Are you familiar with the Net Promoter Score as a customer success metric?
If you’re part of a customer success team, you’re charged with making sure your customers are able to reach the goals and business value they expect. To evaluate how well you’re accomplishing this and get insight into how you can improve, you need feedback from your customers.
NPS surveys are a standard benchmarking metric for any industry, but are particularly useful in B2B industries including the software as a service (SaaS) market. In this article, we’ll discuss:
- What is NPS and how does it work?
- What are common NPS benchmarks in SaaS and other industries?
- What NPS strategies do top SaaS companies employ?
- What NPS best practices can I start using today?
For example, using data in sales and marketing teams can help them identify who their best customers are, who may be ready to provide a case study or testimonial, or which users are struggling and could benefit from a nurture campaign. However, when it comes to customer success, NPS is key because it can help clue you in to any problems that users are encountering and be proactive against those problems.
How NPS Works
The Net Promoter Score is a score that companies get as the result of a user or customer survey that asks one question: How likely is it that you would recommend [brand] to a friend or colleague? It’s measured on a 10-point scale that shows customer sentiment toward the vendor and the product in question.
The results of Net Promoter surveys are grouped into three distinct categories. The first is promoters – these are the survey respondents who answer the survey with a 9 or a 10 on the 10-point scale. They are seen as being positive enough about the company and its products or services to promote it to others.
The second category is composed of users called passives. Passives have scored the company a seven or eight on the 10 point scale. They’re not really bending either way in terms of strong opinions. That’s why they’re called passives or passive customers.
The third category encompasses the biggest range in the Net Promoter Score scale – the negative range from 0 to 6. These are the detractors – the users that the company needs to listen to most. These are the people who may be at risk for churn, so it’s critical to be proactive with their responses and feedback.
Think of it this way: You get a certain percentage of promoters, passives, and detractors, and your company can work with this metric to figure out how to improve.
To make the most out of your NPS survey, follow-up with an open-ended question that gets at the “why” behind their score. A follow-up question like “What is the primary reason for your score?” is a great way to get context for the score they gave and gives you a place to start in assessing their feedback.
How is NPS score calculated?
To calculate your Net Promoter Score, calculate the difference between the percentage of Promoters and the percentage of Detractors. NPS itself is not expressed as a percentage but as an absolute number between -100 and +100.
For example, if 60% of your respondents were Promoters and 10% were Detractors, your Net Promoter Score is 50.
NPS Scores in SaaS
Experts in the field know that it’s particularly difficult to get high NPS scores in the SaaS industry. Founders, CEOs, and others responding to resources like this Quora page show how most B2B SaaS companies almost never break the 60% barrier in terms of Net Promoter Score. In fact, according to some estimates, the industry average is a score of only 31. A score of 50 is generally considered pretty good in the SaaS market.
To learn more about NPS, companies can use Net Promoter Score benchmarking tools like IndexNPS, where you can see how all kinds of companies, including your own or those in your industry, are performing.
Who Owns NPS?
Many companies successfully use NPS as a kind of general health indicator and/or to get insights about how the company is succeeding in serving its customers.
That’s why customer-facing roles such as customer success teams are more likely to own and use the NPS score. If they’re working on anything that has to do with customer satisfaction, customer experience or customer communications (and customer success teams certainly are), NPS is going to be valuable to them.
However, it’s important that NPS is a metric that is accessible to each department within the company as it’s a great indicator of growth and success, and a benchmark for improvements that likely impact teams from customer success and product to sales and marketing. In the long-run, improving NPS is a company-wide effort.
Benefits of NPS
Companies are adopting Net Promoter Scores in the B2B SaaS market and beyond for several reasons.
One of the benefits of NPS is that it’s efficient and cost-effective. As a short survey, with one indicator, it’s fairly easy to build into email or in-app messaging campaigns.
Contrast that with the laborious and top-heavy process of creating long questionnaire surveys or in-person interviews, and you’ll see why people embrace NPS as an agile benchmarking tool. Not only are NPS surveys easier to create, they are also far more likely to be responded to than a questionnaire.
NPS also has been seen as a uniquely effective means of correlating company success. Back in 2003, the Harvard Business Review called NPS the “one number you need to grow” because it’s an indicator of success in other areas, like customer retention rates, user satisfaction, recurring revenue, growth potential, and more.
Another major benefit of NPS is that it works on a particular philosophy called “increasing viral growth by referral.”
By specifically working on communications with these net promoters, companies are able to take steps toward better word-of-mouth and more referrals. This means you can use NPS benchmarking and follow-up tactics to drive sustainable, predictable growth.
Improving upsell is another idea that some people think of when using NPS. If customer success teams are able to use NPS to spot issues and improve based on NPS feedback, then customers are more likely to contemplate upgrading down the line.
Here’s another benefit that’s very relevant to the B2B SaaS field.
Professionals in the B2B SaaS industry are always looking for ways to battle customer churn, or the number of customers who have unsubscribed from your product or service in a given time period. How do you stop churn? You keep customers loyal. That’s easier said than done, but customer success work, supported by metrics like NPS, goes a long way. It ensures that customers achieve their desired outcome with an appropriate experience.
Key NPS Strategies
NPS can do all of this and more for a B2B SaaS company if it’s done the right way.
Experienced communications professionals understand the many ways that NPS campaigns can miss the mark. Surveys can end up at the bottom of inboxes. Constant requests can annoy users and turn them off. A survey placed where it gets in the way of user’s session is a disruption to the user experience.
So when should companies run NPS surveys?
Using NPS in an in-app prompt can be extremely effective because it reaches customers where they already are—inside your application—and not buried at the bottom of an email inbox. It also takes less time to respond and can typically be targeted to only certain groups of users.
A common rule of thumb is to run an NPS survey at specific intervals—typically quarterly—and keep that interval consistent for benchmarking.
The Problem With Using Email For NPS Surveys
It likely doesn’t come as a shock that email surveys tend to get lost in the shuffle. They flash into busy inboxes and disappear. They’re seen as an annoyance, they get forgotten, and therefore they have a much lower conversion rate.
There are some ways to mitigate this. For example, focusing on the end-users and not just the buyers, following up with users, and varying your target audience to ensure you’re not overwhelming users with requests for feedback.
How do you use your NPS survey results to inform customer success
As many experts point out, a company’s NPS score is only as good as how they use them. Companies can take initiatives based on NPS to improve customer success metrics – that’s the whole purpose of collecting this sort of information in the first place. It gives your users a voice to help you understand how you are meeting their needs and where you can better serve them.
Responding to NPS Respondents
More than likely, your survey respondents will have more feedback than what they can represent in a 10 point scale and short follow-up question. They may have questions or comments, need more direction, are struggling with internal issues within their own organization, or any number of things.
What does this mean for customer success teams? It means following up is key. NPS is just the starting point and helps provide direction for customer success teams to gather the feedback they need to make their users successful.
NPS Audience Segmentation
One of the first key steps in utilizing NPS scores is audience segmentation. Companies need to take the aggregated score data, break it down by categories of customers, and use it to their advantage.
Consider using NPS survey results to generate personalized follow-ups for more feedback. After you have the initial NPS scores, segment your respondents by those who are promoters, those who are passives, and those who are detractors. Send each group a follow-up that drills down into more specific feedback.
Reaching out to NPS Promoters
Reaching out to promoters means sharing in their enthusiasm. One of the fundamental ways to leverage responses from promoters is by asking them to follow through on the idea that they would recommend the company. Companies can ask for referrals, request that a customer write a testimonial or participate in a case study, or act as a reference for new potential customers.
A business shouldn’t ask its net promoters to do it all. Instead, it should give them opportunities. That’s the way companies should frame these requests – as opportunities to get more involved with the business and develop a deeper relationship.
Reaching out to NPS Passives
The question of reaching out to passive respondents is a little more difficult.
Many companies “pass over” passives entirely. To understand why that is, it’s helpful to know a little more about what experts call the anatomy of a passive customer.
An article by Dana Severson goes over some of the reasons why companies don’t consider passives to be ultimately valuable. Severson points out lack of loyalty and a tendency to churn as related factors. There’s the idea that a detractor is better than a passive, because that person has a strong opinion and can be engaged, where passives tend to stay where they are.
Another way to understand this is by trying to get a window into how passive customers work. They simply use the product nonchalantly and move on. They don’t get engaged, and so they’re typically harder to reach with customer relationship initiatives. If they do choose to rate the product in an NPS survey, and they rate it passively, the conventional thinking is that they’re not worth your time.
However, there are voices on the other side of the aisle suggesting that companies should reach out to passives. If those passive customers are not excited or engaged, get them more excited and turn them into promoters! Passive customers, if left untouched, are much more likely to churn, but if they are given a little nudge in the right direction, they can also more easily become promoters and advocates.
Reaching out to NPS Detractors
Here’s where companies often have a wealth of opportunities.
First of all, as mentioned above, companies should be crafting follow-up communications specifically to detractors to help get results about what they can change to make their products and services more appealing. Ask detractors about pricing, about ease-of-use, about what features and functionality they would like to see.
There’s a very important point that a lot of experts stress in detractor outreach.
Companies always need to approach this outreach on a friendly, polite basis. It can’t seem like the company is contacting the detractors simply to just try to force them to change their mind. If there’s any sense of hostility, the detractor will be unlikely to engage further.
Again, the goal is to get the customer more involved in participating in a conversation so you can improve their experience.
Check out our webinar on strategies for Addressing NPS detractors here where we explore the best way to engage with detractors, how they can actually shape your brand, and share real-world examples of how to communicate with them.
What’s On an NPS Survey?
Of course, the fundamental question on the NPS survey is how likely the customer is to recommend the company. But, writers also often add additional questions into the survey just to get more business intelligence.
A company might ask NPS respondents how to improve the experience of a dashboard or a specific workflow that user is familiar with. As mentioned above, they might also ask about features and functionality.
The idea is to always be pursuing the most intuitive and user-friendly interface. Smart business people know that ease-of-use and intuitive logic makes a difference in how well you deliver value to your users.
Net Promoter Scores and Customer Success
In utilizing Net Promoter Scores, centralizing and democratizing that data is key. Knowing the company’s NPS score and understanding what the company is doing to improve is critical across every department.
Additionally, companies can build out those sequential communications like surveys, emails, and follow-ups that apply audience segmentation. These multi-step email marketing programs and other outreach tools can have a really positive effect on profits and revenue.
One of the company’s best assets is its people – and that’s another place where NPS should be deployed. Get the right scores and data to the right people, and you’ll have the kinds of well-supported initiatives that help drive customer satisfaction and loyalty.
Final Thoughts on Using NPS for Customer Success in SaaS
The world of SaaS is a world of engagement and collaboration. You want customers to be able to confidently move through your system and interact with it in a positive way. Benchmarking and working to always be improving can act as a north star for your teams. NPS can help to do this in a big way. Think about what NPS can do for your business.