Net promoter scores for SMEs
By Claire Scaramanga
When you are a smaller business, you may gauge your customers’ satisfaction levels based on gut instinct, verbal feedback or maybe even a regular satisfaction survey.
Large organisations have been using the net promoter score (NPS) for a long time now – you have probably been asked to rate on a scale of 1 to 10 how likely you would be to recommend the client’s brand to others.
One of the great things about the NPS – apart from its beautiful simplicity – is that it provides valuable insight for all businesses, regardless of size or industry sector.
What is the net promoter score?
It was developed by Fred Reichheld and Satmetrix, Bain & Company. Reichheld analysed an enormous body of customer surveys and other research to discover that the single most important question that demonstrated customer satisfaction was whether they would recommend your business to a colleague or friend.
How do you use it?
You ask your customers the question “how likely are you to recommend us/our service to your friends or colleagues?” and give them a scale of 0 to 10 to select from.
You then divide your responses into three groups:
- Promoters - those who score you at 9 or 10
- Passives - those who give 7 to 8
- Detractors – those who give 0 to 6
To work out your NPS score, you calculate the number of promoters you have, as a percentage of the number of people surveyed, and subtract the percentage of detractors. You don’t count the passives in your calculation.
If you survey 100 customers (let’s keep the maths nice and simple!) and 35 give you a 9 or 10 (the promoters), while 14 score you between 0 and 6 (the detractors), your NPS is 21.
Promoters who support your brand will recommend others (a low cost of acquisition), are likely to be loyal, long-standing customers and are generally less price-sensitive. Whereas detractors will complain, be less profitable and shop around.
Comparing your NPS
There are two ways you might want to track and compare your score. The first is to ask the question on a regular basis, so you can measure progress over time. If your NPS score is going up, make sure you do more of whatever it is that is working for you. And don’t forget to see how your financial performance compares with changes to your NPS.
The second way is to look at your competitors and see how you perform against them. You can buy benchmarking scores from Satmetrix, but these may be more US based. There is also information on industries and larger
UK companies on the NPS Benchmarks website.
Here are the NPS scores of UK supermarkets on the NPS Benchmarks website please note that some of these may be older than others):
46 - Waitrose
42 - Aldi
16 - Sainsbury
14 – Lidl
2 - Morrisons
-8 - Tesco
-14 - Co-Op
Did any of those surprise you?
By the way, Apple, regular top charter for the brands of the year, has an NPS of 89.