The value of the Net Promoter Score (NPS)

One of the most effective ways to measure customer sentiment is through the Net Promoter Score (NPS). In this article, we give five key reasons why NPS matters for UK financial services companies.

What is NPS?

But first, what exactly is NPS?

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 customers leave a review with us on Smart Money People, one of the questions we ask them is:

How likely are you to recommend this company's product to friends and family?

We’ll then ask them 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.

Read more about how NPS is calculated.

Why NPS matters for UK financial services companies

1. Increasing customer loyalty and retention.

The UK financial services sector is highly competitive, with banks, insurers, and fintech companies all vying for market share. NPS is a universally understood metric that demonstrates customer loyalty – meaning higher retention rates. Companies that track and improve NPS can identify pain points and take proactive steps to keep customers engaged.

2. Driving revenue growth

Loyal customers are more likely to purchase additional products and services. Research by CustomerGauge has found that improving NPS by just 10 points correlates with a 3.2% increase in upsale revenue*. So, a higher NPS often correlates with increased cross-selling opportunities and greater lifetime customer value.

3. Gaining a competitive advantage

In a regulated industry like financial services, differentiation is important. Naturally, consumers often based their financial decisions on reputation and customer experience rather than just price. A strong NPS can be a powerful marketing tool, demonstrating customer satisfaction and trust in a company’s services.

4. Identifying service gaps

NPS feedback helps financial services companies identify areas for improvement. If customers provide low scores, companies can investigate recurring complaints, such as slow customer service, poor digital experiences, or complex product offerings. Addressing these issues can lead to a better overall customer experience.

5. Compliance and regulatory benefits

With the introduction of Consumer Duty, measuring good customer outcomes and fair treatment is more important than ever. A high NPS can demonstrate a company’s commitment to customer satisfaction and ‘doing the right thing’, aligning with the FCA’s expectations and reducing reputational risks.

Final thoughts

For UK financial services companies, measuring and improving NPS is more than just a customer satisfaction metric — it’s an incredibly powerful tool for driving loyalty, growth, and competitive advantage. When financial services companies use NPS to its full potential, they can build stronger relationships, enhance their reputation, and ultimately achieve long-term success in the marketplace.

At Smart Money People, you get NPS included as standard, making it easy to discover what your customers really think. To find out how our data and insight can help your business, contact our Business Development team.

*CustomerGauge, August 2024, NPS impact on revenue