Net Promoter Score (NPS) Industry Trends 2022

Question: How much do your customers love you?
In general, the answer to this question has been difficult to find. Marketers looking to replace traditional brand awareness metrics with more customer-centric metrics have found a solution.

This is called the NPS, or Net Promoter Score.

We're about to walk you through the best ways to increase loyalty and nurture the best in your customers. In the end, your business will be well equipped to respond to how much your customers love you.

Why is the Net Promoter Score important?
It starts in 2003, with a man named Fred Reichheld. Harvard Business Review published its research article titled “An Issue You Need to Know”. During the study of customer loyalty at airlines and rental car companies, Reichheld established the industry standard questionnaire to determine whether a customer is loyal or not.

Years later, Reichheld registered his idea alongside Bain & Company and Satmetrix.

Given what we know about the importance of loyal customers, tracking the likelihood that customers will refer you is the first step in building a culture that is customer-centric and committed to improvement.

The Net Promoter Score is a metric that tracks your customers and competitors to provide a digital understanding of your company's brand loyalty.

Apple uses the NPS in its retail stores, posting an impressive score of +76. GE used it to stimulate growth in stock prices. Hundreds of Fortune 500 companies use it the same way.

Bill Macaitis, CMO at Slack, previously CMO at Zendesk and SVP at Salesforce, says NPS is a critical metric:

“One metric that most SaaS marketers don't measure frequently, but should, is the Net Promoter Score. The NPS measures the likelihood that customers will recommend the product. Best-in-class companies score 70 on a scale of 100, but according to data from Zendesk, the typical B2B software publisher scores just 29.

The NPS is a leading indicator of future growth. The more product advocates there are, the lower the customer acquisition costs for the business and the more effective a customer success team will be.

Slack has been on fire this year, thanks to word-of-mouth marketing followed by a network promoter system. Macaitis summed up his enthusiasm for referral marketing with an NPS backend by saying this:

“Every CEO should be able to answer this question:

What are the top 3 reasons people recommend and disapprove of your brand?"

Net Promoter Score: It all starts with two questions.
Very simple figure to calculate, the net promoter score asks only two questions:

"How likely are you to recommend my brand/product/service to a friend or colleague?"

This question is followed by another question:

“What is the most important reason for your score?"

Here you can see that the responses are scored from 0 to 10. Compared to a traditional survey, the question and answer process is much simpler. Your survey then divides people into three groups:

Detractors
Passives
Promoters

Promoters are the desirable group. And that's why it's called a net promoter score. How many people are loyal enough to promote your product or service? As loyal and enthusiastic fans, they are ready to sing your praises and act as brand ambassadors. This group is more likely to remain a customer and is more likely to purchase more products (and at higher prices) in the future.

The Passives are satisfied, for the moment. With repurchase rates much lower than those of promoters, their downline is less enthusiastic. More importantly, if a competitor's product catches their eye, it is likely to fail.

Detractors are unhappy with your offer. They represent 80% of negative word of mouth. With high churn and no-out rates, their words can damage your company's reputation, discourage new business, and prove to be a huge headache for employees.

Net Promoter Score Trends 2022
NPS measures the degree of loyalty. From this degree of loyalty, on one hand, you understand customer satisfaction and, on the other hand, future business development can be estimated, such as the proportion of repeat buyers. In the past, the Net Promoter Score was a customer experience tool and didn’t take into account individual touchpoints. We are talking here about "Relational Net Promoter Score".

The trend is towards transactional Net Promoter Score
In the meantime, companies mainly use the Net Promoter Score for point of contact analysis (transactional NPS). Whether customers would recommend the company to others isn't just asked at the end of a buying process or as part of a general customer satisfaction survey, but rather after one or even each customer interaction with the company, for example after a complaint or a call for assistance, after a return of merchandise or after logging into the customer area of ​​the website. The transactional Net Promoter Score at the interaction level, therefore, gives a much more “fine” value than the “relational” Net Promoter Score. For example, companies may have a high NPS value at the relational level, but there may be a negative outlier at the interaction level that the relational NPS value does not reflect and a company cannot respond accordingly with metrics. The NPS value may be high after a contract extension, but rather low after support or complaint call if the complaint has not been resolved to customer satisfaction.

Beware of NPS "surveys"
Both methods of obtaining a net promoter score are justified. If you ask your customers about your NPS value based on interaction, it can lead to a kind of 'questioning', in which your customers may get annoyed. It is therefore important not to question every interaction with a single customer, but rather to determine the NPS value at the interaction level through a random selection of survey participants.

Net Promoter Score Benchmark by Industry
Before we Get Started…
With an NPS score of -100, you only have detractors and therefore do not have a happy customer.
With an NPS score of +100, you only have promoters and therefore only satisfied customers.
But these are not realistic or common scores. Anything greater than zero indicates that your business has more promoters than detractors. But what is the benchmark for a good NPS score?

There is no right answer. You could say that an NPS of 50 is excellent. But it can vary wildly from industry to industry, so it's difficult to come up with a single number.

But 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.

How to increase your NPS score?
Rather, the real question is: how do you use NPS to improve customer service?

While the Net Promoter Score tells you how satisfied your customers are, it doesn't tell you why. If you want your NPS surveys to be more valuable, consider adding an optional question for additional information:

Ask customers the reason for their score. Ideally, you should do this as an open question directly below the NPS survey - that is, an open field. Do not make this field mandatory, or many customers will give up.

When customers fill in the field, you find out what your promoters and detractors like and dislike about your brand.

This can provide very valuable information for your business and the choices you will make in the future. These could be choices about your support and customer service, product line, pricing, and more.

Thus, by using the results of the NPS survey to make changes, you will improve the service and the customer experience thanks to the information obtained from the Net Promoter Score.
Conclusion
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! You can read more Customer Success trends on our blog!