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What is a good Net Promoter Score?

Posted by Jack Medland-Slater - 11 November, 2018

You may know what your Net Promoter Score (NPS) is, but do you know if it's enough? Below you’ll discover how to tell if you have a ‘good’ NPS, strategies for improving for your NPS and ways to leverage NPS to grow your business.

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Free NPS benchmarks reports by industry for New Zealand and Australia.

 


 

What is a good NPS?

Any NPS score above 0 is "good". It means that your audience is more loyal than not. Anything above 20 is considered "favourable". Bain & Co, the source of the NPS system, suggests that above 50 is excellent, and above 80 is world class.

However, these are only general guidelines. A ‘good NPS’ will depend on the industry and country a business is in.

In Europe, for example, customers tend to be more conservative with their ratings. A high score, a 9 or a 10, is rare. Japan has a similar reaction, as it is considered poor etiquette to provide a company with a perfect score. In the US, on the other hand, it is far more common to see higher scores, with low scores being just as rare as high ones are in conservative countries.

In other countries, scores are more extreme, with dissatisfied customers liberally using the lower end of the scale, and even mildly impressed clients honouring a business with a full 10/10.

For example, one of Perceptive’ global SaaS clients has an enormous difference in its average NPS from country to country.

Taking the UK, Australia and New Zealand as the median, the company has a 20 point lower score in Singapore, while in the United States, they attain a 10 point higher score.

This is a single company offering similar products and services from country to country to similar people (small business owners). But the average NPS varies wildly. This might be for legitimate reasons, such as poor customer support in some areas, but it will still be heavily affected by the likelihood (or lack thereof) of people rating the same across countries.

Start feeding the difference between industries into this equation, and it’s clear that knowing what a “good NPS” is quickly becomes difficult. However, a rule of thumb for those who insist:

As a general rule in New Zealand and Australia, you should aim for an average NPS of 30.

We also provide specific advice on improving NPS in the hotel, insurance and telecommunications industries.

 

Related content: The top 3 Net Promoter Score industries in Australia and New Zealand.

 


 

What if I have a low or negative NPS?

According to Bain & Co, a Net Promoter Score of 5 to 10 is the average for most companies—they have almost as many unhappy customers as happy. Keep in mind, however, that some industries have a low or even negative average Net Promoter Scores.

If, for example, you were a property management company, you should know that the average NPS score for your industry is -3. If you can have just one more promoter than you do detractors, you are already beating the average.

This doesn’t mean you can simply sit on a low or negative NPS and excuse yourself because of industry averages. Rather, this should be seen as a great opportunity to put some distance between yourself and your rivals: with more people paying attention to customer experience than ever before, you won’t be the only one eyeing the chance. The industry average might not stay low forever.

Even if you are in a niche industry, or don’t have access to your rivals’ NPS data, comparisons and improvements can still be made by benchmarking against your own previous performance.

In fact, this is one of the easiest ways to get started in NPS: compare your score over the last quarter to the previous quarter. If it’s improving significantly (by about 10 per cent), then you can assume you are heading in the right direction. Don't start with NPS competitor benchmarking; at least not straight away.

 

Related content: How to use the Net Promoter Score system to inform your customer journey map

 


 

How can I improve my NPS?

Sometimes your customer experience is lacking, but sometimes it's a problem with the technical side of your surveys: low response rates and similar.

 

Technical-related issues

Technical issues with a survey can result in scores that are not accurate---either too high or too low. Any insights gleaned from these surveys should be subject to scrutiny, and most of them should be outright ignored.

Keep an eye out for issues such as the following:

  • Low response rates

  • Survey bombing

  • Leading questions

  • Financial rewards

  • Survey method e.g. phone call vs online

Any of these issues could result in a less accurate NPS—the low score you’re worrying about or the high score you’re proud of might not be completely accurate.

 

Related content: Don't make these 5 common Net Promoter Score mistakes

 

Customer Experience-related issues

If you’re sure that your NPS surveys are going off without issue (which should be the case if you are using a specialist NPS advisor), it’s likely that genuine customer experience-related issues are to blame for a poor score.

Tomas Dickson, Director of CX at Perceptive, has some insight into how business can improve their chances of a better NPS:

“In our experience, it is often the most simple things letting a business down. Pick up the phone faster, reduce wait times, and, in general, just communicate better,” he explains.

“Don’t make your customers come to you. Go to them—this will massively improve your customer satisfaction and, invariably, your NPS too.”

Generally speaking, improving your NPS centres on one thing: providing a good experience for your customers, keeping them at the centre of your business, and should you fail at some point, make sure you react immediately to rectify the situation.

 

Related content: How to increase your Net Promoter Score℠ percentage in 5 easy steps


 

How to use NPS to be more competitive

NPS allows a company to understand their place in their industry as a whole, rather than just its own reputation in a vacuum—enabling it to see how they can leverage their own unique position to outclass the competition.

“You can identify the needs and, often, wants of your customers with a single question in the NPS surveys,” Tomas explains.

“Once you have identified the one major improvement you can make as a business right now, you instantly gain insight into what is going to provide real ROI in your business.”

A good NPS score is more than just a number. It’s a comparison to your peers, it’s an indicator of your current success, and it’s a way to gain direct, actionable insight into where your business needs to go next.

Don’t be too distracted by the pure metrics; the NPS system can provide so much more.

 

Related content: Leverage your NPS for strategic advantage [Ebook]

  


 

How does your NPS measure up against your industry average? Download our free benchmark reports for New Zealand and Australia to find out!

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Topics: Customer Experience


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