Apples and oranges: the dangers of bad Net Promoter Score benchmarking

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When we think about Net Promoter Scores, it’s easy to leap to Apple as the ideal player to emulate: how many other companies can boast such a fervent base of promoters? Apple is one of the big proponents of the Net Promoter Score and unsurprisingly leads the way in scoring, with a massive 72 points, according to Satmetrix’s 2014 Net Promoter Industry Benchmark.

Setting Apple as your Net Promoter Score benchmark might seem tempting, but it’s a trap. Net Promoter Scores vary greatly between industries and even by kind of product. The average Net Promoter Score among software companies for example, is 21, with a range that goes from -26 all the way up to 56. Compare this to the laptop category that Apple tops, which bottoms out at 28 points.

Why the difference?

This discrepancy makes sense when you think about the difference in attitudes to certain industries. Some products inspire a lot more loyalty than others. You’re far more likely to want to recommend the latest smartphone to your friends over dinner than you are your medical aid scheme. On the other hand, when your medical aid provider fails to cover your life-saving operation, you’re going to be on the warpath.

It’s not only by industry that the Net Promoter Score can vary wildly. Compare Apple’s score in Germany to France and you’ll find a 13 point discrepancy. Comparing your own score to a company in the same industry from a different region is less useful than knowing the Net Promoter Score of your nearest competitor, although it does allow you to better understand how you measure globally.

Reading the results right

While the Net Promoter Score might look like a simple enough system to use on its own, there’s a lot of underlying complexity when it comes to interpreting the numbers it spits out at you. There’s a wide scope to misuse benchmarks and come up with a completely unrealistic picture of how your company is doing.

There are two big steps you can take to fight off the danger of bad benchmarking. The first is to forget about our friends at Apple, and any other business whose Net Promoter Score you might have read about online. If you’re in South Africa, forget those US- or UK-centric graphs that measure industry averages.

It’s important to choose a reputed local company to handle your Net Promoter Score and give you a realistic overview of how you measure against your direct competitors rather than companies you might share an industry with, but which operate in an entirely different context.

The other step is to stop looking at the concept of Net Promoter Score benchmarks from an exclusively external perspective. Knowing how you’re performing against a competitor is only useful if you’re unaware that you’re losing customers day-by-day. As an example, take any video rental company in today’s market – does it really matter which company has the best score, when the entire industry is sinking?

When calculating your Net Promoter Score, your own company’s performance is as important a benchmark as those of your competitors. Tracking the trajectory of your own customers’ attitude towards you can help you accurately map your company’s growth or decline, and uncover strategic opportunities that you might have overlooked if you were too busy comparing apples and oranges.

(Image Source: http://www.temkingroup.com/research-reports/net-promoter-score-benchmark-study-2014/)

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