Benchmarking Net Promoter Score (NPS) and factors affecting it
Net Promoter Score is a customer experience management metric that is used to quantify customer loyalty and satisfaction within a company. Based on the aggregate of the net promoter score calculator and net promoter score calculation, a business improves and enhances their outputs. NPS scores can help with a variety of issues. It can resolve issues with your product/service, support, delivery, and communication, among other things. However, it primarily serves to retain customers and expand the scope of your business.
NPS calculation is done through the net promoter score formula which is: NPS = % of Promoters - % of Detractors which narrows the NPS score to 3 kinds of net promoter score (nps): Detractors (0-6), Passives (7-8) and Promoters (9-10).
The final net promoter score calculation is always estimated between -100 and 100. A score of negatives implies that there are more detractors than promoters whereas a score of positives means there are more promoters than detractors.
-100-0is a bad NPS score
0-30is a good NPS score
30-70is a great
70-100is an excellent NPS score
Click here to know more about the basics of NPS score and NPS calculation.
Delving deeper into the net promoter score we will discuss the net promoter score benchmarking and the factors that affect net promoter score.
Net Promoter Score (NPS) Benchmarking
As we discussed in the previous blog, net promoter scores vary by market and industry, and you can never be sure what is appropriate for your industry unless you look at your competitors. In fact, some markets will never exceed a NPS score of 20. So, how do you benchmark your net promoter score?
- Comparison You must select the relative method, which entails examining the numbers as an agreed-upon standard in your industry and among competitors. This enables you to understand what constitutes a good nps score in the market. Your NPS score will vary depending on the market in which you work. A retail store is more likely to make people happy than a finance company. As a result, a retail store is likely to have a higher NPS score than a finance company. You must compare yourself to people in your market rather than a company outside of your market. According to one leading company, Verizon's NPS score dropped to 19 in 2019, which may appear to be extremely low. It was, however, the highest in its industry and was only defeated by AT&T Fiber in the ISP industry by a score of 20 in 2020. If your goal is to identify your company's strengths and weaknesses in order to improve customer satisfaction, customer journey, and customer needs, you may also want to conduct a competitor analysis.
- Regional Comparison Because your geographical location is important, you should compare your NPS score not only by industry but also by location. Cultural differences are important. Some places vote in extremes, while others do not want to give you the short end of the stick, which is perfectly fine. It should, however, be remembered so that it does not cloud your judgement. When throwing in 9's and 10's, Europeans tend to keep their fists a little tighter. Even when they are completely satisfied, they tend to stick to the middle values. It is considered bad etiquette in Japan to rate someone too poorly or too highly; they also adhere to the middle values. Americans, on the other hand (America being the origin land of the NPS score), are more likely to give you either of the extremes when satisfied or dissatisfied. According to an industry leader in NPS, the United States, Brazil, India, Indonesia, and Mexico give a median response of 9 when satisfied with a company, whereas South Korea and Japan record similar satisfaction with 7 and 6. CheckMarket even suggested that a new European scale for NPS be developed, with 8s also considered Promoters.
- Survey Channel Larger companies have the financial stability to pay for an outsourced survey, whereas smaller businesses typically measure NPS on their own, which can result in a significant difference. Larger companies may conduct surveys and collect data through various channels such as e-mail, in-app, SMS, and so on. In many cases, approach, outreach method, cost, and demographics can all contribute to a company outperforming you, even though web surveying appears to be the channel from which every company makes most of its decisions. When comparing your scores, ensure that your competitor is using the same methods as you. For example, if you rely on a web survey, which is obviously less interactive, cost-effective, and intrusive in nature, an on-the-call survey with direct human interaction where a customer may provide more positive insights to the agent will outperform it. So, in order for you to know where you stand, your benchmarked competitor must use the same methodology as you.
- Individual benchmark "You are your own adversary." You must consistently beat your own score. Every time you finish calculating your NPS score, you should see a 5% – 10% increase in your score. You should be able to identify what needs to be improved and work accordingly to achieve the best results for your company! An increase simply means that your customers' needs are being met, which is exactly what you should aim for.
What are the factors affecting Net Promoter Score?
The net promoter score calculation is determined between -100 and 100. Any score of negatives means there are more detractors than promoters whereas a score of positive means there are more promoters than detractors.
- Customer Support: customers across the globe within any industry want error-free services and servicing. A good customer support with relevant automated and agent services can positively impact your NPS score. Whether it is social media or a helpline your customers should be able to reach out to you and the lack of such a situation can lead to a low NPS score.
- Security: customers should be assured of data security. They must be comfortable with your brand. Customers knowing how you function ensures the utmost levels of security with no possibility of breach (that is what makes them promoters).
- Customer Success: your product/service’s end goal is customer success. That is what keeps you in the market. How your product works, handles, and meets user expectations is what will determine whether your customers come back to you or not. Your NPS score can run into negatives if you neglect this factor. It is essential for you to keep improvising based on feedback.
- Omni-channel experience: your company should be connected with the customers on an individual level through every channel. They should feel heard and you must ensure that a single story flows from end to end in an integrated manner. Companies must invest in a strong integration solution that integrates applications and facilitates collaborations to offer excellent customer experiences.
- Brand Reputation: how your product/service or brand at a whole is perceived in the market, the amount of customer loyalty and its capability to provide likable service is one of the factors that can affect your NPS score. You should be able to build a good brand reputation to increase your NPS score. With customers listening to every aspect of a company including its views in geo-political and social matters the pressure is on for you to be right.
The NPS score as a part of voice of customer program must be seen by brands as a huge game changer and the centre of their customer experience management strategy. It is time for you to make a decision with businesses like Sonata GBW that help you grow your business by pointing out grey areas in a systematic manner through their dynamic customer experience services. The secret to a good business is good decision making, so now is the time for you to make a decision.
Our CX solutions are focused on transforming the total customer experience through surveys, metrics, analytics and auditing by using the CXM framework to combine physical measurements with digital Platformation™ capabilities. We are committed to finding the right customer experience strategy that can lead to a competitive advantage.
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