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 and effective. 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 are 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?
A smart company keeps an eye on benchmark Net Promoter Scores from other companies within its industry. This not only helps keep you competitive but shows if you are exceeding or falling beneath expected levels of excellence.
NPS ranges across industries, but in general, scores of -100 and 100 are considered extreme. According to NICE Satmetrix's annual NPS Benchmark report, any score above 30 is viewed as top-tier, and the average score for SaaS companies is 41. For comparison, here are a few more averages from other industries:
- Digital Marketing 57
- E-commerce 45
- Auto Insurance 41
- Banking 34
- Airline Companies 51
- Hospitality 49
- Internet Service Providers -3
- Communications & Media 24
How to Use NPS in Your SaaS Company 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.
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.
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.
Other Important Customer Success Metrics
Below are a few other recommended metrics that a SaaS company should consider tracking in addition to a Net Promoter Score:
- 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!