When it comes to Customer Success, there is a key question you need to keep asking yourself: do I have the right strategy in place to retain my customers? You might think you do, but realistically, only your customers can answer that question.
As Customer Success leaders or Product Managers, you need to know if your customers are happy with your product or service. It’s also extremely important to understand your customer’s opinion in order to improve and scale your product. The happier the customers, the higher their satisfaction and more likely you are to keep a high retention rate.
Here’s where NPS comes in…
What is Net Promoter Score (NPS)?
NPS is a customer loyalty and satisfaction metrics tool, created by Fred Reichheld in 2003, that measures customer experience and predicts your company’s growth.
NPS has a single motivation: asking customers how likely they are to recommend your brand, product or service to someone else.
To achieve this goal, you have to ask your customers a simple question: “How likely are you to recommend our product or service to a friend or colleague, on a scale of 0-10?”
Why Is It Important?
NPS can be used as a predictor of business success and growth. Asking customers about their probability of recommending your product can give you a lot of insights from the product itself to your onboarding and customer service. As you can imagine, satisfied customers will likely become promoters of your product.
If you are thinking this feels a little like a Yelp review, think again. According to the 2015 Global Report by Nielsen Holdings, general recommendations directly influence at least 30% of purchase decisions. Furthermore, personal referrals or recommendations generate the most trust in 83% of customers [Source: Nielsen].
How Do You Measure NPS?
When creating the NPS, Reichheld and specialists from Satmetrix, came up with a scale divided into three types of customers: promoters, passives, and detractors. They based their scale on the direct relation between their customers’ answers to the survey and their behavior.
- Promoters (score of 9 and 10): this group represents the most loyal customer who will very likely become evangelists of your brand. Your promoters will help you grow by recommending your product to their friends and colleagues.
- Passives (score of 7 and 8): these customers show a more passive behavior towards your brand. They won’t be recommending your brand, but will also not damage it with negative feedback. It’s very important to know if they’re closer to being a promoter or a detractor to understand how to engage with them.
- Detractors (scores from 0 to 6): this group of customers don’t show any positive behavior and will not be recommending your products to others, and probably won’t repurchase it. These customers can hurt your brand with negative word of mouth.
Net Promoter Score is measured by detracting the percentage of detractors from the percentage of promoters:
NPS = % PROMOTERS - % DETRACTORS
NPS is expressed as a number from -100 to 100. The score will be negative when there are more detractors (customers who are not willing to recommend your brand and will possibly hurt it) than promoters (your most loyal customers), and positive if you have more promoters than detractors.
NPS results tend to break out into four areas:
- Obtaining an NPS between -100 and 0 indicates that there needs to be some changes made in order to improve your customers’ experience.
- An NPS of 0-30 is a good result but there still is some room for improvement.
- A great NPS will be somewhere between 30 and 70. You are doing great, but you can aim higher.
- NPS of 70 or more indicates that you are offering your users an amazing experience. Keep up the good work!
NPS Survey Best Practices
How Are You Using Your NPS Survey?
Although NPS is a very valuable metric, remember it doesn’t show the full picture.
Imagine that the % of detractors is suddenly increasing. The first thing that may come to mind might be what are we doing wrong: Is it customer support? Is it the product, does it have the necessary features? Is it the pricing?
For this reason, you need to treat NPS as a starting point in your conversation with your customers. Always have a follow-up question as part of your plan. Whether your NPS score is good or bad, without context you won’t be able to understand what is working and what is not working with respect to your product.
Here are some examples of engaging follow-up questions:
- What is the most important reason for your score?
- What could we have done better?
- Why did you give us that score?
- What would you do differently?
- What would you highlight from your experience?
- Would you mind telling us why you feel this way?
Consider adding a short introduction to your question depending on whether it’s a detractor, passive, or promoter:
“That’s great to hear! What have you enjoyed the most?”
“We’re very sorry to hear that. What can we do to improve your experience?”
Are you Segmenting Your NPS Results?
Just like you are not offering the same services to all your customers, their experience with your product is not the same - different types of customers have different needs.
Segmenting your NPS based on the type of user and their definition of success will allow you to understand how those users experience your product. By analyzing the NPS of your different cohorts, you will be able to determine if there are any key drivers or deterrents in terms of satisfaction between the different types of customers.
With that knowledge in hand, you will have the ability to improve your product and offer an equally great experience for your entire customer base, which will definitely be noticeable in your retention numbers.
Are you engaging your passive customers and converting them into promoters?
Waiting for your detractors and passive customers to magically turn into promoters of your brand, won’t cut it. You need to engage with those users to improve their experience, and their NPS score.
One way to better engage your customers is to establish cadences of behavioral emails for those users who have given you less than a 9 or 10 NPS score. Depending on how close to being a promoter they are, the sequences should be different - passives with a score of 7 or 8 won’t need as much attention as those who have a score of less than a 5.
Another great tip is to educate your users with in-app messages so they will see more value in your product, and reach their next milestone. By helping them reach every possible “aha” moment, you will improve their day-to-day experience with your product, and ideally convert them into brand advocates.
How is Your Timing?
While NPS surveys are very simple to answer and not very intrusive, you do not want to bug your customers with surveys every other week.
When establishing a recurrence for your NPS it is important to match it with your roadmap. If you haven’t made any big changes to your product, you should run the survey every 60-90 days to obtain reliable measurements.
Are there any big updates happening, any new features or redesigns launching soon? If so, run your survey at least 5 days after the launch to analyze its impact on your customers’ satisfaction.
If you are a SaaS offering a free trial, run an NPS survey for users who haven’t converted to paying customers so you can better understand why they haven’t upgraded. Set yourself up for success by sending the survey a week after your users have finished their trial would be ideal.
For the customers who upgraded to the paid version, asking them about their likelihood of recommending your product can give you a lot of insight on at-risk customers and help you prevent any possible churn. Give your new paying customer at least 30 days to try the paid version before running the NPS.
Remember to always follow-up the survey with a secondary question to understand where these answers are coming from!
Are you Measuring your NPS Over Time?
Tracking your NPS over a time period for the different segments of customers can give you tons of insight on what customers are more likely to become evangelists of your brand, which will also help your marketing and sales team understand who they should consider as AAA prospects.
Don’t forget it’s extremely important to understand the impact of your strategy. Analyzing your NPS over time can help you determine how successful your efforts in terms of product improvements and updates have been. And also, understand if your methods of converting detractors and passive users into promoters have paid off.
Use FROGED for FREE to measure your NPS HERE