NPS Blog

The benchmark is dead! Long live the benchmark!

Net Promoter System podcast“Can you please provide benchmark Net Promoter Scores for psychoceramics companies operating or selling at the high end of the Mauritanian market?”

Net Promoter practitioners love to talk about NPS benchmarks. They want to know how their companies measure up against “typical” or “comparable” companies. A well-constructed benchmark samples all target customers for a certain product or service, including those of competitors and even alternatives. Competitive benchmark Net Promoter Scores provide an objective and fair basis for comparing your company’s feedback with the feedback your competitors earn. Done right, they can provide the basis for goal setting and prioritization at the highest levels of a company.

But too many companies misuse benchmarks. Almost every day, it seems, we see another press release or blog post in which a company (wrongly) proclaims its NPS superiority over Apple. As a result, there’s been a pretty strong backlash against NPS benchmarks. And I’ve personally locked horns with some of the people who have been most critical of using them.

My next guest on the Net Promoter System podcast is one of those people with whom I’ve locked horns in the past. He says that many companies should ignore benchmarks altogether, especially small companies for whom an appropriate NPS benchmark might not even exist. Adam Ramshaw, founder of Genroe in Sydney, Australia, says it’s better to focus on increasing a company’s score over time and building a system of constant improvement. Adam discussed his position in a recent post on Genroe’s blog. At the end of the day, it turns out, he and I agree that benchmarks are useless if you’re comparing apples to oranges.

Adam’s firm helps other companies implement the Net Promoter System and advises them on customer service.

In our discussion, Adam also shared his perspective about how NPS can help service companies bring total quality management-like approaches to their operations. Total quality management—a philosophy that relies on statistical process control and simplifying operational mechanisms to eliminate production variables at factories—helped Japanese automakers gain an edge over American companies in the 1980s. These tactics helped Japanese car companies sell high-quality cars at shockingly low prices.

You can listen to our lively discussion on iTunes or through the player below.

Click here to browse more Net Promoter System podcasts.

4 Responses to The benchmark is dead! Long live the benchmark!

  1. Rob, I completely agree with your comment on misuse of NPS benchmarks. It’s so frustrating to see people put out their Net Promoter Score and contrasting, as you say “apples and oranges”. The other thing we see is using NPS in a transactional environment, such as purchase or support experience, and reporting that as your NPS! Or a B2B company that has it’s NPS of end users, and not decision makers. Then the senior execs want to know why the growth doesn’t follow?

    NPS benchmarks are powerful when done right. Our NP360 research found very few companies know their competitive NPS. That’s understandable in many industries where off the shelf benchmarks are not available, as that can be an expensive proposition. In those cases, focusing on improving your NPS is a great way to drive improvements. However, as you reach the top of your game, understanding how to outperform the competition becomes more critical.

    In my experience, most companies need to focus on getting trustworthy data if they want true linkage to business results vs. a marketing claim that means nothing.

  2. Rob – this is a great discussion and I believe taking the Transactional – Relationship – Competitive benchmarking approach is the best path to continuous improvement in this area. Having said that, it is disconcerting to see the the number of self proclaimed NPS benchmarks I see that are being published by a variety of sources. I think it is beginning to hurt the NPS brand, particularly when companies chose to use these benchmarks out of context to make the “better than Apple” or “better than competitor x” claim – when any practitioner of NPS knows that the reliability of the metric is key to validity of these claims. It would be great to hear from you or Fred on your thoughts on these benchmarks.