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.
How to Leverage NPS for Greater Retention and Product StickinessMarch 26, 2019
The Net Promoter Score (NPS) has historically been the single key indicator of success for customer service teams across most industries.
But NPS should be regularly monitored by user experience teams, not just customer success teams. By using raw NPS scores as building blocks for future conversations with users, your team can harvest a wealth of insight to improve your business.
What is NPS?
Not familiar with NPS? This metric is a staple for customer success teams. Users are asked a simple question: “How likely are you to recommend [product/service/company] to a friend?” In many cases, users are then asked to provide a response from 0-10, with 10 being highly likely and 0 being not likely to recommend.
NPS survey from eyeglass experts Warby Parker.
Like the above example from Warby Parker, NPS questions typically come just after purchasing for e-commerce companies or after some level of active usage/membership with SaaS companies.
How is NPS Calculated?
Based on the scores they provide, users are then categorized into one of three groups:
- Promoters (9-10)
- Passives (7-8)
- Detractors (0-6)
This information is used to calculate a company’s overall NPS score, which ranges from -100 to 100. Calculating the overall NPS is not difficult. Simply subtract the percentage of promoters from the percentage of detractors.
Passives are intentionally left out of this equation, as they likely have no inclination to comment on your product positively or negatively to their network.
How Does NPS Relate to User Experience?
One of the great things about NPS is its simplicity. With such a straight-forward question, this is one of the easiest types of surveys to distribute, which likely contributes to its ubiquity.
There is also research to suggest that “NPS is closely related to the perception of usability. In particular, scores on elaborate usability questionnaires such as the System Usability Scale (SUS) are well-correlated with NPS. Thus, if most of your customers are reporting high loyalty to the point of putting their own reputations on the line to recommend your site, chances are that your site is also usable.” (Nielsen Norman Group)
NPS can be a strong baseline to begin to understanding user experience, but it is not enough when observed on its own.
Limitations of Using NPS as a UX Measure
We certainly recommend NPS as a starting point for understanding your user experience. But because it hinges off such a generalized question, it can be tough to pin down what factors go into a user deciding whether or not they would actually recommend your product.
Is it some of the specific functionality that draws them in? Or have they had a better experience with your customer success team than with other tools? Or maybe your price point is just ideal for their budget. NPS may be an industry standard, but its simplicity also makes it a limited source of information.
NPS can be a strong baseline to begin to understanding user experience, but it is certainly not enough on its own.
NPS is also simplistic mathematically. Despite presenting an 11-point scale for scoring, calculating overall NPS takes into account only the number of detractors and number of promoters without much regard for degrees in between scores. While this is arguably intended to balance respondents’ tendency to score relatively high, it is still a very simple formula.
While NPS correlates with usability, simply tracking your raw score alone does not necessarily give you information to pinpoint the factors that would improve your actual experience. We recommend adding an extra step to add some color to responses, because NPS is really just a starting point. The real value in NPS is using it as a jumping off point to asking more in depth questions. The fact that a user gave you an NPS score of 4 or 9 is not as important as why they gave those ratings.
For example, simply asking something along the lines of, “can you tell me more about why you [would or would not] recommend us to a friend?” can be very helpful.
While NPS correlates with usability, simply tracking your raw score alone does not necessarily give you information to pinpoint the factors that would improve your actual experience. We recommend adding an extra step to add some color to responses.
Other ideas include using logic branching for smarter responses. For example, you can send promoters directly to a review site like G2 Crowd or Capterra to encourage them to write a testimonial for your brand.
NPS’ declarative nature makes it a good starting point to get a sense of user sentiment, but the study of user experience is all about observation, and NPS alone does not offer rich observations.
Used properly, NPS scores can be leveraged by all departments. It’s just a matter of going beyond the number.
So How Can I Use NPS to My Advantage?
Although we caution our users from seeing NPS as the be-all, end-all for user experience metrics, it can still be a helpful measure if used correctly. Now we’ll get into 3 ways you can make the most of NPS.
1.) Improve Customer Retention and Identify Trends through User Segmentation
The cost of acquiring new customers is steadily rising, so retaining the ones you currently have is more important now than ever. One of the best ways to do that is to track how business decisions impact your customers’ relationship with your brand.
Measure your NPS against major changes within the business or product. Changed your pricing? Check to see how your NPS scores change once the dust settles. Redesigned your homepage or overhauled your in-app experience? Better check to see how it affects your NPS.
Your NPS score gives you a pulse on user sentiment about your brand and can be used to predict your ability to retain customers, but all of these uses for NPS are much stronger when coupled with data about your users: that’s where segmentation comes into play.
NPS + User Segmentation
For most companies, there are a handful of different archetypes of users or personas that gravitate to your product. Understanding these user segments is crucial to creating something of value. Combining this information with your NPS ratings is perhaps one of the most impactful ways to use your NPS results.
Segment your users early on for easy NPS collection with Qualaroo’s advanced targeting.
There are a number of ways that you can segment your users. The key is to align your segmentation to your goals. Focus on the factors that are most important for your business, and that are most likely to indicate a successful subscription or high customer lifetime value.
If you’re trying to improve your product, segment based on the adoption of relevant features or use cases. Or if your goal is to optimize your pricing, consider segmenting based on pricing tiers. Alternatively, if you’d like to improve your overall brand experience, consider segmenting by NPS score: promoters, detractors, and passives.
A tool like Qualaroo can help you visualize what your NPS score looks like over time. For example, let’s say that you introduce a newly designed website at the beginning of September, you’ll want to be able to understand any shifts in NPS scores from after that time. Learn more about the Qualaroo dashboard experience here.
Not sure where to start on segmenting users? Work backward by profiling your most valuable (read: highest paying) customers. Take the top 20-30% of your customers in terms of value and learn where they’re based, what their use case is, what features they use, and more. Look for the trends in what a ‘good’ customer is and segment your users accordingly.
Your NPS score gives you a pulse on user sentiment about your brand and can be used to predict your ability to retain customers.
When you combine the power of NPS and user segmentation, you can better isolate how product, pricing, and other changes affect different segments of users. This information can not only help you optimize and improve your user experience, but it can seriously improve your customer retention efforts and save you a lot of money in churn prevention.
2.) Conduct Deeper Research with Detractors
Once you know that a customer is a detractor, what do you do about it? Cross your fingers and hope they don’t have a lot of Twitter followers? Of course not! You reach out.
Reaching out to users who have indicated that they’ve had a negative experience is essential to understanding roadblocks and challenges. Not only will it give you a clearer picture of the customer journey, but it will also give you the chance to make those user experience changes that can mean the difference between a churned customer and a happy camper.
Most customer success teams are already in the practice of sending a follow-up note to a detractor to apologize for failing to meet their expectations, but is that enough? There’s a huge opportunity to learn from what caused a consumer to become a detractor.
Follow-up questions such as “What did you find difficult about our process?” is a great start in getting to the “why” behind a negative feeling. But speaking directly with a detractor is an even better way to gather this valuable information.
“Reaching out to users who have indicated that they’ve had a negative experience is essential to understanding roadblocks and challenges. Not only will it give you a clearer picture of the customer journey, but it will also give you the chance to make those user experience changes that can mean the difference between a churned customer and a happy camper. “
A phone conversation can provide extremely powerful insights, giving users a chance to express their feelings, dissatisfaction and specific needs. Additionally, this level of attention from the business shows consumers that your organization truly does care about their opinion. That gesture is a strong first step in converting a detractor into a promoter. In fact, many detractors expect that a representative from the team will reach out to learn more about their dissatisfaction.
Our team uses this method and our customer success team provides notes from conversations with detractors to the whole team. It’s important that every department is made well aware of constructive feedback for a smoother operation all around.
Reaching out to detractors doesn’t have to mean having a focus group full of angry customers in one room together. Check out some of our favorite alternatives to focus groups.
3.)Initiate a User Advisory Board
NPS and feedback aren’t only about fixing what’s broken, they’re also about recognizing which users are having a positive experience and finding ways to replicate that success at scale.
While promoters often have a great relationship with the organization and love the product/service, feedback teams should take advantage of that positive sentiment and follow up. Some ideas on how to capitalize on a promoter’s positive sentiments include:
Asking for case studies/testimonials
Getting a user’s testimonial is a bit more time intensive, but this recommendation is far more valuable than their NPS score—it can help close future sales. At Qualaroo we regularly ask for case studies from customers who have provided us positive feedback. Check out some stories from successful Qualaroo customers.
Qualaroo uses case studies to demonstrate the value we provide to our customers. Read our case study with Twilio.
Asking promoters to speak with prospects
Potential customers are more likely to trust the word of an outside, unbiased source. If a customer really sees the value in your product, see if they’ll be willing to talk with high-value prospects on your behalf.
Implementing a referral program
A promoter has just told you that they’d recommend your product/service to a friend, so incentivize them to do just that. The cost you incur from paying out incentives often pales in comparison to the value you receive when customers become an extension of your sales team.
NPS: A Baseline for Understanding the User Experience
While NPS may not be the answer to all your business’ challenges, it can be a powerful UX benchmark when used the right way. From helping you better understand your most valuable users to identifying how changes to your product and service affect different types of users, NPS can help you affect real business change. However, NPS’ potential can only be realized when your data is paired with thoughtful analysis (by design) and intentional follow-up.
Follow the tips in this article and from the resources below to start implementing NPS as a UX metric today.
Some of our favorite resources on getting more out of your NPS score:
- Net Promoter Score: What a Customer-Relations Metric Can Tell You About Your User Experience – Nielsen Norman Group
- Does Better Usability Increase Customer Loyalty? – Measuring U
- What Is NPS? The Ultimate Guide – Hubspot
- How to Really Benefit From Running an NPS Program – Qualaroo
- Net Promoter Score for SaaS – Qualaroo
- NPS Branching – Qualaroo
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