What is a Good NPS Score
10 mins readOct 29, 2024
So, what is a good nps score? A good NPS score is zero or above, while below zero is considered bad. A net promoter score above 50 is excellent and above 80 is outstanding.
One precious quality that an organization wears like a crown is its Customer loyalty. Organizations that struggle to improve it understand its worth.
Calculating customer loyalty through the Net Promoter Score (NPS) is a technique developed in 2013. This leads us to our topic today: what is a good Net Promoter Score?
Net Promoter Score (NPS) gauges the likelihood that customers will refer your product, service, or business to others. 1
Related Read: What is net promoter score
It depicts customer loyalty in numbers. The NPS is calculated from responses received to this question:
“On a scale from 0 to 10: How likely are you to recommend our company/product/service to a friend or colleague?”
Depending on their responses, we place customers into three categories:
Promoters (Score 9-10): These are loyal enthusiasts who will continue buying from your company and actively recommend you to others.
Passives (Score 7-8): Satisfied but not enthusiastic customers. They could easily switch to a competitor if a better offer comes along.
Detractors (Score 0-6): Unhappy customers who could damage your brand through negative word-of-mouth or leave your business altogether.
The NPS is then calculated by subtracting the percentage of Detractors from the percentage of Promoters.
The net promoter score, ranging from -100 to +100, helps companies gauge the overall perception of their brand. But understand what qualifies as a good NPS score to understand its full potential.
Related Read: How to Calculate Net Promoter Score
What is a Good NPS Score in 2024?
A “good” Net Promoter Score is unique globally to every industry and is not standard. It can vary depending on what industry you are in, the region, business size etc are we talking about. A nps score >= 0 is positive while < 0 is bad. Range from 20-50 is great, >= 50 is excellent and >= 80 is outstanding.
However, there are commonly agreed upon NPS score ranges that can help you understand where your NPS stands.
Net Promoter Score Range
How to interpret your NPS score better, read below:
- Positive NPS is Good (NPS >= 0)
Any positive score (above 0) means you have more promoters than detractors, which is a good start.
- NPS above 50 is Excellent (NPS >= 50)
An NPS of 50 or higher is generally considered Excellent. It indicates that your business has more promoters than detractors.
- NPS above 80 is World-Class (NPS >= 80)
NPS of 80 or above is world-class, it is superb. It indicates that you have a high number of promoters and that your efforts to improve customer loyalty and retention in your organization are blooming.
- Negative NPS is Bad (NPS < 0)
Negative NPS is a strong no no. It indicates that the majority of your customers are having a bad experience with your business and are open to moving to your competitors at any time. And that the company really needs to work and improve the reasons for the high detractor count.
How to Know if You Scored the Good NPS
Opting to score a 100 NPS is most likely an impossible target, especially for bigger companies, and is also an unrealistic goal.
There are four different approaches to help understand if your NPS is a good NPS or not. Each approach provides a different type of analysis; choose whichever suits you better. If you ask me, I would suggest considering the fourth approach above all others.
Absolute NPS Performance Check
“Absolute NPS uses the NPS scores from all industries as a standard”
Every industry has its own industry NPS standard that again keeps on changing as the industries observe their highs and lows. What’s considered good in one industry might be an average NPS in another.
So the absolute NPS uses the NPS scores from all industries as a standard of good or bad NPS and then compares it with your business NPS.
To interpret the results, follow the criteria mentioned in Net Promoter Score range.
I hope you can see that the process and results from absolute NPS performance check are messy and unreliable. This is because every business runs its NPS system slightly differently than others. Plus, other factors like demographics, regions, industry type, etc affect a business’s NPS.
For example, if you are in the tech industry, which often sees higher NPS scores worldwide as compared to traditional industries like airlines or utilities, when you take the average NPS of all the industries, your business NPS might fall into the world-class range. This could be because the average score of all the industries might be lower than yours.
Checking Relative NPS Performance
“Compare your NPS to Competitors”
Second method to monitor if your NPS figure is a good NPS, compare it to your Industrial Average Net Promoter Score—compare your NPS to NPS of your competitors.
Use these industries as a relative benchmark for your company. With a relative score to compare against, you are getting closer to a comparison that makes more sense.
But do you think beating the industry NPS benchmark is your goal? Can your company really benefit from wearing the “better than others” badge? I do not think so. The NPS goal is to serve the customers and improve revenue retention.
Recommended Read:
Be Your Own Benchmark
“Compare your current NPS from last NPS”
The most accurate comparison of the NPS improvement check is your last NPS vs. the latest NPS.
The yardstick to check if you scored a good NPS or a bad NPS is to see “if the NPS is growing”. One score higher than the last score is good NPS. Otherwise, you better sit down and see what happened and why.
Remember, NPS is not your business’s beauty face; it actually tells the inside story of your business and your customers—the state of your customer relationship
The real power of NPS is not only to calculate customer loyalty but also its ability to quickly act and grow in the form of rerevenue,.g. via referrals, up-sells or cross-sells, and retention marketing tactics.
When Revenue is Your Benchmark: Tie the NPS to Revenue
This approach to assessing if your NPS is good or bad is my personal favorite, and I will recommend you use it. You will be surprised. It is about tying your Net Promoter Score to your revenue. Let me explain how it is done.
Once you have received the NPS survey results, find the answer to this question:
“How much current revenue is the passives and detractors are producing?”
For example, you received the NPS survey score, and it is 75. It falls in the Excellent NPS score range (not many bigger companies score it often). However, while calculating for the answer to above question, you found out that one of your big customers, responsible for 17% of your revenue, has churned, and joined a competitor. Will you still think that your NPS score is a good score? I guess not.
This method of evaluating good NPS magically surfaces two more questions “Who is filling out your NPS surveys?” and secondly, “Why your larger customers are not your promoters?”
Net Promoter Score Benchmarks
While it is important to remember that NPS can vary commonly across industries, here are some general industrial NPS benchmarks to consider:
The Global average NPS across all industries is around +32.
Remember, these are just averages. Top-performing companies in each industry often score significantly higher.
To read more about Net Promoter Score, how to improve NPS and Apple’s case study click here.
Conclusion: Its time for action
Even if your NPS is exactly where you want it to be, get into action to improve it. First, focus on the feedback from detractors and Passives. Detractors often tell you what’s not working. Find out whether it’s your customer service, product features, or pricing. Address these concerns, and you might convert them into Passives or even Promoters.
Then engaging with your promoters is an even better idea. They are your brand ambassadors; acknowledge their loyalty and reward them—perhaps through referral programs, special offers, or exclusive content. They can bring you new customers and improve your customer acquisition rate, so it’s a win win situation for both parties. Good Luck!
