Bain analysis shows that sustained value creators—companies that achieve long-term profitable growth—have Net Promoter Scores (NPS) two times higher than the average company”
-Bain & Company
Net Promoter Score(NPS) is one of the most common customer experience (CX) metrics used by both B2B and B2C firms around the world. It was first developed in 2003 by Bain and Company and it measures the loyalty of customers to a company. Net Promoter Score scores can range from -100 to 100. The closer to 100, the better it is.
On average, any number above “50” is considered “excellent” and anything above “75” is “outstanding”!
NPS, one of the leading metrics used in measuring loyalty, is calculated by asking just a simple question. For example- “How likely are you to recommend CustomerSuccessBox to others?”. The rating is usually done on a scale of 0 to 10 with 0 being least likely to 10 being the most.
The responses are then segmented into 3 groups –
Then, the NPS is calculated as (shown in the image)
NPS = % of Promoters – % of Detractors
As mentioned, NPS is a method that uses a single survey question to gauge customer satisfaction with a product. Customer satisfaction surveys are done across the country and will ask people to rate from one to ten how likely they would recommend their company’s services or products to their family or friends.
This measures a company’s Net Promoter Score. NPS is also a good metric that will help you drive customer retention.
Identifying NPS benchmarks is a brilliant way to assess your NPS compared to your competition. This practice helps in addressing issues that might hinder you from getting good scores from your customers. Many leading industries have recorded their respective scores that you may use as a benchmark and assess yourself!
The following is the list of significant industries with their NPS scores as a benchmark for 2021.
An important aspect, here, to be noticed is that the industries specified in the list belong to both B2B and B2C categories.
There is another question that needs to be answered here- “Why should you look at the benchmarks in the first place?”
To understand where you as a firm stand relative to your competitors in the industry! Let’s say you are in the B2B SaaS industry, and your NPS is 40. This score is good since the industry average is 30+. Imagine that the leaders in this industry have a score of 50 and 60. This score gives you a perspective of the amount of effort you’d have to put in to beat the curve.
Suggested Reading: Net Promoter Score (NPS) in Customer Success and its relevance
A good NPS for one industry cannot be considered at par with the NPS for another industry. To benchmark a good Net Promoter Score, you need to compare it to your competitors within your niche.
This is called the absolute method. Where the Net Promoter Score greater than 0 is considered as a good Net Promoter Score.
NPS > 0 means your promoters exceed your passives and detractors. If your NPS = 0, it means you are not delivering a good experience. If your NPS < 0, it means you are delivering a bad experience. The ideal NPS is considered to be 60 and greater.
Let us look at the breakdown of scores:
The NPS trend in 2022 is more emphasis on transaction than realtional. Whether customers would recommend the company to others isn’t just asked at the end of a buying process or as part of a general customer satisfaction survey, but rather after one or even each customer interaction with the company, for example after a complaint or a call for assistance, after a return of merchandise or after logging into the customer area of the website.
The transactional Net Promoter Score at the interaction level, therefore, gives a much more “fine” value than the “relational” Net Promoter Score. For example, companies may have a high NPS value at the relational level, but there may be a negative outlier at the interaction level that the relational NPS value does not reflect and a company cannot respond accordingly with metrics. The NPS value may be high after a contract extension, but rather low after support or complaint call if the complaint has not been resolved to customer satisfaction.
Please keep in mind that the score wouldn’t change overnight! It’s a long-term process that starts with and ends in one place- your customers! Hence, improving feedback scores from your customers should be your goal from Day 1. It should be part of all your internal processes, communications and should be discussed with all the concerned departments such as Sales, product development, Customer Success, etc. It would be always better to have all your functions aligned with a common goal for best results.
The first step here is to set a goal. Map out realistic goals and work towards achieving them. Discuss this with your team and build strategies. Also, you must make sure this plan helps you reduce customer churn and aims for customer satisfaction.
You may have a huge bulk of data. You need to segment the data and your customers too. Every customer has different needs. One of the golden criteria is how much are they paying you or on the basis of the use cases for which they’ve actually purchased your technology. Evaluating your customer data will help you stay a step ahead of your competitors.
Ensure that you reach out to your customers on a regular basis and understand their difficulties if any. Go through the feedback they’ve submitted through some other channel like support tickets, etc. A good practice is to dive in-depth into their concerns and act accordingly.
NPS cannot be turned good overnight. It takes time and is a slow process. But once you reach your goal score, the progress shouldn’t stop there. It needs to improve over a while. Refine your services and plans. Collect feedback from other teams in your business and work on them. This helps you gain a much broader perspective.
Improving the NPS score is valuable as it impacts your bottom line. How does it do that? Take a look at the following figure.
NPS is an excellent quick metric that you can use to gauge whether or not you are performing, but it doesn’t tell you where to go. It alone cannot be the leading indicator that is going to warn you of the churn that can potentially happen. Nevertheless, regular surveys with your customers, coupled with, above mentioned steps can help you improve the score. Thus, not only earning a good score but also improving the profitability of your firm multiple times!
Bain analysis shows that sustained value creators—companies that achieve long-term profitable growth—have Net Promoter Scores (NPS) two times higher than the average company”
-Bain & Company
Net Promoter Score(NPS) is one of the most common customer experience (CX) metrics used by both B2B and B2C firms around the world. It was first developed in 2003 by Bain and Company and it measures the loyalty of customers to a company. Net Promoter Score scores can range from -100 to 100. The closer to 100, the better it is.
On average, any number above “50” is considered “excellent” and anything above “75” is “outstanding”!
NPS, one of the leading metrics used in measuring loyalty, is calculated by asking just a simple question. For example- “How likely are you to recommend CustomerSuccessBox to others?”. The rating is usually done on a scale of 0 to 10 with 0 being least likely to 10 being the most.
The responses are then segmented into 3 groups –
Then, the NPS is calculated as (shown in the image)
NPS = % of Promoters – % of Detractors
As mentioned, NPS is a method that uses a single survey question to gauge customer satisfaction with a product. Customer satisfaction surveys are done across the country and will ask people to rate from one to ten how likely they would recommend their company’s services or products to their family or friends.
This measures a company’s Net Promoter Score. NPS is also a good metric that will help you drive customer retention.
Identifying NPS benchmarks is a brilliant way to assess your NPS compared to your competition. This practice helps in addressing issues that might hinder you from getting good scores from your customers. Many leading industries have recorded their respective scores that you may use as a benchmark and assess yourself!
The following is the list of significant industries with their NPS scores as a benchmark for 2021.
An important aspect, here, to be noticed is that the industries specified in the list belong to both B2B and B2C categories.
There is another question that needs to be answered here- “Why should you look at the benchmarks in the first place?”
To understand where you as a firm stand relative to your competitors in the industry! Let’s say you are in the B2B SaaS industry, and your NPS is 40. This score is good since the industry average is 30+. Imagine that the leaders in this industry have a score of 50 and 60. This score gives you a perspective of the amount of effort you’d have to put in to beat the curve.
Suggested Reading: Net Promoter Score (NPS) in Customer Success and its relevance
A good NPS for one industry cannot be considered at par with the NPS for another industry. To benchmark a good Net Promoter Score, you need to compare it to your competitors within your niche.
This is called the absolute method. Where the Net Promoter Score greater than 0 is considered as a good Net Promoter Score.
NPS > 0 means your promoters exceed your passives and detractors. If your NPS = 0, it means you are not delivering a good experience. If your NPS < 0, it means you are delivering a bad experience. The ideal NPS is considered to be 60 and greater.
Let us look at the breakdown of scores:
The NPS trend in 2022 is more emphasis on transaction than realtional. Whether customers would recommend the company to others isn’t just asked at the end of a buying process or as part of a general customer satisfaction survey, but rather after one or even each customer interaction with the company, for example after a complaint or a call for assistance, after a return of merchandise or after logging into the customer area of the website.
The transactional Net Promoter Score at the interaction level, therefore, gives a much more “fine” value than the “relational” Net Promoter Score. For example, companies may have a high NPS value at the relational level, but there may be a negative outlier at the interaction level that the relational NPS value does not reflect and a company cannot respond accordingly with metrics. The NPS value may be high after a contract extension, but rather low after support or complaint call if the complaint has not been resolved to customer satisfaction.
Please keep in mind that the score wouldn’t change overnight! It’s a long-term process that starts with and ends in one place- your customers! Hence, improving feedback scores from your customers should be your goal from Day 1. It should be part of all your internal processes, communications and should be discussed with all the concerned departments such as Sales, product development, Customer Success, etc. It would be always better to have all your functions aligned with a common goal for best results.
The first step here is to set a goal. Map out realistic goals and work towards achieving them. Discuss this with your team and build strategies. Also, you must make sure this plan helps you reduce customer churn and aims for customer satisfaction.
You may have a huge bulk of data. You need to segment the data and your customers too. Every customer has different needs. One of the golden criteria is how much are they paying you or on the basis of the use cases for which they’ve actually purchased your technology. Evaluating your customer data will help you stay a step ahead of your competitors.
Ensure that you reach out to your customers on a regular basis and understand their difficulties if any. Go through the feedback they’ve submitted through some other channel like support tickets, etc. A good practice is to dive in-depth into their concerns and act accordingly.
NPS cannot be turned good overnight. It takes time and is a slow process. But once you reach your goal score, the progress shouldn’t stop there. It needs to improve over a while. Refine your services and plans. Collect feedback from other teams in your business and work on them. This helps you gain a much broader perspective.
Improving the NPS score is valuable as it impacts your bottom line. How does it do that? Take a look at the following figure.
NPS is an excellent quick metric that you can use to gauge whether or not you are performing, but it doesn’t tell you where to go. It alone cannot be the leading indicator that is going to warn you of the churn that can potentially happen. Nevertheless, regular surveys with your customers, coupled with, above mentioned steps can help you improve the score. Thus, not only earning a good score but also improving the profitability of your firm multiple times!
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