breach is paramount to building trust and loyalty among customers.
- Customer Success: The ultimate goal of your product or service is customer success, as it determines your market sustainability. How well your offering performs, addresses user needs, and exceeds expectations directly impacts customer retention. Neglecting this aspect can lead to a decline in your NPS score. Continual improvement based on feedback is crucial to meeting evolving customer expectations.
- Omni-channel Experience: Your company should engage customers on a personalized level across all communication channels. Each interaction should convey a consistent brand message, seamlessly integrated from start to finish. Investing in robust integration solutions that facilitate collaboration among applications ensures a cohesive and exceptional customer experience.
- Brand Reputation: The perception of your product, service, or brand in the market significantly influences customer loyalty and satisfaction. Building a strong brand reputation is vital to enhancing your NPS score. In today's interconnected world, where customers scrutinize companies on various fronts, including their stance on geopolitical and social issues, maintaining a positive reputation is imperative.
The Net Promoter Score (NPS), integral to any Voice of Customer program, should be viewed by brands as a significant catalyst and the focal point of their customer experience management strategy. Collaborating with industry leaders like Sonata CX can revolutionize your approach by identifying and addressing areas of improvement systematically through their dynamic customer experience services. In the realm of business, sound decision-making is paramount to success. Now is the opportune moment to take action and make the decision that will propel your business forward.
Our CX solutions are designed to transform the total customer experience through comprehensive surveys, metrics, analytics, and auditing, utilizing the CXM framework. By combining physical measurements with digital Platformation™ capabilities, we create a customer experience strategy that gives you a competitive edge.
Sonata CX is a global technology company specializing in customer experience management and platform-based digital transformation. We help businesses become connected, open, intelligent, and scalable. With a presence in over 105 markets and more than 27 years of market leadership, we offer extensive measurement capabilities and powerful, intuitive reporting and analytics platforms to enhance customer experience. Our reach spans the USA, Canada, EMEA, and APAC regions. To learn more about how we can assist you, please click here or fill out the business enquiry form below.