This post originally appeared at knowinghospitality.com/
Like it or not, recommendations and social proof are more important than ever. As a result, your business needs to know much more than simply how satisfied your customers are - you need to know how your customers feel about their experience.
Enter: NPS (Net Promoter Score).
NPS is a benchmark that measures how likely your customers are to recommend your business. In effect, it measures customer loyalty to your brand instead of your their experience with a particular product or interaction.
Why is NPS important?
Are you losing customers (churning)? Are they cancelling their reservations / memberships / subscriptions? Are they buying from your business one time and not coming back?
One reason why NPS is so effective is it’s simplicity. If you ask no other question other than, “how likely are you to recommend us?” you’ll quickly know how satisfied your customers are. It gives you a much better sense of your customers mindset.
This is important because recommendations of your business are likely much more valuable than a simple positive review. According to Nielsen, “the most credible form of advertising comes straight from the people we know and trust”. In other words, we’re more likely to make a purchase decision if our friends and family have already had a great experience with it.
How to calculate NPS
Ask your customers “how likely they are to recommend your business to a friend or family member” and to grade you on a scale of 0 to 10, with ‘0’ being low and ‘10’ being high.
Categorize the responses based on the scores, where scores 0-6 are considered Detractors, scores 7-8 are considered Passives and scores 9-10 are considered Promoters.
Detractors: These customers are not happy with the product or the service, and probably won’t purchase from your company again. They are more likely to damage your company’s reputation through negative word of mouth.
Passives: These customers are moderately satisfied but you could easily lose them to a competitor. They’re not likely to spread any negative word-of-mouth about your business, but they aren’t enthusiastic enough about your offerings to promote them.
Promoters: These customers love your company’s products and services and tend to be repeat buyers. They’re the enthusiastic ‘evangelist’ who recommends your company to others.
To calculate your NPS score, subtract the percentage of Detractors from the percentage of Promoters. Passives aren’t counted because you can’t count on which way they would go.
For example, if you surveyed 100 customers, 40% were detractors and 50% were promoters, your NPS would be 10 (50% - 40% = 10).
The score can range from -100 to 100.
The closer to 100, the better.
More about NPS
You should use your NPS score to measure your company’s trend over time. What you’re looking for is a steady improvement over months or years. This will show that you’re doing a good job of converting detractors in to promoters. You can even take seasonality in to account when looking at the trend. Maybe summers are a low point but if you compare summer over summer, you’ll see the story unfold.
Want gain more insight from customers? Don’t just stop at NPS, make sure you add space for customers to comment and leave feedback about their experience.
Once you have all the data, you can put together an action plan to address pain points or bottlenecks in your customer experience and employee training plan.
If you like this article but you’re struggling with how to improve your NPS score, click here to get in touch with us.
We can help you develop a plan to improve your guest satisfaction results and drive more business.