Breaking Down Net Promoter Score Benchmarks by Industry
You've committed to an NPS campaign, optimized your surveys, sent them out tenaciously (but respectfully and tastefully), crunched the data and now, voila! You have a Net Promoter Score.
Bench·mark [ /ˈben(t)SHmärk/ ]
- a standard or point of reference against which things may be compared or assessed.
But... what does that score actually mean? Well, that depends. Let's say your NPS is 12. If you're an online shopping site, 12 is a worrisome score – but if you're an internet service provider, a 12 might get you into the customer experience Hall of Fame.
Context matters. Otherwise, your NPS is just a number on a screen. Benchmarks provide great context for gauging your NPS. They help you understand whether it’s time to stay the course or rethink your customer strategy altogether.
In this blog, we'll talk about the importance of benchmarks and different factors that play into industry standards for NPS.
Why Are NPS Benchmarks Useful?
First, let's manage some expectations: no major company has achieved a 100 NPS. Some have come close (and we'll get to that later). But a 100 score is unrealistic. And that's fine. It’s hard to have a distinct identity and service and appeal to everyone all the time.
So what specific score should you be aiming for? Well, that depends. NPS is a metric that requires context in order to be useful. Benchmarks provide that context. There are various benchmarks you might apply. Here's a simple example…
Let's say your NPS this year was 46. It might look good at first glance. But, your NPS for last year was 60. In this case, a 46 might be cause for concern.
Alternately, if this year's NPS is 7 and last year's was -3, you're showing significant improvement in your customer experience.
Understand Your Industry's Net Promoter Score Benchmark
An industry benchmark is calculated by averaging the NPS scores of every appropriate business.
Benchmarks vary widely from industry to industry. Some of the most profitable brands in the world have terrible NPS, while local businesses you may have never heard of are sky-high.
- Tablet computers: 52
- Shipping services: 28
- Internet service: –7
The benchmark for a given industry might depend on any number of factors, such as…
- Competition within industry
More competition incentivizes companies to focus on customer experience. The result is often a higher NPS benchmark. - Barriers to switching brands
If switching providers in your industry is cheap and easy, customers might not think much of their providers at all, whether it’s good or bad. - Customer tolerance and sensitivity
How many errors and frustrations are customers willing to tolerate before giving up on a brand? Low tolerance leads to low NPS.
NPS Benchmark Example #1: Automotive Industry + Tesla
The auto industry benchmark is 40, which is relatively high. Industry leaders like Honda and Toyota steadily chart scores in the 80s, but Tesla famously attained an NPS of 97.
Of course, NPS isn't a simple reflection of product quality. It charts customer enthusiasm. And enthusiasm is subject to factors beyond the car itself.
Competitive Industry
Thanks to high demand and a variety of options, personal auto sales are a very competitive market. Auto makers pay attention to numerous customer touchpoints, from the dealership to the service repair shop. Tesla takes that value to the next level with a customer experience program entirely its own.
High Barriers To Switching
Purchasing a car is a daunting process. It requires research, then dealership visits, negotiations with sales people (and potentially your spouse), then financing plans and paperwork... and a significant amount of money leaving your bank account. (A very significant amount if you're buying a high-end Tesla.) By the end of the process, customers want to feel good about their investment, resulting in higher NPS on average.
NPS Benchmark Example #2: Healthcare industry + Kaiser Permanente
The healthcare industry benchmark is 27. Kaiser Permanente recently topped the provider NPS list with a score of 40.
The procedures and prescriptions that people require from their healthcare varies wildly among the millions of Americans who seek it. So what customer experience factors might play in to the NPS scores among healthcare providers?
Lower-tolerance Customers
People are, understandably, sensitive when it comes to their healthcare. You might just shrug when Netflix is slow to load, but your prescription pill refills are a very different matter.
As a result, the hospital industry benchmark for NPS is lower than streaming services.
Less Competition
Over the past decade, hospital competition has declined, especially in rural areas. And due to fluctuations in the Affordable Care Act marketplace, many Americans have only one insurer to choose from. As mentioned, this puts less of a premium on customer experience.Why worry about your promotion score when you're the only hospital in town?
Kaiser has set itself apart from the competition by being a loud and proud early adopter of high-touch, high-tech, and budget-minded customer engagement. This is very likely a factor in its superior NPS.
Quality Analysis Drives Business Performance
Benchmarks enable you to see the standards for NPS in your given field, so that you can really see how your business is faring. Industry benchmarks are worth tracking as much as tracking your own score over time (and those of your closest competitors).
Once you understand what your NPS score actually means, you can begin to take action. That's why a reliable, user-friendly data management system is essential. How does that fit in with your business? See for yourself.
