Understanding how your customers feel about your product isn’t just importantโit’s essential. But how do you quantify an area that has been described to be as fickle as the wind, such as customer loyalty? Net Promoter Score (NPS) is a straightforward tool that helps to find out not only the level of satisfaction of the customers but also the probability of their recommendation.
This guide will teach you how to harness NPS to fuel growth, improve customer retention, and convert your users into promoters.
What is Net Promoter Score (NPS) and Why It Matters
Net Promoter Score (NPS) is a metric that gauges customer loyalty by asking a single, straightforward question: โHow likely are you to recommend this product to a friend or colleague?โ
The responses given by the customers can be categorized at three levels: Promoter level-9-10, Passive level 7-8, and Detractor level 0-6.
NPS is merely the percentage of promoters minus the percentage of all detractors.
Why does NPS matter? Because it is not only a number but also a forecast of future potential results.
A high NPS indicates that consumers are satisfied with your brand and willing to spread the word about the business, promoting growth through recommendations.
On the other hand, a low NPS signals that churn is just around the corner and that action must be taken to alter the situation.
Research shows that word-of-mouth referrals are among the best marketing techniques for SaaS businesses. Loyal customers who are willing to recommend your product are free marketing tools.
How to Measure NPS Effectively
The concept of the NPS is quite simple, yet capturing the right data and information that would enable organizations to act is not easy.
Hereโs how to do it right:
1. Choose the Right Timing
One of the most important things to consider when conducting an NPS survey is the timing of the survey. For SaaS businesses, it is wise to administer the survey after critical touchpoints, such as when the customer interacts with a new feature, after initial training, or after dealing with customer support. This helps to keep the feedback topical and relevant.
2. Use a Simple and Clear Survey Design
Again, just like the process of measuring NPS, you need to keep your NPS survey simple. The core question should be phrased in clear and simple language that does not try to guide the respondent in any specific direction.
Alongside the rating scale, selecting an open-ended follow-up question in which customers provide more details about the given rating is necessary. This qualitative feedback is very helpful in comprehending the rationale why there is such a score.
3. Segment Your NPS Surveys
Some customers may have positive impressions, while others may have negative impressions of the product.
NPS surveys can be equally general or specific based on key factors such as customer type, plan level, or usage frequency, thereby providing a targeted examination of corresponding groups.
4. Automate the Process
Automate the NPS surveys so that the right surveys are sent at the right time to the right customers.
This makes your surveys timely and has a standard approach that is very important when conducting surveys over time.
5. Monitor Response Rates
A low response rate can negatively affect the NPS results. Higher response rates can be achieved by providing a fast and effortless survey and contacting non-respondents.
There is no limit on how many responses one can gather; the higher the number, the more accurate and reliable is the NPS.
Interpreting NPS Results for Strategic Insights
The next step entails analyzing the data after you have collected your NPS data. NPS is more than just the score; it is the understanding of what lies behind the number.
Hereโs how to make sense of your NPS results:
1. Analyze the Distribution
Look at the distribution of Promoters, Passives, and Detractors. A high percentage of Promoters is a good sign, but pay close attention to the number of Detractors.
Even a small percentage of Detractors can significantly impact your overall NPS and indicate underlying issues that need to be addressed.
2. Dive into the Qualitative Feedback
The open-ended responses are where you’ll find the gold. Analyze the feedback from both Promoters and Detractors to identify common themes.
What are Promoters praising? What issues are Detractors highlighting? Use this feedback to understand the specific factors driving customer satisfaction or dissatisfaction.
3. Benchmark Against Industry Standards
Understanding how your NPS compares to industry benchmarks can provide valuable context. According to Survicate, a good NPS score for the SaaS industry typically falls between 30 and 50.
However, anything above 50 is considered excellent, showcasing exceptional customer experience.
4. Track NPS Over Time
NPS should be tracked over time to monitor trends. Are you seeing improvement, or is your score declining?
Tracking NPS over multiple touchpoints can help you identify whether specific changesโsuch as a new feature release or a pricing adjustmentโpositively or negatively impact customer sentiment.
5. Segment Your NPS Data
Segment your NPS data by customer demographics, usage patterns, or any other relevant factors.
This will help you understand how different groups of customers perceive your product and where you need to focus your efforts.
The Role of NPS in Customer Retention and Advocacy
NPS isnโt just a tool for measuring customer satisfactionโitโs a powerful driver of customer retention and advocacy.
Here’s how NPS contributes to these critical aspects of SaaS growth:
1. Identifying At-Risk Customers
NPS surveys enable you to capture customers who will potentially churn, which we call the Detractor category.
You consolidate retention rates and decrease churn rates by paying attention to customers’ concerns and enhancing their experience.
2. Turning Promoters into Advocates
Promoters are those customers that are most valuable to the organization. They’re not just happy, but they are willing to encourage others to purchase your product.
Capitalize on this by engaging them to take part in case studies, testimonials, or referral programs. Engaging passive consumers who are already satisfied can effectively increase brand awareness and attract more customers without advertising.
3. Building a Customer-Centric Culture
Using NPS ensures that the right processes are implemented to create a customer-oriented culture in the organization.
When every stakeholder, from product development to customer support, is focused on increasing the level of customer satisfaction of the company, overall corporate sensitization toward customers increases, resulting in enhanced product and service delivery.
4. Predicting Growth Potential
High NPS is generally associated with high growth capabilities. The scores obtained for NPS imply that your customer is satisfied and loyal, which in return results in higher rates of retention, more referrals, and, therefore, continuous growth.
5. Driving Continuous Improvement
Remember, NPS is not an endpoint; it’s an ongoing endeavor. Frequent collection and response to NPS are instrumental in ensuring you are always in tune with what customers expect from your business and its products and services.
Mastering NPS for SaaS Success
Net Promoter Score (NPS) is more than just a customer satisfaction metric; itโs a powerful tool for driving growth, improving retention, and building customer advocacy.
By measuring NPS effectively, interpreting the results with strategic insight, and implementing targeted improvements, you can turn your SaaS product into a customer favorite, driving both satisfaction and long-term success.
If you want to grow your SaaS company and leverage NPS for growth, we have a list of 100+ Top Resources for SaaS Startups to help you navigate the path to success. Don’t miss outโyour next growth leap could be just a survey away.
