Industry Benchmarks: Know Where You Stand

Different industries have varying average NPS scores. Understanding where your score sits in comparison to industry benchmarks can help you set realistic improvement goals. Let me show some of the most popular industry to help you set up your NPS goals.

• Financial Services & Banking: The average NPS can range from 35 to 55. This industry often faces challenges in customer satisfaction due to the complex nature of services and regulatory constraints.

• Insurance: Typically, the insurance sector sees an NPS range between 30 and 50. Customer experience here is greatly influenced by claim processing times and transparency.

• Technology (Software/SaaS): This industry enjoys a relatively high NPS range, often between 50 and 60, thanks to rapid innovation and customer-focused service models.

• Retail: Retailers can see a wide range of NPS scores, from 30 to 70, heavily influenced by customer service, product selection, and shopping environment.

• Automotive: The automotive industry, including dealerships, often has an NPS range from 40 to 50, with customer satisfaction influenced by sales experience and vehicle reliability.

• Healthcare: Healthcare providers and services typically have an NPS between 15 and 55, reflecting the personal and critical nature of their services to patients.

• Telecommunications: This sector often struggles with lower NPS, ranging from 0 to 30, due to customer service issues and competitive market dynamics.

• Hospitality (Hotels and Resorts): The hospitality industry can boast an NPS range from 40 to 60, as guest experiences can significantly impact loyalty and recommendations.

• Airlines: With customer experiences heavily influenced by pricing, service quality, and punctuality, airlines tend to have an NPS range from 10 to 40.

• E-commerce: Online retailers and service providers can range widely from 20 to 65, as customer experience is impacted by website usability, product selection, delivery options, and return policies.

The NPS Question Done Right

Remember, the core of NPS is how likely your customers are to recommend you. To know that you will need to ask a simple yet powerful question: "How likely are you to recommend [your company] to a friend or colleague?" Customers will respond on a scale from 0 to 10, and based on their ratings, they are categorized into three groups: Promoters, Passives, or Detractors.

• Promoters (score 9-10): These are your most enthusiastic and loyal customers. They're likely to recommend your company, product, or service, contributing to organic growth through word-of-mouth.

• Passives (score 7-8): Satisfied but unenthusiastic customers who are vulnerable to competitive offerings. While they might not spread negative word-of-mouth, they aren't actively promoting your business either.

• Detractors (score 0-6): Unhappy customers who can damage your brand through negative word-of-mouth. They are unlikely to recommend your company and may even dissuade others from becoming customers.

To calculate your NPS, subtract the percentage of Detractors from the percentage of Promoters. The result is a score ranging from -100 to 100 that serves as a clear measure of your company's performance through your customers' eyes.

The NPS calculation is relatively straightforward. Here's the formula again for reference: NPS=(% of Promoters) − (% of Detractors).

Example Scenario:

Imagine you have surveyed 100 customers about how likely they are to recommend your company to a friend or colleague.

• 70 customers responded with a score of 9 or 10 (Promoters).

• 20 customers responded with a score of 7 or 8 (Passives, who are not included in the NPS calculation).

• 10 customers responded with a score of 0 to 6 (Detractors).

Step 1: Calculate the Percentage of Promoters and Detractors

First, you determine what percentage of your total responses each group represents.

• Promoters: 70 out of 100 responses are Promoters, so they represent 70% of the total responses.

• Detractors: 10 out of 100 responses are Detractors, so they represent 10% of the total responses.

Step 2: Calculate the NPS

Next, subtract the percentage of Detractors from the percentage of Promoters.

NPS= 70% − 10% = 60%

Key Points to Remember

• NPS scores range from -100 (if every customer is a Detractor) to 100 (if every customer is a Promoter).

• Passives (scores of 7 and 8) are not directly factored into the NPS calculation. However, their presence affects the overall percentage of Promoters and Detractors since the total number of respondents serves as the denominator in calculating these percentages.

• A higher NPS is indicative of a healthier relationship with your customers, suggesting that more of your customers are willing to promote your business.

• Improving your NPS can involve strategies to reduce the number of Detractors (by addressing their concerns) and to increase the number of Promoters (by enhancing customer satisfaction and loyalty).