As more and more SaaS companies attempt to increase customer loyalty, more and more ways of measuring it are developed. One of the most popular methods is Net Promoter Score (NPS).
In fact, 55% of companies around the world use NPS to measure customer loyalty and satisfaction.
And yet, very few actually make any use of their NPS (other than bragging about it in meetings):
Net Promoter Score can be so much more than a ‘vanity metric’ though — when cross-referenced with what the users do, NPS can be used to conclude what user adoption scenarios actually make the users happy.
Then, you can use these insights to guide your users to these ‘desired behaviour patterns’ in your onboarding.
Thus, NPS can inform your user onboarding and product development, and help you reduce your churn and increase retention.
Want to know how to measure your NPS and how to cross-reference it with your user data to guide your product development and onboarding?
We’ve put together this complete guide so that SaaS teams can learn everything they need to know about NPS.
First, we’re going to take a look at the Net Promoter Score calculation, and what the different groups of respondents mean.
Then we’ll discuss the pros and cons of using NPS as a metric, and why ultimately it’s a useful source of data.
We’re then going to look at how you can make the most out of NPS and collect the data you need.
Finally, we’ll discuss how you can use the data to improve your user satisfaction scores by a) streamlining your onboarding flow to guide users towards the desired behaviour pattern (basically, getting them to reach the ‘AHA moment’ that correlates with high NPS score) and b) — improving your product.
- What is Net Promoter Score (NPS)?
- Should I use NPS?
- How to measure NPS
- How to analyze NPS
- How to use NPS
- How to improve NPS
- Key takeaways
What is Net Promoter Score (NPS)?
Net Promoter Score, often abbreviated to NPS, was first devised in 2003. It’s since become a popular way of measuring customer satisfaction.
An NPS survey consists of one simple question (sometimes two, but we’ll get to that)…
“How likely are you to recommend [PRODUCT] to a friend or colleague?”
Respondents then answer on a scale from 0 to 10, with 0 being “Not Likely” and 10 being “Very Likely”.
Once you’ve collected your results, you separate respondents into three different groups:
- Promoters — People who respond with a 9 or 10.
- Passives — People who respond with a 7 or 8.
- Detractors — Anyone who responds with 6 or below.
Each of these groups contains a different kind of customer.
Promoters are people who would likely recommend your product. They basically love you and your product, and are your most satisfied customers.
Passives are people who are sat on the fence. They like your product, but they don’t love it, and they probably wouldn’t risk their reputation by recommending it.
Detractors are people who aren’t very satisfied with your product at all. Either they won’t recommend it, or they may even discourage others from buying it.
Then, you calculate your Net Promoter Score by subtracting the % of Detractors from the % of the Promoters:
%Promoters — %Detractors = Net Promoter Score
43% of your respondents answered with 9 or 10.
18% answered 6 or below.
Your NPS is then 43–18 = 25
Now, you may be wondering — is 25 a good or bad NPS?
What is a good Net Promoter Score (NPS)?
Generally speaking, a positive NPS or NPS above 0 is considered “good”. Anything above 30 would be considered excellent.
On the other hand, if your NPS score is below 0, then that is a clear indication that your company needs to start improving customer satisfaction levels.
But of course: what is considered a ‘good’ NPS score also depends on your industry.
Let’s look at some industry benchmarks:
According to research conducted by Retently, the average NPS for SaaS companies is 26.
That actually makes it relatively low compared to other industries, such as eCommerce and Construction.
But ultimately, it would seem 26 is the number to beat if you want a higher NPS than other SaaS companies.
Of course, comparing yourself to others only gets you so far.
As a general rule of thumb, you want to avoid a negative NPS. That means that more customers aren’t satisfied than are. If you have a negative NPS, you’re going to want to fix that as soon as possible.
Anything in the region of 0 to 30 is pretty good, and in the case of SaaS that’s where the benchmark lies. However, there is still room for improvement here.
70 and above is where things get exciting. A really high NPS means that your customers love you and your product. That’s the holy grail.
Ultimately, while beating an NPS of 26 will put you above average, why not aim a little higher? You can always improve, right?
Should I use Net Promoter Score (NPS)?
When NPS first burst onto the scene, it was heralded as the one number you needed to grow.
As Frederick Reichheld, the creator of NPS, explained:
“The path to sustainable, profitable growth begins with creating more promoters and fewer detractors and making your net-promoter number transparent throughout your organization.”
That was 17 years ago, back in 2003. It’s safe to say times have changed somewhat. In fact, the entire SaaS industry rose up and grew to the point it’s at now in those 17 years.
So is NPS still a relevant metric? Does it still offer value?
What NPS gets wrong
There are those that say no.
Jared Spool, for example, a prominent writer on software and usability, once likened NPS to ecstasy.
There are many other criticisms of NPS.
A study by Schneider et al. in 2008 found that the 11-point scale that Reichheld advocated isn’t actually the most effective measure. They found a 7-point scale yielded more accurate results.
Other critics of NPS have pointed out that using one single question is much less reliable than asking a whole range of questions. They point out that combining NPS results with other measures produces a better overview.
Ultimately, critics claim that as a single measure of customer loyalty, NPS simply isn’t good enough.
Which begs the question, why are we even discussing it?
Well, we’re discussing it because, despite the criticisms, NPS is an extremely useful measure to have at your disposal.
The main criticisms aimed at NPS effectively boil down to this: On its own, NPS isn’t accurate.
If the only customer metric you’re using is NPS, then you’re going to run into problems. But fortunately, there’s no reason why you have to stick to one metric.
In fact, most SaaS companies use a wide range of different metrics. NPS, Customer Satisfaction (CSAT), and Customer Effort Score (CES), can all be used together to give a clearer picture.
So, now that we’ve addressed the biggest criticism of NPS, let’s look at what it gets right…
What NPS gets right
For starters, NPS is a very simple measure. It involves just one question. This means you won’t overwhelm your customers with a long, drawn-out survey. You’ll likely collect far more data as a result.
It’s also a quantitative measure. This makes it easy to track changes over time, and compare differences in scores. You could, for example, segment your customers and see how different groups are more or less loyal. The numbers are clear and patters easy to spot.
NPS also focuses on a concrete action. Rather than asking customers how loyal they are, you’re asking them if they would ever recommend your product. This is far easier to answer, and so the accuracy of your data will improve.
Finally, as you’re about to discover in the next section, NPS provides you with your foot-in-the-door. You can start getting your customers to open up and provide useful qualitative feedback as well.
Why you should use NPS
Any SaaS company that wants to measure customer loyalty and satisfaction should be using NPS.
When combined with other metrics and data points, NPS provides you with a simple yet powerful way of capturing how your customers currently feel about your product.
That information is invaluable.
So how do you collect it in the first place?
How to measure Net Promoter Score (NPS)
When it comes to collecting NPS data, there are a few things you need to consider. These are:
- The tool you use to collect the data
- How you collect it (email, in-app, etc.)
- What you do with the data
So let’s take each in turn.
Choosing the best NPS tool
There are lots of great NPS tools out there. Some of them are standalone apps that only provide NPS (e.g. Wootric or Satismeter) some are more in-depth analytics tools offering NPS as one of their features (e.g. Userpilot).
Using a stand-alone tool will mean you will probably need to integrate the NPS data with another tool offering user-analytics to see how to user behaviours correlate with NPS results (we’ll cover how to do that later.)
How to collect NPS data — email or in-app?
Once you have your tool in place, it’s time to start collecting your NPS data.
The biggest choice you have here is where you want to send the survey. You have two main options to pick from — in-app surveys and email.
While email may seem less intrusive (the users open it at their own discretion) — it is also usually less effective (lower response rates)
In-app NPS surveys
One of the most common ways is to have an in-app NPS survey. It’s often a little pop-up or slideout containing the survey.
Depending on your NPS tool, you can customize the look and feel of the modal with your brand colours, fonts, and logo:
The main benefit of using an in-app survey is that you already have your customer’s attention. They’re already engaging with your product, so it isn’t a stretch for them to fill out a brief survey.
This generally means you’ll collect more data.
It also means you can tailor the NPS survey to a specific part of your product, or trigger the survey based on your users’ behaviour.
If you wanted to know what customers think about a new feature, you could show the NPS survey when they use it: by restricting the display of the survey to specific screens of your app (in Userpilot you can determine this in the NPS > Targeting tab):
The downside of the in-app approach is that it can sometimes distract from your product.
If a customer is trying to do something productive and you’re shoving a survey in their face, they might not be too pleased. You may end up with slightly lower scores as a result.
On the other hand: you can offset the friction of showing an in-app survey by setting the trigger and shows the survey only after a user visits a certain number of pages, a certain screen, or spends a certain time interacting with your app:
That way, your survey will not catch them ‘in the middle of things’ and will be less frustrating.
Email NPS surveys
The other common approach is to email the survey to your customers. You can either embed the survey into the email (if your chosen tool allows it) or you can simply send a link to the survey.
On the plus side, emails are far less intrusive. Unless you’re bombarding your customers with daily emails, they probably won’t mind an email containing a survey. It means they can fill it out in their own time, and it doesn’t distract them.
The main issue, however, is that you’ll end up with less data. Not every customer will open the email, not every customer will click the link or fill in the survey. Those drop-offs will result in fewer submissions, and less data to base decisions on.
On the other hand — emails seem perfect for following up on the results of your NPS from your in-app survey:
If your user gives you a high score (9–10), send them an automated email thanking them immediately and inviting them to provide you with qualitative feedback.
Here’s an example of a good ‘thank you email’ Profitwell sends to its ‘Promoters’:
On the other end of the spectrum — if someone gives you a low (<6) score, also follow up immediately asking them specific questions about why their feedback wasn’t better:
How do you know what caused the low score — so you can refer to it in your follow-up email and make it feel personal (= like you really care)?
You can set up follow-up questions in your in-app survey to find our why immediately:
…and then follow things up in an email and subsequent call.
Which brings us to our next point: how and whether you should follow up on your NPS survey.
Adding follow-up data
A common approach SaaS companies take when they send an NPS survey is to have two questions.
The first question is the standard NPS question about the likelihood of recommending the product.
The second question often asks respondents to expand on the reasons for giving the score.
Following up with a more detailed question helps to fill in the gaps, enabling you to start taking action to improve your product.
So, why wouldn’t you follow up?
Well, the main reason is that it’s one thing to ask a customer to select a number on a scale, it’s a whole different thing to ask them to write down their reasoning.
If your customers are busy (and chances are they are) then they might be okay with a quick NPS survey. When it comes to writing a full answer, they may be more hesitant. They may not have the time.
Asking a follow-up question might well irritate your customers, and prevent them from actually filling out the survey.
There is, however, a simple way around that.
You should include a follow-up question, but make it optional. That way, a customer can respond to the first question and that data is then yours. If they have time to expand on the second question, then great. If not, it doesn’t matter.
This approach will help you collect all the data you need, and maybe give you some extra insights into the reasons behind the scores.
How to analyze Net Promoter Score (NPS)
Now that you’ve collected your NPS data, what exactly do you do with it?
The first thing you need to consider is what a good NPS is. What score should you be aiming for?
To recap, your overall NPS is calculated by subtracting the percentage of detractors from the percentage of promoters.
Let’s imagine 100 customers responded to your NPS survey. 70 of them were promoters, 20 were passives, and 10 were detractors.
Your NPS would be 70%-10% = 60%. So you’d have a score of 60.
Cross-referencing with product usage analytics
If you aren’t already monitoring how your customers are using your product, then you really should be.
The data you get from product usage analytics is valuable on its own, but even more so when combined and cross-referenced with your NPS data.
By adding your NPS data to your product analytics, you can start identifying key patterns of usage. Perhaps your detractors haven’t actually discovered a key feature of your product. Or maybe your promoters all have a specific action in common.
For instance, you see that a user with low NPS logs in every day, but that they are not using a key feature that could make their life easier and hence improve their satisfaction with your product.
In that case, you could take action by e.g. sending them an email that a) praises them for their regular use (a compliment in the subject line won’t hurt) and b) offering some suggestions especially for them:
These insights show the way forward. You can use these to improve your onboarding or to drive product marketing initiatives.
Get our free email course with 11 tried & trusted tactics to improve your onboarding and become a specialist.
How to cross-reference product usage with NPS?
Depending on the tool you choose, you will be either able to directly see e.g. the NPS score next to your user analytics, or you will be able to download your user behaviour data (e.g. frequency of logins, most visited pages etc.) in CSV and match that with their NSP score by email:
In Userpilot, you can also use NPS score to filter your users:
E.g. search users’ activity levels by a specific NPS:
Segment your NPS data
While your overall NPS is indicative of how your customers generally feel about your product, that one number alone doesn’t tell you much.
NPS is far more useful if you dig into the scores a little more, and find out about the customers behind the numbers.
There are two approaches you can take here.
One way is to take each group of promoters, detractors, and passives. You can then identify which customers are in each group. Chances are, different patterns will emerge.
You might discover, for example, that most of your detractors are on your Enterprise price plan. That would suggest an issue with specific features for that plan, or maybe the pricing.
The other approach is the reverse. You can take each segment of your customers, and then see how each group is composed of detractors, passives, and promoters.
You might find that a certain type of user, say product managers, are more likely to be promoters. That suggests that their use case is the most relevant to your product.
Instead of taking the overall NPS at face value, consider segmenting to understand more about your customers.
Analyzing the follow-up question
If you follow the advice we gave earlier, then hopefully you’ll also have answers to the follow-up question. This is where you can start learning the reasons your customers give for their scores.
Due to the follow-up answers being qualitative data, this will require a little more leg-work.
One of the most effective ways of analyzing text responses is to categorize them.
You do this by creating different “buckets”, each with relevant answers in. When an answer mentions a certain feature, tag it with that feature’s bucket. If an answer discusses your ease of use, then put it in the “ease of use” bucket.
It’s worth noting that most answers will fall into several buckets, so you need to have multiple tags in place.
If that sounds like a lot of work, don’t worry. There are plenty of great tools that can handle this for you. MonkeyLearn and Thematic, to name just two, will automatically sift through your NPS feedback and tag it up. You can then analyze the results.
How to use Net Promoter Score (NPS)
All that’s left to do now is put your data to good use. There’s no point in collecting and analyzing NPS data if you aren’t going to improve your product with it, or use it to make the most of your loyal customers.
First, let’s look at improving your product with NPS data.
Improving your product with NPS data
Unless you have a perfect product, chances are you’re going to have some detractors. These detractors aren’t completely satisfied with your product, which means they have some key insights you can use to improve it.
If you asked a follow-up question, you should already have the information you need.
You can either look through the responses manually, or you can use a tool like MonkeyLearn to do the hard work for you.
Either way, you’ll be left with several common themes that your detractors have commented on.
Now, clearly you don’t want to go out and make every possible improvement. That would take forever, and probably wouldn’t actually do that much for your product.
We recommend taking the most frequently addressed areas of your product and then seeing how they fit into your product roadmap.
If there are any overlaps, then it suggests that you should work on those particular areas.
Sometimes you’ll have to read between the lines, however. Some answers may require you to dig a little deeper to uncover the true pain points.
If you aren’t sure what a detractor is trying to say, then there’s no harm in following up with an email or phone call to ask them to expand and explain their thoughts.
Ultimately, the data you collect from the follow-up questions can help you understand where your product is falling short.
Following up with detractors
If you don’t include a follow-up question on your NPS survey, then all you really have is an idea of how many customers aren’t satisfied.
However, you’ll also know who these detractors are. And that’s really useful as it means you can reach out to them and have a chat.
Talking to your customers is something you should be doing on a regular basis anyway, but following up and enquiring about the score they gave you is a good excuse to do it.
You can simply send a short email saying that you saw they weren’t completely satisfied with the product and that you’d like to know how you can make it better.
Most customers will appreciate that you value their opinions and that you’re taking the time to listen to them. They’ll happily give you the information you’re looking for.
Using your loyal customers for referrals
Of course, NPS isn’t all about the detractors. The promoters are equally important, and extremely valuable to your company.
These are customers who are really happy with your product, and are loyal to your brand. Now’s the time to use them.
Firstly, you need to decide what you want to do with them. Are you aiming for referrals or for reviews and case studies?
A good idea is to cover both at once. You could go to those that gave you a 9 for reviews and case studies, and then get referrals from the 10s.
As for actually getting what you want, it’s simply a case of reaching out to your promoters and asking them.
Generally, it’s best to have your customer success team reach out. They already have a strong relationship with your customers, and so know the best way to engage with them.
If your CS team have a lot on their plate, then why not automate the entire process?
Simply set up an automation so that if a customer gives you a 10, you’ll send out an email asking them for a review.
It’s important to follow up with your promoters, even if it’s just to thank them for being there. They’ll appreciate it, and it only strengthens the relationship between you and them.
How to improve your NPS
Apart from following up with your detractors and using their feedback to improve your product features, you can also trigger specific ‘experiences’ — e.g. tooltips or modals — within your app depending on the users’ NPS score — as well as other conditions (based on the insights you got from their behavioural analytics — e.g. which key features they are not using):
Let’s take the following scenario: Postfity, a social media scheduling app, got a low NPS score from a segment of users.
In the follow-up question, they users said ‘I don’t have time to come up with post content’ — indicating the scheduling function is not enough for them — and that they would like to get some post content/ suggestions.
But actually — Postfity already has these features:
It offers both Post Ideas (scraped from around the web, organised by category) and Social Tips Calendar — with cut-and-dry customizable post copy templates that users can schedule to their social calendars at one click.
With Userpilot, Postfity was able to create a tooltip triggered by the low NPS score of the segment of users who were not visiting the two features’ pages — reminding them they can use the features to come up with post ideas faster — or even use the ready-made post templates:
We’ve covered a lot in this NPS guide. We recommend that you start putting your NPS project into place, and then simply refer to the relevant sections as you go along.
We’ve summarized the key takeaways for you below…
What is NPS?
- Net Promoter Score (NPS) is a commonly used measure of customer satisfaction.
- The survey consists of one question: “How likely are you to recommend [PRODUCT] to a friend or colleague?”
- We also recommend asking an optional follow-up question to find out the reasons behind the scores.
- Scores of 0–6 are detractors, 7 or 8 are passives, and 9 or 10 are promoters.
- The NPS score is calculated by subtracting the % of detractors from the % of promoters.
- You can use a range of different tools to send your NPS surveys, including Userpilot and Wootric.
- NPS surveys can be sent via email, messaging apps, or displayed within your product.
- Follow-up questions should be optional, and can generally be included as part of the NPS survey.
- Once you have your NPS data, you should segment it to see if there are any patterns among detractors, passives, and promoters.
- It’s also useful to cross-reference your NPS data with product usage analytics.
- You need to analyze the answers to your follow-up question, either with a dedicated tool (MonkeyLearn, Thematic, etc.) or manually.
- The insights you gain from following up your NPS responses can be used to make improvements to your product.
- You should also follow up with promoters and ask them for either referrals or reviews/case studies.
- Either way, follow up with every customer that fills in the NPS survey.
Hopefully you’re ready to start using NPS to measure customer loyalty and improve your product.
About the author
Aazar Ali Shad is the VP of Growth at Userpilot, and has more than 7+ years of SaaS Experience. He is currently helping 700+ SaaS companies improve user onboarding and increase product adoption.
Originally published at https://userpilot.com on January 22, 2020.