Know the NPCs: Who are they, where are they from, how loyal are they, and what are their motivations? Knowing the NPCs gives them a unique voice and allows the GM to present consistent personality and opens possibilities of interacting withe the party. It provides another challenge to the PC’s to figure out what characters are important and not if they all have some degree of depth and flavor. It helps to give all NPCs names. Good visions of NPCs can help GMs to “wing it” – outside the strict materials provided for an adventure.
Define Key Dialog Points: Have a few dialog points for each NPC to use in Narration – interests, motivations, aversions, information to give to the PCs, and knowledge which might help them against the PCs in a fight. Just a couple of key words to spark conversations can go along way in adding that good experience when PC’s interact with them.
Be Careful About Giving NPCs Items: If you don’t want the PCs to have those items, don’t give them to NPCs who are likely to die and give it up as treasure the PC’s take if the NPCs are beaten.