Net Promoter Score (NPS) is a must-have metric to help measure the customer experience. The score rates how customers feel about the organization and its product or service that they are providing. A positive NPS score is an excellent indicator of organizational health – your business is growing, you’re in a valuable market, and retention rates are on the rise.
Though there are positives, the use of NPS has encountered some scrutiny in recent years. Industry leaders have argued that the NPS metric is too broad and not able to provide actionable insights. On the opposite hand, there are C-suite leaders who believe that the NPS score is the “best indicator of loyalty” and consider it seriously during evaluation. However, they still believe the metric is not enough on its own.
It’s estimated that “over 75% of companies will abandon as a measure of success for customer service and support NPS measurement by 2025” (Gartner). Other metrics, like the Customer Effort Score (CES), Customer Satisfaction (CSAT), etc., are also considered, so picking which metric is best for their business has been challenging for CS leaders.
Understanding the Role of NPS in Customer Success
The first step when adopting NPS is understanding its role within your organization and what the metric indicates. NPS is the percentage of your business promoters vs. your business’s detractors (Note, NPS does not factor in any customer with a neutral score).
An NPS survey asks a simple question: “What is the likelihood that you will recommend our product/service to someone else?” When asked the question, the customer answers on a scale of 0–10.
The following ranges depict a different status for the customer:
- Selects 9 or 10: categorized as promoters
- Selects 7 or 8: categorized passives
- Selects between 0–6: categorized as detractors
To calculate NPS, one takes the percentage of Promoters against the entire pool of respondents and mimics the same formula to calculate the detractors. The Net Promoter Score shares the number of Promoters minus the measurement of Detractors.
Key NPS Insights to Remember:
- Generally, people are polite when answering surveys and tend to give companies a rating above 5. For this reason, NPS only considers customers true loyalists if they respond with a 9 or 10.
- Loyalists are invaluable assets, which is why NPS is so critical for Customer Success organizations. True loyalists have higher renewals, grow in value, easily forgive mistakes, and refer the product/service to others.
- Low NPS can indicate your organization is doing something wrong. Lower scores should strike urgency to investigate each step of the customer journey and find the pressing issues.
Adapting NPS for a New Era of Customer Success
Customer Success and Customer Experience outcomes are no longer left to support and service professionals; they fall under Customer Success teams now. Today, customer-centric organizations worldwide, especially SaaS companies, prioritize Customer Success as a top priority for their company. If a customer doesn’t derive the value from your product or service it expects, they’re at risk of not renewing and possibly churning. As a method of prevention, NPS is an invaluable barometer for customer sentiment and can help indicate potential churn before it's too late.
There are several ways you can adapt this powerful metric for your CS strategy:
While NPS surveys are one simple question, it may be worth asking follow-up questions to further actionable insights. A second survey question could be: “What is the reason for your score?” This question provides an opportunity for an open and free-flowing statement from the customer, providing greater insight into the product/service.
Benchmarking Against Internal Metrics
Organizations can also check the strength of their customer relationships internally with an NPS assigned by the Customer Success team. Providing an opportunity for two different scores can help pinpoint company shortcomings. Many companies (especially at the growth stage) can misunderstand their Customer Experience with insufficient market chatter or feedback. Internal benchmarking can create clarity and help streamline the path to growth.
Strategically Position NPS Surveys
Calculating and comparing Net Promotor Scores collected across multiple touchpoints is very insightful. It can pinpoint which areas of the Customer Experience are excelling and which areas need improvement. To provide an example, a SaaS company can have a high NPS from website users but a lower NPS with their mobile app users. By strategically positioning surveys, you can garner profound insights for the Customer Success organization and maximize each touchpoint. There are also many tools on the market today, like the Vitally, that provide the opportunity to automate NPS surveys, helping garner a productive and efficient manner for surveying customers while gaining actionable insights.
This blog was written and contributed by Arvind Mehrotra. Vitally is proud to distribute thought leadership content to the Customer Success community, so if you know of an article or author with some Customer Success knowledge and wisdom worthy of endorsement, we would love to expand its reach. Reach out to firstname.lastname@example.org with all the details, plus visit our blog to read more Customer Success content worthy of your time.