Top

5 Benefits of NPS Program You May Be Missing Out On

Katarína Kasalová | Feb 18, 2017 266 views No Comments

Share on LinkedIn

If you aren’t already striving for a good NPS score, you’ve probably at least considered measuring it. Bad or good NPS gives incredibly actionable feedback that helps improve your customer’s loyalty over time. But it’s not just a set it and forget it survey. Reading the results once and then tucking the report away for next year will mean you’re missing out on some of the biggest benefits. Setting up a robust NPS process can help with product management, customer communications, reducing churn, and even finding investment!

In this post, we dive into five benefits of NPS that you might not be taking advantage of.

Good NPS score means product market fit

Find Product Market Fit

Product Market fit is what happens when you’re selling a product market demands. It means you’re building a product for the right customer and solving an existing problem. How do you know when you’ve found it? A good NPS score is the perfect indicator.

When you’re surveying customers, the reason for the score is just as important. Why do your Promoters love you? If it’s because your product makes their life better, you’re on your way to product market fit. Compare your promoters with passives and detractors. Is there a commonality between them? If you have a certain type of customer that tends to be a Promoter – there’s your target market. Double down on what’s already working well in order to attract even more of your perfect customers.

Read more about analyzing your NPS scores in this blog post.

personalize realationships thanks to good NPS score program

Personalize Relationships with your Customers

You can’t treat every customer the same. If you ask someone who’s unhappy with your product to participate in a case study, they will very likely say no – and you might even damage your relationship further. Measuring NPS will help tailor your marketing and communications to each user, so you can be sure they land on the mark.

For example, say you want to start a customer advocacy program. The best place to find customers willing to help you out is your Promoters:  Those that answered 9 or 10 on their last NPS survey. They already love your product and want to recommend it to others. Why not get even better acquainted with these power users?

For customers on the other end of the spectrum, you may want to give them a little extra love. That might mean a priority queue for support tickets, proactive calls offering additional coaching, or a free trial of some new features. These customers who’ve responded with a 6 or lower are at the highest risk of churn, so time spent nurturing them will pay off in your MRR figures.

predict future growth based on net promoter score

Predict Future Growth

Each response on an NPS survey indicates a risk of churn or expansion in the future. A customer who responds with a 4 is at a much higher risk of canceling or downgrading than a customer who responds with an 8. If we assign a risk percentage to each number, we can actually predict the impact on future growth and churn.

Experience shows that about 50% of detractors will churn in the next 90 days, and 40% of passives will churn in the next 180 days. If you have 100 detractors with an average monthly revenue of $100 per user, that means you can expect to be down $5000 MRR in the next 3 months.

That’s quite alarming! But the good news is that you’re now able to target those customers based specifically on their risk of churning. And you also have feedback on what’s not going well. Assigning a dollar value to the customers at risk gives you better insight into your return on investment of an NPS program.

Bonus: You can also track how many customers your Promoters refer. By moving more customers into the 9-10 range, you’ll see a bump in referrals!

reduce churn with NPS score

Reduce Churn

Detractors are closer to Promoters than they are to Passives. Surprising? Because Detractors have feelings towards your brand, they are more invested in making it work. Fixing their concerns will earn their loyalty.

You also have the silent majority of customers who haven’t replied to a survey. Even the best NPS results only receive about a 40% response rate. That means there’s a big percentage of customers who haven’t provided their feedback. But they likely have similar concerns to those customers who have responded.

Analyzing the bigger picture will show you where small changes can bring the most significant results. Maybe, there’s a persistent bug that is dragging down your score, or perhaps a missing feature would convert some of those passives to promoters.

Besides responding on an individual level, analyzing your overall results will help you bring down churn holistically and dramatically.

Good NPS score might land you investment

Get Better Investment Deals

If you’re looking for funding, most investors will ask what your NPS results are. Some investors place such high importance on NPS that they will even provide a better investment deal for companies with a proven good NPS score. Jason Lemkin, the investor at SaaStr, recently tweeted that he would invest at the same rate in companies with good NPS score (well over 40) compared to companies with a higher MRR.

This means that for some VCs focussing on product market fit and earning the recommendations of your customers is more important that building MRR. Focusing on acquiring the right customers means that your current MRR is at a lesser risk of churn. Phillip Klien, General Manager of Uber agrees. “Many private equity firms & venture capitalists will insist on performing a Net Promoter Score survey with your customers before they invest in your business.” he explains, stating that Sequoia Capital, a leading SaaS investor has all of their investments use NPS to gauge potential growth.

For example, Zoom, a SaaStr investment currently has an NPS of 68, which is extraordinarily high. Their loyal customer base continues to promote their product (it’s been recommended to me!), and I can’t see their growth slowing down anytime soon.

Striving for a good NPS score brings benefits

Unexpected Benefits of Striving for Good NPS Score

Embracing an NPS program across the organization will help focus every employee on the end goal – a product that customers love to use and talk about.

When you start creating a common goal, you’ll see benefits pop up in all sorts of unexpected places. From the way engineering conversations happen to having more aligned hiring priorities, being an NPS driven company will change the way you work.

Print Friendly


Recent Editor's Picks:


Categories: BlogPerformance MetricsVoice of Customer

266 views

No responses yet, why not leave yours?

Add Your Comment (All comments are reviewed by moderator, no spam permitted!)