The Net Promoter Score (NPS) has become the gold standard of customer satisfaction metrics since first being introduced by Bain & Company almost 20 years ago. Simple and effective, it's currently used by companies in every industry, including SaaS, to improve products and services, and to curtail customer churn.

In this article, we'll deep dive into this popular data tool to explore what makes it so beloved by Customer Success professionals and discuss best practices for using it in your SaaS company.

What Is a Net Promoter Score and How Does It Work?

The Net Promoter Score is a metric that measures how likely a customer is to recommend your business to other buyers. Customer Success professionals love to use it because it's simple, effective, and sets your team up for success. Its simplicity can also be one of its negative points since it can quickly become a vanity metric if not accompanied by enough context.

Building a typical NPS starts by asking a customer the following question:

On a scale of 1-10, how likely are you to recommend X company's product or services to a friend or colleague?

Depending on the respondent's rating, they're segmented into one of three categories:

• Promoter – Customers who reply with a rating of 9-10. These individuals have an excellent level of brand loyalty and will sing the praises of a company they like to other potential buyers.
  
• Passive – Customers who submit a score between 7-8. They are satisfied with a company's services but not "wowed" enough to tell others about their experience.
  
• Detractor – Customers who rate a company at 6-0. These people are not happy, and not only will they not recommend a company to others, but they may also openly complain about their negative customer experience.
  

To arrive at the Net Promoter Score, a company would take the total percentage of Detractors and subtract it from the total percentage of Promoters.

What Is a Good Net Promoter Score?

While they’re not perfect, benchmarks are a great way to understand how you’re doing against other companies in your industry. This not only helps keep you competitive but shows if you’re exceeding or falling beneath expected levels of excellence.

NPS scores vary across industries, but in general, scores of -100 and 100 are considered extreme. Pulling from different reports, we saw a range of NPS scores based on industry. A 2023 report by Qualtrics found that the average NPS score in Saas was 15.6. For this report, they asked 10,000 people to evaluate 351 companies across 22 industries in the U.S.

Not in Saas? Here are some other industry benchmarks:

• Grocery +30.1
• Streaming Media +29.1
• Retail +28.8
• Banking +23.9
• Airline +12
• Car rental +7.6
• Consumer payment -6.1

‍How to Use NPS in Your SaaS Company

If you're a savvy, customer-centric SaaS company, your goal is to use NPS to drive high-value components of your Customer Success operations. Doing so helps you optimize the customer experience, reduce and prevent customer churn, and capture significantly greater customer lifetime value for your company.

Ask the right questions with the right tools

To get the most out of using the Net Promoter Score, you'll want to include a few more questions with the core NPS query; this will help prevent your NPS from becoming a vanity metric (Do they love us or do they hate us?) There are tons of data showing that long surveys produce fewer responses, so remember to keep it short and intentional when adding additional contextual questions.

Here are a few examples of additional questions you can ask to support the core NPS query:

• What is the reason for your score?
• Is there any specific thing we can do to improve your experience?
• Which feature do you like/use the most?
  

And if the score provided is something that triggers a need for greater insight, it's helpful to include:

• Is it ok for us to follow up with you about your response?
• What's the best email address to reach you?
  

Gathering this additional data will go a long way toward helping you extend the value of NPS. With it, you can pinpoint problems with your products or services. You can better evaluate customer churn scenarios and get ahead of them before they occur. You can also see where your company is winning and lean into what works.

Over time, your NPS dashboard could look a little something like this:

Another tactic to ensure you get everything you need from your Net Promoter Score is optimizing when and how you deliver your survey. Using robust automated tools like those available in Vitally's Customer Success platform, you can set up triggers that send follow-up emails to Detractors and Promoters so that you can offer high-touch assistance or ask for a customer review.

Have a plan of action for detractors

In SaaS, on average, it can cost four to five times more to acquire new customers versus retaining existing ones. So, it’s important that you do everything you can to reduce churn by turning detractors into promoters.

When speaking with Kapil Sharma, Customer Success Manager at InsightsCRM, we learned just how their team manages detractors with Vitally.

They outline their NPS Detractor Blueprint into three main milestones: 

• Investigation
• Resolution
• Feedback

They’ve also included various Tasks nested within each milestone to ensure that no detractor falls through the cracks. With this Blueprint, the InsightsCRM team is set up for success to increase product adoption and improve overall retention rates.

Beyond NPS: Other Important Customer Success Metrics

Below are a few other Customer Success metrics that SaaS companies should consider tracking in addition to NPS:

• Customer Health Score (CHS)  – A Customer Health Score is based on tracking multiple data points and combining them into a single score to determine if a customer is thriving or at risk of churning. It provides a holistic view of a customer's experience with your company and will include insights from every interaction they've had with your business.
  

• Customer Satisfaction Score (CSS)  – A Customer Satisfaction Score measures whether customers are happy or dissatisfied with their experience and is usually expressed as a percentage. For example, "95% of our users are satisfied with our product".
  

• Customer Effort Score (CES) – A Customer Effort Score is based on the concept that the more effort customers have to put into getting support or using a product, the less satisfied they will be. The CES scale runs from 1-5, with 5 reflecting the highest level of effort expended.
  

Proactive Customer Success professionals know that gathering customer feedback and tracking customer satisfaction are high-value activities that support growth and longevity. Any SaaS company serious about staying competitive would do well to adopt the Net Promoter Score into its CS toolbox. 

Easily Send targeted surveys, gather invaluable feedback, and analyze customer satisfaction with Vitally's NPS capabilities. Request a demo today!