Did you know a net promoter score of 70 or higher indicates your customers love your brand?
The net promoter score is the most popular benchmark from qualitative customer surveys. A good score contributes to better customer retention and company growth.
However, getting and maintaining a good score can be difficult at times. And not necessarily because you have a bad product or service, but because satisfied customers don’t always fill out the survey.
So, how can companies, especially CPGs, understand and leverage their net promoter score? Let’s find out.
What is a net promoter score?
Net promoter score (NPS) is a measure of customer loyalty.
It is a way to measure how likely customers are to recommend your company's product or service. NPS doesn't have any direct relationship with sales or revenue, but it does influence these metrics.
The NPS metric has been widely adopted across industries, including healthcare, financial services, and retail. A company’s net promoter score can be seen as an indicator of how happy its customers are with the services they provide.
NPS helps companies to grow and make better decisions about their business model and customer service, which ultimately leads to more satisfied customers.
According to NPS, a company’s net promoter score ranges from -100 (the worst) to +100 (the best). The higher the NPS number, the more loyal and satisfied your customers are with your company.
How does the net promoter score work?
NPS is calculated by asking customers how likely they are to recommend your company, then subtracting the number from 1. So if someone says they are likely to recommend your company, it would be 0. If someone says they are not likely to recommend your company, it would be -1. The closer the score is to 0 or -1, the higher the net promoter score will be.
NPS can be obtained through surveys or interviews with customers. It is also possible to get NPS scores from social media posts, text messages, emails, and phone calls from your customers.
What is a good NPS score?
Any score between -100 and 0 needs improvement. This means your customers aren’t happy and won’t recommend your brand to others.
Scores between 0 to 30 are good. Your customers probably aren’t screaming about your product from rooftops, but they will likely keep purchasing from you.
Scores between 30 and 70 are great. These customers love your brand and likely recommend your products to others.
If your score is over 70, you can rejoice! Your customers really love your brand. These customers are probably screaming from rooftops.
How do you calculate the net promoter score?
Net promoter score (NPS) is a loyalty metric for measuring the willingness of customers to recommend a company's product or service to others.
Generally, your net promoter score is calculated by subtracting the percentage of detractors from the percentage of promoters and dividing it by 100.
Not sure what a detractor or a promoter is? Don’t fret.
What are the types of customer categories?
When you measure scores, customers are classified into three categories. Those are:
- Promoters — give you 9s and 10s on the survey
- Passives — give scores of 7 or 8
- Detractors —- any scores between 1 and 6
Promoters
Promoters are customers who have given a company its highest rating. They are the most loyal and satisfied customers, and they have the highest likelihood of making a purchase or recommending that company to their friends.
When calculating the NPS score, promoters are considered as 1 point higher than detractors. For example, if a customer gives you a 3 on an NPS survey and you have 10 total responses, then you would earn an NPS score of +11.
Passives
Passives are the portion of customers who would not recommend your company to their friends or colleagues but would still be willing to buy from you again in the future. They are satisfied with your products or services but not enough to be considered promoters.
Detractors
Detractors are those people who have a negative opinion of your company. These customers are generally unhappy with your brand and will not buy from you again. They may even discourage others from purchasing your brand.
What is a good net promoter score for CPGs?
In the CPG space, there are a few industry averages for the NPS score. Those are:
- The average NPS score is 43
- The average median 50
- The highest score is around 72+
- The lowest score is 21+
CPG brands must keep their NPS score at the average or higher. It’s important to keep the customer satisfied in a highly competitive industry. Here are a few ways to improve your net promoter score:
Systematically monitor your score
When you have a system in place to regularly review and respond to customer feedback, you will have more satisfied customers. Issuing surveys to collect your score and using the data to track customers is an important step in this process.
Create a seamless customer experience
Customers will quickly abandon your brand if they encounter a difficult customer experience. This is also true if they have a bad customer service experience. You must invest in your customer-facing team to make the entire experience seamless.
Consider every touchpoint and make sure you have addressed all pain points. This will help to increase your NPS.
Do you want to partner with a distributor that will help improve your customer experience? At Buffalo Market, we distribute to retailers 7 days a week. If you are interested in learning more, check out our onboarding process for CPG brands.