How CPGs Calculate and Improve their NPS

Trying to kickstart your small CPG brand is a tough process. There are so many metrics to keep track of, it can be tough to know which actually have value to your business.

One key metric you should be looking at, and looking to improve, is your NPS. 

Let's take a closer look. 

 

How CPGs Calculate and Improve their NPS_Buffalo_Market

What is a net promoter score?

A net promoter score (NPS) is one of, if not the most popular benchmarks from quantitative surveys. It is used by businesses across the world to judge how products, services, brands, and organizations are performing based on the measured pulse, affinity, and loyalty.

Before NPS, customer satisfaction surveys were incredibly lengthy, difficult to verify, and offered low response rates. To combat this, we needed a new, streamlined way of measuring customer satisfaction that could garner high response rates. Enter Frederick F. Reichheld and his December 2003 Harvard Business Review article, “The One Number You Need to Grow”.

It all starts with one simple question: “Would you recommend [product/service/business] to a friend?”.

This question must be answered using a 0 to 10 scale - where 0 is unlikely and 10 represents a high likelihood of recommendation.

From there you can ask a series of follow-up questions to gain further information such as more product feedback or demographic insight.

How to calculate net promoter score

The net promoter score ranges from -100 to +100 and uses a calculation derived from answers of the recommendation question. 

Calculating your NPS is far simpler than you may expect. All you need to do is tally up the responses and subtract the percentage of detractors from the percentage of promoters. Say you have 30% of respondents giving a lower score and 50% are promoters, that 30% is detracted from the 50% to give you a score of 20. 

So, how do you know which responses should be detracted? This is where the 0 - 10 scale comes into play. 

On the 0 - 10 scale, we’re ideally looking for respondents to choose 9 or 10 indicating a high likelihood of recommendation. This tells us that the respondent is very happy with their experience. Anyone giving a 9 or 10 response will likely champion the brand to friends and acquaintances. We call these “promoters”. 

Anyone giving a response of 7 or 8 are customers who may recommend your product or service if a related topic comes up in conversation, but are unlikely to bring it up off their own back. These are the middle of the road customers that are happy with your product, but don’t love it enough to be an advocate. We call these respondents “passive”. 

Any response between 0 and 6 is a sign that something needs to be improved. These are people that will have something they didn’t like about the product, even if it's a small thing. Those who find an issue are more likely to discuss that issue with friends, which can influence others to avoid the product. This is why any response within this range is considered a detractor.  

What are CPG brand benchmark NPS scores?

The CPG sector is a busy and heavily contested area. One of the best ways to get ahead is to improve your NPS, but to do this you need to know what a good NPS score looks like for CPGs. 

A good NPS benchmark looks different depending on the industry you’re working in. For example, the insurance sector has an impressive average NPS of 71, while the average score for internet software and services is just 4. 

The general rule of thumb for NPS scores is that anything between 0 and 30 is good, and anything over 70 means you’re doing something right as your customers genuinely love your product or business. 

Within the consumer-focused sector, NPS scores can vary wildly. Rolls Royce – a business you would expect to have a very high NPS given their level of prestige – has a shockingly low -47, while Heineken sits at the top of the table at an impressive 76. If we boil down this table to just food and drink CPGs, the average is a respectable 34. 

How can CPGs improve their NPS scores?

While it’s unlikely that consumers will be checking your net promoter score when deciding to buy, a low NPS score can essentially bury your business. You could implement the best marketing strategy ever seen, but it won’t make a difference if you can’t raise your NPS.

The first step is to make sure your team understands NPS and how it affects the business. You could even start by showing them this article! Once everyone is on the same page, you can start a collaborative effort to improve NPS.

Considering NPS is powered by customers, you should be actively making it easy for customers to give feedback. This second step is much simpler in this digital age thanks to social media. Social media has made it far easier and cheaper to have meaningful interactions with customers. It’s important to interact with every comment, even the negative ones. Not only will this help build a connection with customers – which then encourages them to go from passive to promoter – the increased engagement tells the algorithms that your brand is worth showing to other users. 

Social media has also made it far easier for customers to become promoters for your CPG brand, as they can quickly and easily inform their friends and followers within seconds of the thought crossing their mind. 

How can Buffalo Market help?

We want to give your brand the chance to grow your net promoter score by offering purpose-driven products and all the tips you could ever need over on the Buffalo Market blog

CPG brands work hard to provide the highest quality products to their customers. Partnering with Buffalo Market can help your CPG to secure the best, most sustainable products available to create a product mix that customers will love. 

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