NPS vs Star Rating: Which Metric Predicts Growth?

Opening Insight#

While star ratings show what customers think, NPS scores reveal why they'll recommend you. For Australian businesses, NPS typically predicts revenue growth more reliably than star ratings alone. However, the best strategy combines both metrics into a comprehensive reputation system.

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What's the Difference Between NPS and Star Ratings?#

Understanding NPS Score#

Net Promoter Score measures one simple question: "How likely are you to recommend us to a friend or colleague?" Customers respond on a 0-10 scale, creating three segments:

• Promoters (9-10): Loyal advocates who drive growth
• Passives (7-8): Satisfied but vulnerable to competitors
• Detractors (0-6): Unhappy customers who damage your reputation

Your NPS is calculated by subtracting the percentage of detractors from promoters. A score of 50+ is considered excellent in most industries.

How Star Ratings Work#

Star ratings (typically 1-5 stars) provide a quick satisfaction snapshot. They're visible on Google, Facebook, and industry-specific platforms, influencing purchase decisions before customers even contact you.

Unlike NPS, star ratings don't measure loyalty or advocacy—they measure satisfaction at a single moment. A customer might give you five stars for excellent service but never recommend you to anyone.

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Which Metric Actually Predicts Growth?#

The Research Behind NPS#

Studies from Bain & Company show companies with high NPS scores grow revenue 2-3x faster than low-NPS competitors. This correlation holds across industries because NPS measures intent to advocate—the strongest predictor of organic growth through referrals.

For Australian businesses, referral-based growth is particularly valuable. According to local research, word-of-mouth recommendations influence 92% of Australian consumer purchasing decisions, making NPS alignment with actual business outcomes more direct.

Why Star Ratings Matter Less for Growth#

A 4.8-star rating looks impressive, but it doesn't tell you:

• How many customers will actually recommend you
• Why customers are satisfied (or dissatisfied)
• Whether satisfied customers are at risk of switching
• What specific improvements drive loyalty

A Sydney-based plumbing company might maintain a 4.7-star rating while losing customers to competitors because their NPS is only 25. The ratings show satisfaction, but the NPS reveals they're not creating advocates.

The Growth Correlation Reality#

Research shows:

1. NPS correlates more strongly with revenue growth (r = 0.7-0.8)
2. Star ratings correlate with initial purchase decisions (r = 0.5-0.6)
3. Combined metrics predict growth better than either alone (r = 0.85+)

Think of it this way: star ratings get customers in the door, but NPS determines if they become repeat customers and advocates.

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Customer Satisfaction Metrics in 2026#

The Shift Toward Predictive Analytics#

Australian businesses are moving beyond vanity metrics. Modern reputation management platforms now track:

• Sentiment analysis: Understanding why customers rated you, not just what they rated
• Behavioral tracking: Linking NPS scores to actual repeat purchase rates
• Churn prediction: Identifying which detractors are likely to switch to competitors
• Segment-level NPS: Understanding which customer groups are most loyal

Why Context Matters#

A Melbourne-based accounting firm might have an NPS of 65 (excellent), but if 60% of that comes from large corporate clients while small business clients show NPS of 20, they're missing a growth opportunity.

Modern review analytics tools now provide this granular insight, letting you optimize for the segments most likely to drive referral growth.

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How to Use Both Metrics Strategically#

Step 1: Establish Your Current Baseline#

Start by measuring both metrics across your customer base:

• Send NPS surveys to recent customers (within 2 weeks of purchase)
• Audit your star ratings across all platforms (Google, Facebook, industry sites)
• Calculate your average star rating and NPS score

A Brisbane-based dental practice might discover they have a 4.6-star rating but only a 42 NPS—indicating satisfied customers who aren't becoming advocates.

Step 2: Identify the Gap#

Analyse the mismatch between ratings and NPS:

• High stars, low NPS: Customers are satisfied but not loyal. Focus on deepening relationships and creating memorable experiences.
• Low stars, high NPS: Your advocates are frustrated by something specific. Fix that issue urgently—you're at risk of losing promoters.
• Both low: Serious problems exist. Conduct exit interviews with detractors to understand root causes.
• Both high: You're doing well. Maintain consistency and scale what's working.

Step 3: Act on Feedback Differently#

For NPS Detractors:

• Conduct follow-up conversations (not surveys) to understand why
• Implement specific fixes based on common complaints
• Re-survey after improvements to track movement

For Low Star Ratings:

• Respond publicly and professionally to negative reviews
• Address the specific issue mentioned in the review
• Invite the reviewer to re-experience your service

For Passives (7-8 NPS):

• These are your biggest opportunity. Small improvements convert them to promoters.
• Identify what would move them from "satisfied" to "would recommend."

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Real Australian Examples#

Example 1: Hospitality#

A Gold Coast hotel chain had a 4.5-star rating but NPS of 35. Analysis revealed:

• Check-in experience was smooth (positive reviews)
• But room cleanliness issues weren't mentioned in reviews, only in NPS feedback

They fixed the cleaning process, and NPS jumped to 58 within three months—without their star rating changing much initially. But within six months, the improved NPS generated enough referrals to push their rating to 4.8.

Example 2: Professional Services#

A Perth accounting firm discovered their high star rating (4.7) masked a critical issue: detractors weren't leaving reviews, they were just switching firms. Their NPS was 31. By focusing on the detractor feedback (slow communication, unclear billing), they improved NPS to 62 and grew revenue 34% through referrals.

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The Bottom Line for Australian Businesses#

NPS predicts growth more reliably than star ratings alone. However, you need both:

• Use NPS to identify advocates and detractors, then act on their feedback
• Use star ratings to understand how you're perceived by potential customers
• Track both trends to spot problems before they impact revenue

Australian businesses that combine NPS-driven loyalty strategies with star rating reputation management see 2-3x faster growth than those relying on either metric alone.

The metric that predicts growth isn't the one you measure—it's the one you act on.

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Key Takeaways#

1. NPS measures advocacy intent; star ratings measure satisfaction
2. NPS correlates more strongly with revenue growth (especially through referrals)
3. Star ratings influence initial purchase decisions
4. High stars with low NPS signals satisfied but non-loyal customers
5. Modern review analytics combine both metrics for predictive power
6. Australian businesses benefit most from integrated reputation strategies

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Frequently Asked Questions#

What's a good NPS score for Australian businesses?#

Industry varies, but 50+ is generally excellent. However, compare against your direct competitors—a tradie might have different benchmarks than a SaaS company.

Should we stop caring about star ratings?#

No. Star ratings still influence 70% of purchase decisions at the awareness stage. Focus on NPS for growth strategy and star ratings for customer acquisition.

How often should we measure NPS?#

Monthly or quarterly is ideal for tracking trends. Monthly surveys from recent customers provide the most actionable data.

Can we improve NPS without changing star ratings?#

Yes, initially. You might improve the experience for existing customers (increasing NPS) before new customers experience those changes (affecting star ratings).

Which platform should we use to track both metrics?#

Look for reputation management tools that integrate NPS surveys with review monitoring across Google, Facebook, and industry-specific platforms—giving you a complete picture of customer sentiment.