Net Promoter Score

Definition:

Net Promoter Score (NPS) is a widely used metric that measures customer loyalty and satisfaction by asking customers a single question:

“How likely are you to recommend this restaurant to a friend or colleague?”

Respondents answer on a scale from 0 to 10, with their answers divided into three categories:

• Promoters (9-10): Loyal customers who are likely to recommend the restaurant to others.
• Passives (7-8): Satisfied but unenthusiastic customers who are vulnerable to competitors.
• Detractors (0-6): Unhappy customers who are unlikely to recommend the restaurant and may even discourage others from visiting.

The NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters, resulting in a score between -100 and 100.

Thus, a higher NPS indicates greater customer loyalty and satisfaction.

Why It Matters:

• Customer Loyalty Insight:NPS provides a simple but powerful snapshot of customer loyalty and overall satisfaction.

  A high NPS score indicates that a restaurant is creating positive experiences, while a low score signals areas for improvement. Monitoring NPS helps restaurants understand how well they are meeting customer expectations.

• Predicting Growth:NPS is often seen as a key predictor of future business growth.

  Loyal customers (Promoters) are more likely to return, spend more, and generate positive word-of-mouth referrals, all of which contribute to increased revenue.

  On the other hand, Detractors can harm a restaurant’s reputation through negative reviews and word-of-mouth.

• Benchmarking Performance:Restaurants can use NPS to benchmark their performance against competitors or industry standards.

  By tracking NPS over time, operators can see how customer loyalty evolves, pinpointing trends that impact customer satisfaction positively or negatively.

• Actionable Feedback:NPS is often paired with follow-up questions that ask customers to explain their score.

  This qualitative feedback provides actionable insights that restaurant operators can use to address issues, improve service, or enhance the menu.

Characteristics of NPS:

• Simple and Direct:NPS is a straightforward metric that distills customer satisfaction into a single score.

  Its simplicity makes it easy to implement and understand, while still offering valuable insights into customer behavior.

• Promoters:Customers who rate the restaurant 9 or 10 are considered Promoters.

  They are the restaurant’s most loyal customers and tend to generate repeat business, recommend the restaurant to others, and leave positive reviews.

• Detractors:Those who rate the restaurant between 0 and 6 are categorized as Detractors.

  They are likely dissatisfied with their experience and may spread negative feedback, hurting the restaurant’s reputation.

• Customer Feedback Loop:Many restaurants use NPS surveys to create a feedback loop, using customer responses to implement changes that improve the dining experience.

  This allows for continuous improvement and increased customer satisfaction over time.

Example in Action:

A mid-sized restaurant chain uses NPS to gauge customer satisfaction after each visit.

After noticing a drop in their NPS score, they analyze feedback from Detractors and discover common complaints about slow service during peak hours.

Therefore to address the issue, they optimize their staffing schedule and streamline kitchen operations.

Over the next few months, their NPS score improves by 15 points, reflecting increased customer satisfaction and a reduction in negative reviews.

Additional Resources & Related Terms

• Customer Feedback Loop:
  
  A Customer Feedback Loop is a continuous process in which a restaurant collects, analyzes, and responds to customer feedback to improve the overall dining experience.
• Average Star Rating (ASR)
  A key metric used in the restaurant industry to measure customer satisfaction and overall reputation.
• The 4 Main Impacts of Average Star Ratings on Restaurant Brands and 7 Best Practices:Average Star Ratings are more than just numbers for restaurant brands. Check out the 4 main impacts that ASR has on restaurant brands.

Conclusion:

Net Promoter Score (NPS) is a critical tool for measuring customer loyalty and predicting long-term success in the restaurant industry.

By tracking NPS, restaurants gain valuable insights into how likely their customers are to recommend them to others, which can help drive repeat business and organic growth.

Restaurants can use this data to make strategic improvements, ensuring they meet or exceed customer expectations, improve satisfaction, and ultimately boost their reputation and revenue.