Net Promoter Score (NPS): The Complete Guide for SaaS
In SaaS, you have to contextually measure if you want to drive user success fast. NPS surveys help you do that, but where do you get started? In this article, we guide you through what the NPS score is, how it’s calculated, how to analyze and respond to your data and our tool recommendations!
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- Net Promoter Score (NPS) is a customer loyalty and satisfaction metric derived from asking how likely your customers are to recommend your product to others.
- NPS can inform your customer onboarding and product development processes.
- NPS is calculated by this equation: percentage of promoters minus percentage of detractors.
- 0-6 is a “detractor” — not likely to recommend. 7-8 is a “passive” — uses your product but that’s it. 9-10 is a “promoter” — someone who is likely to recommend your product to others.
- For SaaS, the 2021 average NPS is 41.
- A negative NPS score means that you are not hitting the right market, customers don’t yet see the value in your product, or your service needs improvements.
- You can run NPS surveys in-app or by e-mail.
- In-app surveys are more contextual and get better responses.
- E-mail surveys are unobtrusive but have a lower response rate.
- Combine NPS data with other metrics (user behavior in-app, etc.) to determine what is driving user satisfaction or dissatisfaction.
- Tag responses to group common issues for closer analysis and to gain more accurate insights.
- Reach out to detractors to proactively address issues or to let them know where to find features in your product they are not yet using.
- Reach out to promoters for online reviews to boost your social proof.
- Userpilot is a product growth tool that you can use to collect, analyze and act on your NPS metrics.
What is Net Promoter Score (NPS)?
Net Promoter Score, often abbreviated to NPS, was first devised in 2003. It’s since become a popular way of measuring customer satisfaction. An NPS survey consists of one simple question (sometimes two, but we’ll get to that)…
“How likely are you to recommend [PRODUCT] to a friend or colleague?”
Respondents then answer on a scale from 0 to 10, with 0 being “Not Likely” and 10 being “Very Likely”.
Adding follow-up data
A common approach SaaS companies take when they send an NPS survey is to have two questions.The first question is the standard NPS question (0-10 scale) about the likelihood of recommending the product.The second question often asks respondents to expand on the reasons for giving the score. This helps you get a better picture of the situation.
Why is Net Promoter Score (NPS) important?
55% of companies around the world use NPS to measure customer loyalty and satisfaction.And yet, very few actually make any use of their NPS (other than bragging about it in meetings):
However, NPS can be so much more than a ‘vanity metric’ – when cross-referenced with user behavior metrics, NPS can be used to evaluate user adoption scenarios.When you see what makes your users happy, you can use these insights to guide other users to these ‘desired behavior patterns’ in your onboarding.Thus, NPS can inform your user onboarding and product development, and most importantly, help you reduce your churn and increase retention.When combined with other metrics and data points, NPS provides you with a simple yet powerful way of capturing how your customers currently feel about your product.When NPS first burst onto the scene, it was heralded as the one number thing you needed to grow.As Frederick Reichheld, the creator of NPS, explained:
“The path to sustainable, profitable growth begins with creating more promoters and fewer detractors and making your net-promoter number transparent throughout your organization.”
That was 18 years ago, back in 2003. It’s safe to say that times have changed. So is NPS still a relevant metric? Does it still offer value?A study by Schneider et al. in 2008 found that the 11-point scale that Reichheld advocated isn’t actually the most effective measure. A 7-point scale gives more accurate results.Other critics of NPS have pointed out that using one single question is much less reliable than asking a whole range of questions. They point out that combining NPS results with other measures produces a better overview.Ultimately, critics claim that as a single measure of customer loyalty, NPS simply isn’t good enough.Which raises the question, why are we even discussing it?The main criticisms aimed at NPS effectively boil down to this: on its own, NPS isn’t accurate.If the only customer metric you’re using is NPS, then you’re going to run into problems. But fortunately, there’s no reason why you have to stick to one metric.In fact, most SaaS companies use a wide range of different metrics. NPS can be used alongside other tools like Customer Satisfaction (CSAT), and Customer Effort Score (CES) to give you a clearer picture.RELATED: How to Improve Customer Satisfaction in SaaS
How to calculate NPS
To calculate your Net Promoter Score you need to subtract the % of Detractors from the % of the Promoters:
%Promoters – %Detractors = Net Promoter Score
For example: 43% of your respondents answered with 9 or 10. 18% answered 6 or below. Your NPS is then 43 – 18 = 25
Once you’ve collected your results, you separate respondents into three different groups:
- Promoters — People who respond with a 9 or 10.
- Passives — People who respond with a 7 or 8.
- Detractors — Anyone who responds with 6 or below.
Each of these groups contains a different kind of customer.
Net Promoter Score Scale: Promoters
Promoters (customers who answered 9 or 10 on your NPS survey) are people who would likely recommend your product. They love your product and are getting continuous value from using it.As your top fans and brand advocates, these are the people you might reach out to for reviews to drive social proof (we’ll cover more on this later).
Net Promoter Score Scale: Detractors
Detractors (customers who answered 6 or below on your NPS survey) are people who aren’t very satisfied with your product. They won’t recommend it, and they may even discourage others from buying it.Detractors have a high chance of churning, because:
- they may have issues with your product: encountering lots of friction
- they may not see the value in your product: the product works but doesn’t deliver the expected value (you may wish to review your product-market fit or your onboarding processes)
Net Promoter Score Scale: Passives
Passives (customers who answered 7 or 8 on your NPS survey) like your product, but they don’t love it, and they probably wouldn’t risk their reputation by recommending it.They are not directly represented in the NPS calculation, which only factors in the promoters and detractors. They haven’t fully experienced the value your product brings. They could easily become promoters or detractors.Try to take advantage of the fact that they’re already “in the door” to turn them into promoters.
Net Promoter Score (NPS) benchmarks for SaaS
NPS metrics can theoretically range from -100 to 100.While the extremes are unlikely, you want to keep your score above zero. Your NPS metric will be negative when you have more detractors than promoters and positive when the opposite is true.
NPS metrics vary across industries and checking what’s the average in your industry can give you some context into what’s a good or bad score. Here’s the 2021 average NPS by industry:
Don’t focus too much on having a better score than your competitors, focus on what your customers are actually saying, understand their needs and problems and offer help and guidance.
What is a good Net Promoter Score (NPS) for SaaS?
Generally speaking, a positive NPS or NPS above 0 is considered “good.” Anything above 30 would be considered excellent.According to NICE Satmetrix NPS 2021 benchmarks, a good NPS score for SaaS is around 41.It’s interesting to see how the rise in customer experience has pushed the benchmark higher, considering that the average in the industry was around 30 just 3 years ago.Let’s take a look at the different industry leaders for 2021:
Of course, comparing yourself to others only gets you so far.You want to avoid a negative NPS, period. That means that a significant proportion of your customers are unhappy. 70 and above is where things get exciting. A really high NPS means that your customers love you and your product. That’s the holy grail.While you can aim to beat the average, you should ultimately commit to ongoing improvement.Computers are always getting faster, and web standards are always rising. Unless you have a plan to go out of business, you should have a plan to stay in!
What is a bad Net Promoter Score (NPS) for SaaS?
In two words: anything negative-you do not want a negative NPS score.A negative score means you have more detractors than promoters. Users don’t see value in your product.This could mean one (or both) of two things:
- you are targeting the wrong audience
- your product or service needs improvement
You should keep a long-term focus. Don’t fall into the trap of comparing yourself to ridiculous benchmarks, but focus on providing value so your customers achieve success by using your product.
When should you run the Net Promoter Score (NPS) survey?
You want to target NPS surveys to activated users who have spent some time using your product. Use user journey and product usage analytics to determine the best time for this.You don’t want to send an NPS survey to an inactive user, as they have nothing to recommend.You also don’t want to send a survey to a user who hasn’t reached the activation point in their journey. They are still discovering the value of your product, so a survey might just be annoying.Here are the two types of surveys you can run:
Transactional NPS surveys
Transactional surveys are triggered after an interaction you have with the user (customer support, tech support, customer success, etc.) or after the use of a feature.For example, Wise sends an NPS survey after you finish setting up a money transfer:
When triggering transactional NPS surveys you have to track the frequency with which certain actions are performed. If a user sends 100 transfers in a month, they won’t want to see 100 surveys.
Relationship NPS surveys
How to run an NPS survey and collect data
There are lots of great NPS tools out there. Some of them are standalone apps that only provide NPS (e.g. Wootric or Satismeter), while some are more in-depth analytics tools offering NPS as one of their features (e.g. Userpilot).Using a standalone tool may require you to integrate the NPS data with a tool offering user analytics. You will want to correlate NPS data with other user behaviors (we’ll cover this in a bit).Before choosing a tool, the biggest choice you have here is where you want to send the survey. You have two main options to pick from – in-app surveys and e-mail.
How to run an in-app NPS survey
One of the most common methods is an in-app NPS survey. It’s often in a little pop-up or slideout.The shape and place of a survey will vary, but you should use the two-question NPS survey to make it more contextual and meaningful.You don’t want your surveys to be as meaningless as a legally mandated notification about cookies. Without the “why did you give this score?” question, users may just answer randomly to get rid of the survey. Your NPS surveys should fit in with the feel of your brand. Here’s how Asana fits a banner survey:
Depending on your NPS tool, you can customize the look and feel of the modal, popover, or banner with your brand colors, fonts, and logo.
The main benefit of using an in-app survey is that you already have your customer’s attention. They’re already engaging with your product, so it isn’t a stretch for them to fill out a brief survey.This generally means you’ll collect more data.It also means you can tailor the NPS survey to a specific part of your product, or trigger the survey based on your users’ product behavior.If you wanted to know what customers think about a new feature, you could show the NPS survey when they use it by restricting the display of the survey to specific screens of your app (in Userpilot you can determine this in the NPS > Targeting tab):
The downside of the in-app approach is that it can sometimes distract from your product.If a customer is trying to do something productive and you’re shoving a survey in their faces, they might not be too pleased. You may end up with slightly lower scores as a result.On the other hand: you can offset the friction of showing an in-app survey by setting a trigger and showing the survey only after a user visits a certain number of pages, a certain screen, or spends a certain amount of time interacting with your app:
That way, your survey will not catch them ‘in the middle of things’ and will be less frustrating.
How to run an NPS survey using email
The other common approach is to email the survey to your customers. You can either embed the survey into the email (if your chosen tool allows it) or you can simply send a link to the survey.Here is an e-mail survey from Intercom:
While e-mail may seem less intrusive (users open it at their own discretion) – it is also usually less effective (lower response rates).When a user chooses to respond to the survey from Intercom, the user is redirected to a webpage for a qualitative question:
The main issue, however, is that you’ll end up with less data. Not every customer will open the e-mail, just as not every customer will click the link or fill in the survey.Fewer submissions mean that you will have less data on which to base your decisions.
How to analyze Net Promoter Score (NPS)
Now that you’ve collected your NPS data, what exactly do you do with it?You can take the average for your industry and use that as a baseline. A baseline helps you begin to evaluate the fresh data relevant to your product.Establish trends to help you sort out your immediate priorities. For example:
- people like the product, so you can focus on some long-term improvements
- people have problems with the product, so you need to check whether you have a product-market fit
Your immediate priorities then let you sort through other user data that you have.
Analyzing NPS: cross-reference with product usage analytics
NPS scores are just one dimension of user data. Depending on the tool you choose, there will be different ways to let you compare your data.Some tools let you directly see the NPS score next to your user analytics. Some tools let you download your user behavior data (e.g. frequency of logins, most visited pages, etc.) in a CSV file and match that with their NSP score by email (e.g. Userpilot):
The data you get from product usage analytics is valuable on its own, but even more so when combined and cross-referenced with your NPS data.By adding your NPS data to your product analytics, you can start identifying key patterns of usage. Perhaps your detractors actually haven’t discovered a key feature of your product. Or, maybe your promoters all have a specific action in common.For instance, you see that a user with low NPS logs in every day, but they are not using a key feature that could make their life easier. If you can nudge them to adopt that feature, then they will have greater success with your product.
Analyzing NPS: segment your NPS data
While your overall NPS is indicative of how your customers generally feel about your product, that one number alone doesn’t tell you much.It’s just one number on one axis on the graph. You need both X and Y.NPS is far more useful if you dig into the scores a little more, and find out about the customers behind the numbers.There are two approaches you can take here.One way is to divide the entire group into promoters, detractors, and passives. You can then identify which customers are in each group. Chances are, different patterns will emerge.Here is the “promoter” page within someone’s Userpilot account:
You might discover, for example, that most of your detractors are on your Enterprise price plan. That would suggest an issue with specific features for that plan, or maybe the pricing.The other approach is the reverse. You can take each segment of your customers, and then see how each group is composed of detractors, passives, and promoters.You might find that a certain type of user, say product managers, are more likely to be promoters. That suggests that their use case is the most relevant to your product.Instead of taking the overall NPS at face value, consider segmenting to understand more about your customers.In Userpilot, you can build advanced segments based on NPS scores and other user data. Here’s a segmentation screen letting you narrow down identifying user behaviors. You can see details including NPS scores when the user signed up, and what country the user is in:
You can launch experiences tailored precisely to each group (we’ll cover this in a bit).
Analyzing NPS: get insights from the follow-up questions
If you follow the advice we gave earlier, then hopefully you’ll also have answers to the follow-up question. This is where you can start learning the reasons your customers give for their scores.Because follow-up answers are qualitative data, the analysis will require a little more leg-work.You have to go through user responses to uncover patterns of what pushes the user to change their score over time. One of the most effective ways of analyzing text responses is to categorize them.
You do this by creating different “buckets” of user responses (see above). When an answer mentions a certain feature, tag it, putting it in that feature’s “bucket.” If an answer discusses your ease of use, then put it in the “easy UI” bucket.By looking at the correlation between the follow-up question responses and the NPS score, you can uncover user satisfaction insights.Here, you can see an analytics page showing what portion of promoters, passives, and detractors mentioned specific things.
Looking at the tags in the image above, “Missing features” has received an understandably low score. “Affordable” is a good sign. “Instagram direct posting” indicates a feature that needs some work.You have now refined your data into information. What can you do with it?
How to use Net Promoter Score (NPS)?
All that’s left to do now is put your data (refined into usable information!) to good use. There’s no point in collecting and analyzing NPS data if you aren’t going to improve your product with it or use it to make the most of your loyal customers.First, let’s look at improving your product with NPS data.
Use NPS to improve customer success
Unless you have a perfect product, chances are you’re going to have some detractors. These detractors aren’t completely satisfied with your product, which means they have some key insights you can use to improve it.You should already have the information you need from follow-up questions.We already mentioned how you can tag responses using Userpilot. For example, you can tag comments about “missing features” and go into deeper analysis.Then you can use the insights you get to shape your product road map.If you will be including new features on the road map, you can go back over your “missing feature” tagged responses and let those users know that you are following up on their suggestions.
As you can see, response tagging leaves you with several common themes that your detractors have commented on.Now, clearly, you don’t want to go out and make every possible improvement. That would take forever, and probably wouldn’t actually do that much for your product.We recommend taking the most frequently addressed areas of your product and then seeing how they fit into your product roadmap.If there are any overlaps, then it suggests that you should work on those particular areas.Sometimes you’ll have to read between the lines. Some answers may require you to dig a little to uncover the true pain points.If you aren’t sure what a detractor is trying to say, then there’s no harm in following up with an e-mail or phone call to ask them to explain their thoughts.Ultimately, the data you collect from the follow-up questions can help you understand where your product is falling short.
Use NPS to improve product and prioritize roadmap
You might have detractors who are “missing a feature” that you have. They just need help finding it.In this case, you need to reach out to those users to show them where it is or how to use it. Then you can lead them to success within your product.You can go further and use this information to make important features more visible in your UI.You can also trigger specific ‘experiences’ – e.g. tooltips or modals – within your app depending on the users’ NPS score – as well as other conditions (based on the insights you got from their behavioral analytics – e.g. which key features they are not using).Postfity, a social media scheduling app, got a low NPS score from a segment of users.In the follow-up question, their users said, “I don’t have time to come up with post content” – indicating the scheduling function is not enough for them – and that they would like to get some post content suggestions.Postfity actually had these features.It offers both Post Ideas (scraped from around the web, organized by category) and Social Tips Calendar – with customizable post copy templates that users can schedule to their social calendars with one click.With Userpilot, Postfity was able to create a tooltip triggered by the low NPS score of the segment of users who were not visiting the two features’ pages. The tooltip reminded these users to use the idea and template features to come up with post ideas faster:
When users are using your product to its full potential, they will focus on what they want to get done – and finding a replacement for your product won’t be on the to-do list.
Use NPS to reduce churn
Don’t wait for users to churn. Reach out and help detractors and passives while they are still with you.Someone who gives you a low NPS score but hasn’t yet churned is someone who might still “believe” in you. They have a problem, but they still believe in a solution.An e-mail from a real live human being can show your user that you are paying attention. This goes a long way toward building customer confidence.
The faster you can follow up when a customer gives you a low NPS and the more you can show them you understand their problem, the less likely they are to churn.
Use NPS to drive social proof and reviews
Of course, NPS isn’t all about the detractors. The promoters are equally important and extremely valuable to your company.Firstly, you need to decide what you want to do with them. Are you aiming for referrals or for reviews and case studies?You can cover both at once. Go to those that gave you a 9 for reviews and case studies, and then get referrals from the 10s.
You can automatically trigger a slideout inside your product (see above) or have your customer success team reach out to ask them. They already have a strong relationship with your customers, and so know the best way to engage with them.A thank-you email for a high NPS score can be a good start:
Tools you can use to track and analyze NPS
Here’s a checklist of important things to consider before deciding on which NPS software to choose. Each business will have different needs, but you should be able to answer YES to the following:
- Can you create NPS surveys where your users are (aka on your website or in-app)?
- Can you create a follow-up question with your NPS score survey?
- Can you collect unlimited responses without having to pay extra? Some tools may place a cap on how many you are allowed to collect, so keep your scale in mind.
- Can you create and launch your NPS survey without needing help from a developer? The faster you iterate, the faster you improve.
- Can you segment the audience before sending your NPS survey? You don’t want to ask new users for recommendations yet.
- Can you automate responses based on the responses users submit?
- Can you tag/flag responses? You want to be able to sort common responses to identify issues as they develop.
User sentiment tools focus on different things. Depending on the potential audience for your NPS surveys and the scale at which you will deploy them, you may consider the pros and cons of the following NPS feedback tools:
- Userpilot – in-app surveys, advanced segmentation, in-app automated responses, does not work on mobile apps.
- Hotjar – specializes in heatmaps and session recordings, can launch surveys in-app but you can’t segment the audience based on product analytics.
- Nicereply – focused on support teams and in-email transactional NPS surveys.
- SatisMeter – exclusively focused on user sentiment, offers multiple types of surveys (NPS, CSAT, CES).
For SaaS-oriented NPS data collection, we recommend Userpilot. You might say we are biased, but using a tool that allows you to both collect and act on NPS data can be valuable.
PROs of using Userpilot as your go-to NPS survey tool:
- no limit to the responses you can collect
- branded surveys with quantitative and qualitative feedback collection
- advanced user segmentation
- no-code NPS survey creation
- responses analytics
- tag responses and automate in-app experiences based on your tagging (coming soon)
- create automated in-app experiences based on NPS score from one dashboard
CONs of using Userpilot as your go-to NPS survey tool:
- can only run surveys in-app or on your website
- not suitable for mobile app businesses
NPS scores have become a standard measure of customer satisfaction. Contextual, unobtrusive surveys have made it possible to track user satisfaction over time, helping you prioritize product development.The numeric feedback from users combines usefully with other user behavior metrics to let you pinpoint issues in your product. Segmentation based on NPS responses lets you follow up with exactly the right users for issue resolution or requesting reviews.
Want to get started with creating NPS surveys? Get a Userpilot Demo and see how you can stay on top of user satisfaction and boost their success with your product.