What is a Net Promoter Score?

As a CPG brand, there’s nothing more important than your customers. And while you might be trying to attract new shoppers, you also need to focus on customer loyalty and recommendations. 

So how can you work out how successful your business is at this? Meet the Net Promoter Score (NPS).

What is a Net Promoter Score (NPS)?

Simply put, the Net Promoter Score of a business or service means how likely it is that customers recommend your product/service/brand to someone else. Effectively, this is a widely used metric that aims to measure consumer loyalty.

A smiley face icon spraypainted onto the floor with a woman's feetThe NPS is a marketing industry standard. It is the most used metric that evaluates customer satisfaction. It’s also used to predict customer retention and loyalty too.

A Net Promoter Score is a number between -100 and +100 making it an easy metric for companies to monitor over time( and compare with each other!). Zero is the midpoint, with -100 being the worst and +100 being the best.

The measurements taken into account to make the NPS are formed of answers to questions on a sliding scale, such as “On a scale of zero to 10, how likely are you to recommend this business to a family member or friend?”

This zero to ten scale is called the Likert Scale — zero means that person would not recommend at all, while 10 would mean a person is extremely likely to recommend the business or service.

Groupings of the Likert Scale for NPS calculation

When a business has asked a question like the one above, you can then divide the results into three groups:

  • Detractors
  • Passives
  • Promoters

Let’s look at each one in more detail.

Detractors

These are the people who said they were between zero and 6 on whether they were likely to recommend the business. Though you might think that 5 or 6 out of 10 isn’t bad, it does mean that they’re far more likely to end up finding things they don’t like about the brand too.

Passives

This group of people are fairly satisfied and have scored the business 7 or 8 out of 10 on whether or not they would recommend the business. These are the people who could be swayed by the competition. 

Simply put, there is something about the brand or business that is preventing them from being a 9/10 or 10/10.

Promoters

When you look at your 11-point scale, those who respond with 9/10 or 10/10 are your brand promoters. These are your dream customers who go out of their way to be positive about your brand.

How to calculate your Net Promoter Score

To calculate a Net Promoter Score, you need to find two figures:

  • The percentage of promoters in your survey results
  • The percentage of detractors in your survey results

To work out the Net Promoter Score, you need to subtract the % of detractors from the % of promoters.

Let’s take an example:

Score

No. of people

 

0

5

Detractors

1

3

Detractors

2

4

Detractors

3

9

Detractors

4

11

Detractors

5

20

Detractors

6

4

Detractors

7

80

Passives

8

45

Passives

9

90

Promoters

10

66

Promoters

 

337

 

 

Percentage of detractors = 56 / 337 x 100 = 16.6%

Percentage of promoters = 156 / 337 x 100 = 46.3%

Net Promoter Score = 46.3 – 16.6 = 29.7

What is a good Net Promoter Score for CPGs?

As a standalone figure, the value of the Net Promoter Score is limited. In order to really understand the impact of it and what it means, it’s important to know the average score for similar brands and the whole industry.

A good resource to use for this is Retently. This organization looks at the current Net Promoter Scores across all industries.

Generally speaking, Retently describes:

  • A good score to be between zero and thirty
  • A great score to be between thirty and seventy
  • and an excellent score to be between seventy and one hundred. 

Anything less than zero means improvement is needed. When you have an excellent NPS, it means your customers really value you and as a result, they’re generating lots of word-of-mouth referrals.

Retently also talks about how most industries (75%) end up seeing their NPS scores decrease over time. This is why it’s important to look at the industry as a whole and compare your figure. If your score has gone down but not as far as the rest of the industry, then you’re still in a good position.

Here are some more example NPS scores taken from Suricate’s 2021 NPS Benchmarks Report:

  • Retail 48
  • Food 28
  • Entertainment 21

A bunch of yellow and pink balloons with happy and sad faces

Why is NPS important for CPGs?

Given that over 80% of people say they trust recommendations by friends, family, and colleagues, word-of-mouth remains integral to increasing sales and attracting customers. As it always has been, word-of-mouth continues to be a considerable growth driving force — and NPS is the simplest way to understand how much your CPG brand is valued in comparison to your competitors.

Because it’s so simple and effective, there are few surveys and metrics capable of competing. NPS is an unambiguous and clear way of knowing whether people are loyal to your brand. It’s also a great tool for improvement too as it can be really eye-opening!

What’s important to remember is that a good NPS isn’t permanent. All CPGs need to continue working to keep their customers happy in order to maintain their scores or improve upon them. Failing to act upon this feedback is problematic.

How Buffalo Market can help

Buffalo Market gives brands the opportunity to grow their Net Promoter Score through the promotion of products that have a purpose and place in the CPG industry. With CPG brands working hard to keep their customers satisfied, it makes sense to partner with Buffalo Market who are ready to collaborate with them to improve NPS all-round. 

Take a look at the Buffalo Market Food Distributor and Consumer Packaged Good News blog to see what else we can offer.

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