Understanding different factors in Net Promoter Score (NPS)

November 14, 2023

What does it mean to have a good Net Promoter Score?

  • More loyal customers that are supportive and rooting for your company’s success.
  • More loyal customers that are also willing to spend more time and money in your product.
  • More promoters that are likely to recommend and vouch for your product.
  • More likely to spread through word of mouth. Depending on the industry or type of customers you have, word of mouth plays a critical role in acquiring new customers.

With various factors in play, achieving a 100 NPS is extremely difficult. It is more important to:

  • Understand how your score compares with key competitors
  • Regularly check NPS and use it as as a health check of your company’s performance and customer satisfaction
  • Segment the score by demographics and customer profile to discover additional insights

Factors affecting Net Promoter Score

Type of business (B2B vs. B2C):

Regardless of the type of business you’re in, the format and the essence of NPS metric are the same. However, the way it is measured could slightly differ by the type of business:

  • NPS in B2C is transactional: NPS surveys are sent out following a certain touchpoint like subscription or purchase. Following up with NPS questions immediately after a specific touchpoint is helpful to collect contextual feedback while the customers’ experience is fresh. See how you can easily setup in-product NPS modules with Hubble.
  • NPS in B2B is relational: NPS is used to gauge the overall product experience over time especially when retention and churn rate are critical for maintaining relation with other businesses.

Type of customers:

Just as it is important to segment target customers in businesses, it is noteworthy to differentiate these segments when making sense of the score because each customer profile will place different value and threshold for satisfaction. For example, buyers and end users in a B2B environment will have a somewhat different goal when adapting a new software for the company:

  • Buyers or decision makers will place more value in cost savings and the ease of relevant teams to adapt to the new tool.
  • End users will be the employees or the users interacting with the tool. Their value in satisfaction will be related to the actual features and usability of the tool.

Thus, buyers may rate a high NPS for significant cost saving from replacing an existing tool, but this will not necessarily translate to high satisfaction for the actual end users.

Industry:

Some industries generally score higher than the others by nature. For instance, shopping in a department store would be much delightful and less stressful than deciding which financial plans to choose from a bank or insurance company.

Retently’s 2023 NPS study below highlight NPS averages of different industries in B2B and B2C for reference. The data is based on 10,000+ survey data points.

Major event during a specific time period:

External factors and significant events can impact your industry, customers’ perception, and satisfaction. Qualtric’s 2020 study suggests that the overall industries observed a 15 point decrease in NPS from 2019 to 2020 during COVID-19. Companies specifically in travel and hospitality experienced a significant hit in NPS scores.

The study further suggests a major NPS decline rate difference between age groups, hinting that some age groups may be more sensitive or have varying degree of tolerance than other age groups depending on the industry sectors.

Culture and geography:

If your company serves a global population, it is worthwhile to segment the responses by demographics before making sense of the data. For example, Europeans tend to be more conservative in their ratings whereas people from East Asian culture will be more generous with their ratings to be polite.

Driving insights from Net Promoter Score

1. Understand how your company stands in the industry and against the competitors

As mentioned in article, the relative NPS approach is much insightful than a single absolute score. The true meaning of the score lies relative to the scores of your competitors or key players in your industry as the average score varies across each industry. For the most up-to-date NPS benchmarks by industry, search online to look for related publications, industry blog or reports from customer experience research firms that may regularly publish NPS data and benchmarks.

2. Segment the responses by demographics and customer profile

Once you have a broad sense of how your NPS looks like, delve into segmenting the score by demographics or specific customer profile because each profile will place different value and threshold for satisfaction. Consider isolating demographic factors, such as age and geography, as it might show new insights or trends in the score.

3. Benchmark your own NPS as baseline and compare to others

Collecting NPS shouldn’t be a one time thing but rather be approached as a regular health check up to gauge how customer satisfaction and loyalty change over time. Follow-up on qualitative data to make incremental improvements and observe how your NPS changes over time. If you have a new purchase flow implemented in the product, collecting NPS feedback on the overall purchase experience can yield how the new change is performing against the previous flow.

As you monitor your NPS, it is important to see how the industry average and competitors change over time. Identify key players in the industry and reach for their scores. Also, there could be significant global events that affect the overall industry and customer perception, such as COVID, that might be more difficult to remedy.

4. Triangulate data with other research

While NPS is an easy yet effective metric to keep track of, it shouldn’t be the sole indicator to gauge customer satisfaction. Along with NPS and qualitative data collected from follow-up questions, combine the results with other research, such as competitive analysis and CSAT, to gain a broader understanding of the industry landscape and satisfaction.

At a more granular level, conduct follow-up studies, usability studies, and surveys, to understand how you can make improvements in the product.


Frequently Asked Questions

How is NPS calculated?

NPS = % of Promoters — % of Detractors

NPS is calculated by subtracting the percentage of detractors from the percentage of promoters. The score can range from -100 to +100.

To learn more, refer to the article section on Calculating Net Promoter Score.

What is NPS benchmarking?

NPS can be benchmarked across industries to assess how well a company is performing compared to its peers. Benchmarking helps in setting realistic improvement goals. To learn more, refer to the article section What Net Promoter Score really means.

What is a good NPS score?

NPS scores are interpreted as follows:

  • Promoters (score 9-10) are loyal and likely to recommend.
  • Passives (score 7-8) are satisfied but not enthusiastic.
  • Detractors (score 0-6) are unhappy and may negatively impact the brand.

A positive NPS indicates that you have more promoters than detractors. Using a relative scoring method to benchmark how your NPS changes and compares with other competitors will show more insights into how your product stands.

What other customer satisfaction metrics are available?

While NPS is widely used, there are other metrics like Customer Satisfaction Score (CSAT) and Customer Effort Score (CES) that complement NPS and provide a more comprehensive view of customer satisfaction.

Jin Jeon

UX Researcher
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Jin is a UX researcher at Hubble that helps customers collect user research insights. Jin also helps the Hubble marketing team create content related to continuous discovery. Before Hubble, Jin worked at Microsoft as a UX researcher. He graduated with a B.S. in Psychology from U.C. Berkekley and an M.S in Human Computer Interaction from University of Washington.

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