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The Net Promoter Score

Gaining success from your Net Promoter Score (NPS)

For a long time at Cendyn, we have been measuring the likelihood that guests will recommend hotels, and using this to calculate a score – the Net Promoter Score (NPS). NPS will offer hotels more valid, reliable, and comparable guest data in real-time, consequently, providing hotel managers with empirical evidence for operational improvements including rooms & housekeeping, f&b, and facilities, as well as more informed marketing and sales strategies, and enhanced revenue management.

 

WHAT IS NPS?
NPS is a widely used measure of firm performance, often regarded as the most important measure to include in any customer survey. Specifically, NPS measures the concept of customer loyalty, which is likely to impact firm performance via word-of-mouth. Harvard scholar Frederick F. Reichheld depicted this relationship with the following figures.

NPS-1NPS-1

 

 

 

 

 

The above figures show the positive correlation between firm growth and firm NPS. In other words, firms with greater net promoter scores (X-axis) experience higher rates of growth (Y-axis).

 

HOW IS NPS MEASURED?
NPS asks hotel guests “How likely are you to recommend [Hotel A] to a friend or colleague?”. Responses to this question are measured on an 11-point Likert scale, ranging from 0 to 10, where 0 is labeled “Extremely Unlikely” and 10 “Extremely Likely”.

NPS-update-scale-onlyHOW IS NPS CALCULATED?
Guests that answer the above question are categorized based on their responses. Those who respond 9 or 10 are labeled “Promoter”, 7 or 8 “Neutral or Passive”, and 6 or less “Detractor”. The score, NPS, is the percentage of “Promoters” minus the percentage of “Detractors”.

NPS-scale

 

HOW IS NPS USED?
Due to the observed positive relationship between NPS and company financial performance, NPS is often used as an indicator of overall firm performance. Some firms take this a step further by using NPS as a predictor of future financial performance. At Guestfolio, we recommend hoteliers use NPS as a benchmark of firm performance. Specifically, as:

  • An internal benchmark for individual hotels
  • An external benchmark for comparison with sister hotels (comparable hotels within your hotel group)
  • An external benchmark for comparison with peer hotels (comparable hotels that are not owned by your hotel group)
  • An internal benchmark, scores can be compared over time, to indicate how an individual hotel is performing compared to itself. If extraneous variables are controlled, managers can see how their operational changes are impacting guests

NPS-5

 

 

As an external benchmark, scores between hotels can be compared at one point in time and over time. This provides an indication of relative performance among sister and/or peer hotels, in other words, compared to the market.

NPS-6

 

 

ONCE WE HAVE THE DATA, WHAT DO WE DO WITH NPS?
Analysis of NPS provides valuable insights that can be actioned by management. Here are a few examples:

  • Comparing within groups of hotels allows lower performing hotels to learn from higher performing sister hotels.
    Drilling-down into scores by demographic allows managers to better understand and tailor communications and operations to suit the needs of certain guest segments
  • If the hotel guest survey has been designed well, relating scores to other question responses uncovers root causes that can be communicated back to employees to improve the guest experience
  • Similarly, the relationships between hotel department performance and NPS can be examined to understand which guest touch points have the greatest impact on the guest experience. This sort of analysis provides management with a basis for resource allocation and ROI prediction

Hotels and hotel groups that include the NPS question in their post-stay survey will begin to create an advantage through superior insights. The subsequent array of benchmarks available to hotel management, as well as guest touch points and guest specific insights, empowers managers to make meaningful improvements across a hotel group, at the individual hotel level, and within hotel departments. Ultimately, this leads to superior guest experiences, increased word-of-mouth, and improves the potential for revenue growth.

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