Calculating NPS in Hospitality: Risks, Recovery Methods, ROI
Improve your guest satisfaction and build your business with NPS.
“Would you recommend us to a friend?”
In the hospitality industry, word of mouth is critical to your success. NPS is the key metric in determining how the guest experience and service execution of your brand resonates with your customers. A great experience can translate into a competitive NPS, which is then proven by ongoing loyalty.
NPS turns recommendations and social approval into a way to gauge your guest’s satisfaction - and find out how they connect to your brand.
What is NPS?
Net Promoter Score, or largely referred to as ‘NPS’, is an easy to calculate metric that measures guest satisfaction. Hospitality businesses that incorporate guest feedback into their plans for growth are likely to see their NPS continue to grow.
NPS gives a holistic picture of how your guests really feel about your business, reporting complete brand sentiment instead of moments in time.
Why is NPS important?
As a business owner in the hospitality sector, you strategically develop your menus, your decor, your venue and your website to serve a specific audience or culinary gap. Every operational input is shared with guests, yet the way they interpret each element might result in an outcome that isn’t exactly as positive as you would like.
NPS is a way to capture the defining moments of a positive or negative experience, ultimately reporting how guest sentiment can translate into expected or lost loyalty. It’s an unambiguous measure of how your business is doing seen through the eyes of your guests.
The higher your Net Promoter Score, the greater your customer retention is, which can boost your profits by at least 25%. Loyal guests consume more and make more revisits. By identifying and rewarding your promoters you can generate greater loyalty and more positive online reviews.
Want to measure the impact of a new menu item or a change in decor? NPS helps you accomplish that. And because your competitors are also using this essential metric, you’ll have an easy way of benchmarking yourself externally against them.
To Learn about how leading brands are leveraging NPS to drive success, download our 'Recovery through the eyes of your guests' White Paper.
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How do I know my NPS?
If you want to know how happy your guests are and why, ask them that one simple question: “Would you recommend us to a friend?”
Guests can then be segmented in categories, assigned by how they respond to your brand; detractors, promoters and passives.
Promoters are the loyal customers who are happy to refer your business to others. These are the guests that are most likely to keep coming back and boosting your revenue and reputation.
Detractors are dissatisfied guests who aren’t likely to return for another helping. What’s more they could damage your business with negative word of mouth.
Passives, on the other hand, are neither positive or negative about your business. They might become promoters, or they could just as easily start checking out the competition.
So how do you find your target promoters? Out of a five point scale, detractors will rate your business between 1-3, passives represent a 4 and promoters a 5. For your restaurant, pub or hotel it’s an at-a-glance way of pinpointing the areas where you’re succeeding in customer satisfaction and where you have work to do to engage your guests.
To calculate your NPS, work out the percentage of customers who fall into the detractor group and subtract from the percentage of guests who identify as your promoters. The resulting number is your Net Promoter Score and could be anywhere in a range from -100 to 100. According to Forbes the average NPS for the hospitality industry is 53.
Knowing your NPS isn’t a magic bullet to driving customer loyalty, but working towards a higher NPS is a great way to drive real value for your business.
A higher number of promoters will purchase more whether that’s premium rooms or more expensive menus. They’re more likely to recommend your business to their friends and provide insightful and positive feedback that you can act on. And while NPS doesn’t always correlate directly with growth it should be one of your KPIs when building a strong business.
How do I improve NPS?
Improving your NPS doesn’t have to be difficult if you set clear and achievable targets. Decide where you want your NPS to be in six months and a year and start by incorporating NPS into your wider guest satisfaction strategies.
Motivate your team: improving your NPS is a great way to motivate your team to provide the best possible customer satisfaction experience. Celebrate milestone achievements as your Net Promoter Score improves and consider tying it to performance bonuses.
Flip your detractors: work hard to turn detractors into promoters by being quick to resolve customer service issues and following up promptly and appropriately. Let detractors help you pinpoint potential pain points and work hard to address them.
Nurture promoters: build your promoter base with unexpected rewards, bonuses and loyalty programmes. Nurture your positive relationships and then assess the impact in your next NPS.
Crunch the numbers: correlate your Net Promoter Score with a range of other metrics including guest review scores, guest complaints and repeat guests. This will focus your efforts where they’re needed.
More happy guests
To help move the needle on your brand’s NPS, our subject matter experts can build a plan specific to your business goals. Yumingo’s platform has helped mid-sized brands, on average, increase their NPS by 17 points by providing insights to improve marketing techniques and venue experience.
We can help track NPS at a brand, regional, location shift and server level.
If your business needs guest experience management we can help you turn customer feedback into actionable insights that let you outperform the competition.
Get in touch today and start making more happy guests across every shift every single day.