Net Promoter Score(NPS) benchmark for the year 2021
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”!
How to calculate NPS ?
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 –
- * Promoters: Customers who provide you with a score of either 9 or 10.
- * Neutrals/Passives: 7 & 8
- * Whereas, Detractors are the ones who usually give you a score in the range of 0-6.
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.
NPS Industry Benchmarks 2021
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.
Let us look at the breakdown of scores:
How to improve the NPS Benchmark for your industry?
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.
Define goals clearly
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.
Segment your data
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.
Listen to what your customers are saying
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.
Improve your NPS over time
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!