You probably have a firm grasp on some of the universal metrics of SaaS success: ARR, growth rate, churn rate, CAC, LTV, etc. There is no doubt that these are critical, but in many ways these metrics do not tell the whole story of “success”. So what’s the leading indicator that can give you a fuller picture of success? Your customers’ satisfaction.
Why You’re Getting Rotten NPS Data and How to Fix ItMay 25, 2016
As a marketer, you’re drowning in data. With dashboards tracking everything from web traffic to email list growth, you probably feel overloaded with information. Every time a customer sneezes, you hear about it. Your Net Promoter Score (NPS) often feels like just another thing you have to look at.
NPS is incredibly valuable, but most people don’t know where to begin using the data it gives them. Just three groups of customers—promoters, passives, and detractors—seems overly simplistic, and many attack NPS as a useless “vanity metric” that looks backwards instead of forwards.
Like any other tool, though, the results you get from NPS are simply determined by how invested you are. In order to succeed, you need to dig in and iterate on the feedback you receive. NPS won’t do your job for you, but it gives you a starting point you can use to increase customer happiness, boost retention, and grow.
Companies are always focusing on how they can do more with less. That’s why NPS is such a powerful metric for growth. NPS gives you a window into where you can improve and allows you to look at where you have *already *succeeded with customers, so you can double down and make it repeatable.
A Quick Refresh on NPS
Your basic NPS survey starts with one simple question: “What’s the likelihood you would recommend this product to a friend or colleague?” It asks the customer to respond on a scale of 1-10 where 1 = highly unlikely and 10 = very likely. The second question asks why.
(source: Net Promoter System)
Net Promoter Score segments your customers into three groups based on their response to the first question:
- Promoters (9-10): These customers are your most valuable assets. They love your product so much, they’re willing to spread the word with their friends.
- Passives (7-8): Passive customers are like willows in the wind. They don’t feel strongly about you one way or another.
- Detractors (0-6): Detractors are customers who are dissatisfied with your product. They’re likely to stop using your product and even liable to tell others why they dislike you. There is a silver lining though—a negative experience means you have the chance to win them back and improve your product.
Although the concept of NPS revolves around putting the customer first, it’s not a fluffy, feel-good metric. NPS gives you a concrete measure of how your customers feel and the reasons why they feel the way they do.
Slack’s Chief of Marketing, Bill Macaitis says, “[NPS] is a great gold bar. We’re not satisfied if someone signs up and starts using Slack. We’re not satisfied if they become a customer. We’re not even satisfied if they renew. Our bar is ‘Are they going to recommend us?’”
For Slack, using NPS as a compass to drive growth has clearly been effective. Within a year of launching their product, Slack grew to 500,000 daily active users and was valued at $1+ Billion. They achieved this primarily by leveraging word-of-mouth from happy customers.
1. Hone in on your Target Audience
The outputs you receive from NPS, or any similar metric, will only be good as your inputs. A lot of companies end up with bad data because they “spray and pray.” They hit the send button, forget about it, and end up confused by the results.
The key to getting your NPS survey filled out is getting it in front of your customers in the right place, at the right time. Understand that when you ask customers for feedback, they’re doing you a favor. Try to make your NPS survey as frictionless as possible.
Ghost your NPS
Use Google Analytics to look at the average time customers spend on the page that you’re launching your NPS survey, and set your survey to appear accordingly. Three to five seconds is typically the perfect amount of time—any longer, and they’ll have moved on to the next page.
In Qualaroo, you can access this in the targeting settings as you set up your survey:
Pro tip: You’ll pull in better NPS survey results if you’ve timed it to a point in the customer life-cycle where they’ve had a chance to experience your product. Amazon, for example, triggers email surveys after customers have *finished* reading a book on their Kindle. Wait until the night after customers stayed in a hotel, or two weeks after they sign up for the paid plan of your product, and then ask if they’d recommend you.
For more tips on getting your surveys answered, check out our list of best practices.
Send NPS Surveys Based on Behavior
If you’re using a tool like Qualaroo to aggregate NPS data, one of the easiest ways to to start is by targeting direct traffic as well as repeat visitors to your site. Direct traffic comes from customers who head to your website so often they have it stored in their bookmarks bar, or memorized by heart. Repeat visitors read a blog post you wrote, or signed up for a webinar, and are typically a good segment to hit with your survey.
You can get even more precise with your surveys:
- Identify customers who come to your website. You can do this with Qualaroo, or through an analytics tool like Segment. Target customers who are already logged in to your web-page or mobile app. This is a sure-fire way of ensuring that these visitors are in fact customers.
- Send surveys based on geographic location. As Mike Volpe, angel investor and VC points out, NPS varies across different cultures. Americans tend to score higher than Europeans, for example.
- Send surveys every 90 days. NPS helps you keep a running tab on customer loyalty, but only if you develop the habit of periodically sending surveys throughout the customer life-cycle. This allows you to identify trends all the way from free trial to sign-up.
2. Segment NPS by Customer
Once the results start coming in, you can use an aggregate NPS metric to serve as a general guideline for how your company is doing. But relying on that average number to determine the direction of your company is an exercise in futility.
Fred Reichheld, the creator of NPS writes:
“Net Promoter score is where mission meets mathematics. A mission without a measurement, without an accurate gauge of success or failure, is just so much hot air. Only by systematically measuring its effect on people and their relationships can an organization gauge whether it is really achieving its mission and enriching lives. That’s NPS’s reason for being.”
NPS helps you pin down the voice of the customer (VOC)—but what you have to understand is that there isn’t a single voice that speaks for them all. On its own, your average NPS score isn’t that helpful.
For example, you might have a whole bunch of free-trial promoters, but if you only looked at your average score, this would obscure the handful of far more valuable enterprise detractors at risk of churn. Each group of customers has a voice that you need to isolate and respond to.
The only way to separate the signal from the noise and get actionable insights from NPS is to start segmenting your customers.
Segment By Persona
You wouldn’t try to up-sell a small business to your premium enterprise plan, and you probably wouldn’t offer them the same level of support either. Each grouping of customers has different needs, and their NPS scores can tell you something different.
Help desk provider Zendesk recommends bucketing NPS scores by type of customer. For example, if you’re a SaaS business that offers a free trial, the NPS rating of someone on that trial will look very different from that of a customer paying you cold, hard cash.
In the above chart, your enterprise customers are generally pleased with your service, but the customers on your professional plan are are feeling quite unsatisfied. They’re a churn threat.
Based on this kind of data, you can create even more detailed segments through NPS:
- Look at NPS scores for unconverted free trial promoters who have `< 2` days left in their trial, and have your sales team reach out to them. In terms of customer acquisition, this is low-hanging fruit.
- Look at passives on the professional plan who have signed up within the last 7 days. These customers are in danger of becoming detractors and churning out.
- Your enterprise customers are some of your most loyal, so try to create more. Offer enterprise features of your product to qualified free trial users to try and convert more of them to the bigger plan.
- Analyze the qualitative answers for enterprise promoters who have been with your service for longer than six months. Identify commonalities in their answers, from specific features to satisfaction with customer support. Use these insights to try to turn your professional detractors into promoters.
On its own, your average NPS score gives your company a strong indicator of customer sentiment. But by segmenting your NPS scores, you’re able to turn a simple survey into a systematic plan of action, from closing more sales leads to prioritizing support.
Pro-tip: Integrate NPS scores with individual customers in your existing customer relationship management (CRM) system, like Salesforce or HubSpot. That way, you can keep a timeline of how individual customers feel about your company.
3. Dive into the Data
NPS is useful as a gauge of growth. Week in, week out, it tells you how your customers feel about your company, and what they’re saying about it. But now that you have your NPS data segmented by customer, go one step further.
As Janet Choi from Customer.io says, “The real value of NPS comes from how you digest and address survey responses and resulting conversations—whether it’s a simple thanks for feedback, solving customer problems, or delving for more information.”
NPS is a great indicator of growth down the line, but on its own, it doesn’t work well as a predictor of customer behavior. Kayako, a help desk provider, recommends weighing NPS against customer satisfaction scores. Measure NPS against other customer data you have—reviews, customer satisfaction scores, or whatever metric you might use to get a transactional measure of customer satisfaction.
- Advocates: These are the customers who are out there, telling their friends about you.
- Wildcards: These customers bear watching. They’ve been satisfied with your support system, but have troubling NPS scores. Send a sample audience of these customers a more detailed survey to figure out what makes them tick.
- VIP Support: These are loyal customers who might have recently had some poor experiences with your company. Reach out to them through customer success, and you can still prevent them from churning.
- Churners: These customers are about to leave your service. Intervene immediately.
When you weigh NPS against customer satisfaction, you’re able to create a plan of action for each segment of customers, and close the feedback loop.
How Airbnb Uses NPS Data To Predict Rebookings & Referral
Airbnb’s data science team looked at NPS data for over 600,000 customers and found that only 2% of these customers were detractors. They found that the highest NPS scores increased the likelihood of referral by 4% for customers, and rebooking rates by 13%.
While most companies would have been satisfied, the team decided to take a deeper plunge into the data to try to model both rebooking rates, and the likelihood of referral. The reason *why *you have metrics in the first place is so that you can find where you’re winning with your customers, and double down on success—this is the kind of attitude that leads to a repeatable, scalable business.
Although the likelihood to recommend (LTR) or NPS score was the strongest way to predict future rebookings, Airbnb found that the other most important factors were the accuracy of the listing, and the cleanliness of the rental. With this information, the company could buckle down on increasing customer referral.
Armed with this information, the company could buckle down on upping the number of re-bookings and customer referrals, by focusing on specific factors that influence customer loyalty, like offering discount pricing and quality control on listings.
Drive Action with Data
As Jason Lemkin says, your entire team should focus on NPS: “It’s the one metric all of them directly impact, and all of them are equally responsible for.”
NPS is an incredibly versatile metric. It can tell you when customers are about to churn, and help prioritize what features you build next. NPS is not, however, a silver bullet that will fix all your problems. It’s a way to build customer feedback into your company’s roadmap.
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This post originally appeared on UsabilityGeek.