A Net Promoter Score, often referred to as ‘NPS’, is a measure of how well a company creates relationships with customers worthy of their loyalty and they’re considered an important metric for companies to monitor.
When you leave a review with us on Smart Money People, one of the questions we ask you is:
How likely are you to recommend this company's product to friends and family?
We’ll then ask you to give a rating between 1 and 10. The results of this question allow us to calculate the Net Promoter Score (NPS) of a company and their products.
At Smart Money People, we follow this question up with an open question:
‘What do you like about this company, and what could be better?’
Responses to this question are important to help us to understand what are the key areas, or as we like to call them, drivers, that influence a company’s Net Promoter Score.
How are Net Promoter Scores calculated?
- If you give a score between 9 and 10, you are considered to be a ‘promoter’ and would actively recommend that company or product to others.
- If you give a score of 7 or 8, you are considered to be ‘neutral’.
- If you give a score of 6 or less, you are considered to be a ‘detractor’ and would actively encourage others to steer clear of that company or product.
We then calculate the Net Promoter Score by subtracting the percentage of detractors from the percentage of promoters.
You can have a Net Promoter Score between -100 and +100. The higher the Net Promoter Score, the more loyal the customers are.
Watch our short video to understand more
Why are Net Promoter Scores important?
People talk. Whether it’s talking about your experience among friends and family, or an influencer talking on social media, we regularly share the good and bad of our own personal experiences with a company. And a negative experience is much more likely to be talked about, and remembered, than a positive experience.
So creating a great customer experience, and growing customer loyalty is really important for companies. A loyal customer will often stay with a company for longer, buy more of their products, and recommend that company to others. For companies, it’s also often much more cost-effective to retain their existing customers than it is to try and win new customers.
Creating a sense of loyalty among customers is particularly important across industries such as financial services where customers can choose from many providers and can easily switch between accounts and products.