NPS Benchmarking: Understanding your customer loyalty

NPS Benchmarking: Understanding your customer loyalty

By Shelmith Macharia,

In an age where the customer is empowered, businesses have no option but to listen to their customers. The Net Promoter Score (NPS), a global metric used to measure customer loyalty has been used widely across the world. In Africa, this metric continues to shape the customer experience industry.  According to Chris Pescott (2017), the NPS is not only a customer loyalty metric but a tool that gives businesses the ability to know how they rank against their competition and more importantly, how to be industry leaders.

NPS benchmarking involves comparing your NPS score with the industry score and against that of other businesses within the industry. Although businesses are now able to track their own performance, knowing how they perform compared with their fellow industry players in terms of customer experience has remained unclear. In this article, we talk about why NPS benchmarking is important, how it is done and where to get correct industry benchmark scores for your industry.

NPS benchmarking is done at the industry level. Various customer experience companies globally have determined industry NPS for companies in various countries. For instance; Satmetrix, an American customer experience company determined the industry NPS for various industries in the United States. In Kenya, Ajua, an integrated customer experience company, publishes NPS benchmark reports on a quarterly basis. Industries rated include but are not limited to; banking, Insurance, Retail and modern trade, Food and beverages, Health facilities and Energy.

Is NPS benchmarking really important?

I’m sure some or most people would argue that there is no need to benchmark against others because each company is unique and the NPS is about improving internal processes and becoming a more customer-centric company. But have you ever wondered how difficult it would be trying to attain an NPS score that is almost impossible for your industry? That would mean investing a lot of resources with no returns, giving pressure to your employees to achieve unattainable targets and eventually discovering that it does not work when it is too late.

On the other hand, being comfortable with your NPS score, even though your business is doing well, doesn’t make you any better. You could have the lowest NPS in your industry, an indication that you are not doing well.

NPS Benchmarking helps businesses understand their market share. From the customer’s mentions of a brand, one is able to tell where a business stands in the market.

In addition to this, it gives businesses an opportunity to capitalize on their strengths and improve their weaknesses for better customer experience. In the long run, it acts as a compass in the road towards remaining competitive and relevant in the market.

What is the methodology behind Ajua’s benchmarking?

First, industries to be benchmarked are identified. Random and independent samples of size 1500 are drawn from Ajua’s audience of 70,000 people distributed across all counties, genders and age groups. The method of sampling used is stratified sampling where respondents are drawn from each region using probability proportional to size sampling. Age and gender ratios are also taken into account and these ratios are proportional to those of the Kenyan General Population. Mobile surveys are sent to the sample. 1,000 respondents are targeted from each industry. Respondents are asked to rate a bank, hospital or any other facility in each industry that they have interacted within the last three months on a scale of 0-10 and give a reason for their answer. The NPS for the industry and that of each brand mentioned is also determined. The NPS is only reported for brands with at least 50 mentions.

Why you should look out for Ajua’s NPS benchmarks:

  1. 1. The methodology is right- The methodology used reduces bias significantly. The surveys are non branded meaning that customers do not know who is behind the survey. The respondent panel is neutral and randomly selected.

  2. 2.They are a true reflection of market share- Ajua’s benchmarks are double-blind competitive. Research has shown that double-blind competitive NPS benchmark scores are reliable and consistent predictors of market share trends. Double-blind means that respondents do not know who is behind the survey and the people doing the analysis do not know who is funding it.

  3. 3. Mobile phone surveys promote candid conversations – Unlike other methods of survey administration like In-person interviews, telephone interviews, mobile surveys promote candid conversations between a customer and a business.   Past research work has shown that customers do not shy away from speaking their hearts when participating in a survey because they have no fear of “how will the interviewer perceive me?”

  4. 4. Mobile conversations are fast and have wider coverage compared to other methods of engaging customers in Africa.

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