What is NPS?
Net Promoter Score or NPS is a scoring system that measures customer satisfaction. It is a metric that determines how likely your customers are to recommend your company to someone else. It was first created in 2003 by Bain and Company and is utilized by millions of businesses such as T-Mobile, Lego, and us here at Roofing101. It is a scoring system that tracks and measures how a business is seen in the eyes of its customers.
How is the Net Promoter Score calculated?
NPS is found by surveying your customers after their experience asking if they would recommend your company to someone else with the question, “how likely is it that you would recommend this company to a friend or colleague?” Those surveyed then answer on a simple 0 to 10 scale with 0 being the lowest likelihood to recommend and 10 being the highest. From this initial score, the respondents are placed into three groups, The Promoters, The Passives, and The Detractors. The Promoters, those that cast votes of 9 and 10 are the happiest customers who will account for 80% of the referrals your business receives. The Passives, votes of 7 and 8 are happy with your services but not at the level of the Promoters. Lastly, The Detractors are those that vote 0-6 and represent your unhappy customers and may even discourage others from interacting with your business. Your company’s NPS is calculated by subtracting the percentage of unhappy customers from the happy ones and disregarding The Passives. Net Promoter Score = % of Promoters – % of Detractors.
Why is having a high NPS important?
By having a higher NPS, your business can stand out from its competitors. It can also be a large indicator of current business growth and future business growth. A high Net Promoter Score can provide your business with stronger validity over other companies in your industry. Through having a higher NPS, your company will have more leverage over others. Companies that have leading Net Promoter Scores on average grew at twice the rate of competitors. Having a high NPS is important because people are four times more likely to make a purchase when they are referred to by a friend, compared to coming across your business via traditional advertising.
How do we compare?
At Roofing101, we have a Net Promoter Score of over 40% which is high for our industry. This is compared to other industries such as travel websites at 23% and the banking industry at 35%. The construction industry is one of the industries where a good NPS score is directly related to the growth of the company. Again, if your company has a higher Net Promoter Score, you are more likely to grow than other companies. At Roofing101 we also have a strong response rate of 55% of people taking our survey.
How can you improve your company’s NPS score?
It may take some time to improve your overall NPS score. To ultimately improve it, you must set attainable and realistic goals and lay out the steps to achieve this goal. Your goals should be part of each team meeting where you focus on communicating about the Net Promoter Score and your goal. You also should read through each comment you receive from a customer in order to evaluate where you can improve. By reading each comment or review you will be able to target and identify how to increase your consumer’s satisfaction rate.