In today’s SaaS world, it is almost too easy for customers to drop your service and switch to another. That is why having a solid customer success strategy is so important, and part of that strategy should be gauging how loyal your customers are to your company and your service.
Using a Net Promoter Score (NPS) to help you do so is an industry best practice, so the team at Planhat put together a beginner’s guide to help you get started with NPS!
In this guide we will go over everything you need to know about NPS to get started, and how it can help your company grow, reduce churn, and create a more loyal customer base.
What is the Net Promoter System?
Simply put, it is a measurement of a customer’s loyalty to the company or product. It also tries to give a predictive measurement about a customer’s willingness to put their reputation on the line and recommend your company or your product to others.
The Net Promoter System uses a survey where a customer provides a score between 0-10, and the aggregated customer feedback becomes the Net Promoter Score.
We will go over the survey, the score and how to calculated in this guide.
When surveying your customers there are only 2 questions you need to ask….
The first question is quick and easy, and the customer rates the company on a scale of 0 to 10.
The second question is where you gather their feedback, and reasoning for why they gave the score they did.
Quick and simple. Now, you just have to send it out.
Sending Out The Survey
You do have options when sending out your survey; you can choose to send it out via email, or, if you use an in-app chat service, you can do so there.
Our recommendation is to send it out via email. It feels more personal than an in-app chat, and it also tends to be a more honest answer with better feedback when it is sent to your customers' email.
Take a look at this article for more on why email is a better idea than in-app.
Using an NPS Platform
There is also the option to use an NPS survey platform to help you send out your surveys. These are great because they help you to automate your processes.
There are, of course, more tools for NPS than the above-mentioned, you just need to find the one that works the best for you. Select one that gives you flexibility, and hopefully easily integrates with the other tools you use.
How to Calculate NPS
The customer is able to rate their willingness to recommend your company to others on a scale of 0-10. A score is calculated from all of the respondents feedback, and you can receive a score of anywhere between
Customers score you on a scale of 0-10, and are broken down into three groups:
To calculate your NPS score, you subtract the percentage of promoters from the percentage of detractors.
Passives are excluded when calculating NPS because their score indicates that they will not have a large impact on your business; they do not have a strong enough opinion to speak out for your company or against your company.
For the sake of a simple example, say you survey 200 customers. And out of those 200 customers, the score breakdown was as follows:
Now you need to calculate the percentages of your detractors and promoters..
With those percentages, 45% and 30%, you subtract them as whole numbers.
So your Net Promoter Score is 15.
*NPS is a number (always a number, never a percentage even though it is calculated by percentages) that can be from -100 to 100.
What is a good NPS Score?
Now that you have surveyed some of your customers, collected their scores and feedback and calculated their scores...what does this score mean?
With the above example, we have the example where the score is a 15, and that seems pretty low considering that you can score up to a 100. But it is important to remember that scores are all relative.
In order to get a feel for whether or not your score is ok, good, or means you really have to do some re-thinking, you should compare your scores to others in your industry and space.
You can check out NPS Benchmarks website to search companies and see what their NPS is around.
How to Use NPS
After you have sent out your survey and collected your customers' scores and feedback, it is important to follow up.
This is your opportunity to. be proactive about and learn from the detractors, make sure that the passives are getting the full value out of your service, and take the feedback from the promoters as what you're doing right.
Your Customer Success Team
Your Customer Success team members will probably be the ones taking on the task of following up and making sure any of the bad feedback gets addressed.
While NPS is a great way to gauge customer loyalty and customer happiness, it is not predictive of customer behavior. A customer may give you a score of an 9 or a 10, but that doesn’t mean they are guaranteed to go out singing your praises to others. That also works with all score from 0-8; just because a customer falls in a certain group on the NPS scale does not mean that they will necessarily behave according to their score.
So take the NPS scores and feedback, and get a feel for what your customers think about your product and use them to make your product and team better. Pay attention to the customers who scored between a 0-6, and take time to seriously reflect and consider how it can make your company better.
If you're interested in the e-book, send us an e-mail and we'll send it to you! Put subject: "Beginner's Guide to NPS"