Tracking NPS For SaaS: Why is It Important and How to Do It Right
How does tracking NPS give you the insight you need on how to better engage customers?
By asking customers how likely they are to recommend your product to others, you get an honest look at customer satisfaction.
In this article, we’ll cover:
- What NPS is and why it’s important to track.
- What is a good NPS score?
- Best practices for creating NPS surveys.
- How to use NPS data to make product improvements.
Let’s get started.
- The Net Promoter Score (NPS) measures customer experience by asking customers: “How likely are you to recommend [company] to a friend or colleague?”
- Tracking NPS is important because it’s a globally recognized metric that makes it easy to benchmark against industry averages.
- To calculate the net promoter score, send out surveys that ask the simple question above. Then, divide respondents into three categories: Promoters (9 or 10), Passives (7 or 8), and Detractors (0-6).
- The net promoter score formula is (Number of Promoters – Number of Detractors) / (Number of Respondents) x 100.
- Generally, a good NPS is 30+, but it differs by industry.
- There are two main types of NPS programs: relational and transactional.
- Here are some best practices for creating and distributing NPS surveys:
- Segment users to make sure you are collecting data from the right customers
- Send NPS survey to the right number of customers
- Trigger surveys contextually – set custom goals and trigger them based on user behavior.
- Keep track of performance over time,
- Personalize the surveys to increase the response rate.
- Follow up with respondents and close the feedback loop.
- You should use NPS data to improve your product. Here are a few ideas: ask detractors to provide feedback, offer incentives to passives, and ask promoters to participate in beta tests.
- Along with NPS, you should also track your customer satisfaction score, customer effort score, and customer health score for the most well-rounded picture.
- The best tools to use to track NPS are Userpilot and SatisMeter. Userpilot is a more well-rounded option, where you can build and send surveys, and then create in-app product experiences based on the results.
What is the Net Promoter Score (NPS)?
A brief history of NPS
Net Promoter Score was developed by Fred Reichheld at Bain & Company in 2003 after analyzing how traditional customer satisfaction surveys correlate with consumer behavior. He wanted to devise a quick way to measure customer loyalty and satisfaction without conducting extensive research.
The deliberately phrased survey question, “How likely are you to recommend [brand] to a [friend or colleague]?” is now used by millions of companies.
Why is tracking NPS important?
There are many other popular NPS alternatives you can track to get a sense of your customer sentiment. So why should you still up in the effort and track this metric too?
Here are some of the reasons tracking NPS is important:
- The NPS system is easy to use. It’s just one question with a magic formula that practically any business can use without any customization.
- NPS is a widely recognized and utilized metric, so it’s easy to benchmark again industry averages and your competitors.
- Tracking your NPS benchmarks over time can show whether the changes you implement in your business are working.
- NPS score is a measure of your whole business, therefore it’s a company-wide metric relevant to everyone – from business executives to customer support
- With NPS, you can proactively spot customers who are at risk of churn and turn their experience around to retain them
How to calculate NPS?
To measure NPS, you first need to build and run in-app NPS surveys. Ask customers to rate on a scale from 0-10 how likely they are to recommend your product to a friend or colleague.
Then, group those survey responses into three categories:
- Detractors (scored 0-6): Unhappy and at risk of customer churn.
- Passives (scored 7 or 8): Apathetic – not happy or unhappy.
- Promoters (scored 9 or 10): Loyal customers with high user engagement.
Calculating NPS from this point is easy with this simple formula:
(Number of Promoters – Number of Detractors) / (Number of Respondents) x 100
For example, if out of 100 respondents, you had 90 promoters and 10 detractors, then your net promoter score is 80.
What is a good NPS score?
A “good” NPS score depends on your industry – a SaaS product will have a different score than an e-commerce site.
Find out what the benchmark is for your industry, and then compare that score to where you currently stand.
That being said, here are some general guidelines that indicate where your customer experience stands:
- Lower scores below 0 are cause for concern – this means you have more unhappy customers than happy ones.
- NPS results between 0-30 are in the middle ground – Your customer experience is positive, with more satisfied customers than unsatisfied ones. There’s still room for improvement.
- High NPS scores that are 30+ show a high customer perception. This is a great place to be – more happy customers mean better customer retention and higher customer lifetime value.
What are the two main types of NPS programs?
For a well-rounded NPS program, use these two types simultaneously:
Relational NPS programs
Relational NPS surveys are sent to your customers regularly, such as once every three or six months. Relationship NPS programs are ideal if you run a B2B or SaaS company because you can measure customer satisfaction once a relationship has been established, and your customers have had time to form an opinion of your organization.
Transactional NPS programs
Despite using the same survey methodology, transactional NPS focuses on customer satisfaction at a more granular level.
You can optimize different touchpoints across the customer lifecycle by using transactional feedback, giving each department a metric to base their actions on.
Best practices for tracking NPS with in-app surveys
Follow these six best practices to create your net promoter score surveys:
Collect data from the right users
Firstly, be strategic about who you send the surveys to. For example, make sure you don’t survey the same people over and over again.
Also, send surveys only to customers who have already reached activation, otherwise, your results will be skewed.
Send NPS survey to the right number of customers
To get the most accurate score, send the NPS surveys to a medium-sized audience. It’s tough to get an accurate score from small groups – you may get an undeserved lower score if you have just one detractor.
To avoid sample size issues, you can also send NPS surveys to different user segments, so every group is represented.
Trigger your NPS surveys contextually
To collect relevant data, ask users for feedback contextually. Here are some situations when you might want to trigger an in-app NPS survey:
- After engaging with a certain feature several times
- After contacting customer support
- After engaging in an in-app experience
- After the user upgrades their plan
You can do this by creating events and triggering flows based on user actions with Userpilot.
Keep tracking performance over time
Net promoter score surveys are not a one-time thing. NPS’s true power is revealed over time when you can see trends and fluctuations.
Monitor improvements at different intervals and check what might be the cause for a decrease or increase in your NPS scores.
Personalize your surveys
People love to feel known and considered.
Add a personalized touch by:
- Introducing yourself
- Addressing customers by their name
- Mention a product/plan they recently purchased
This increases the response rate and creates a bond with the customer.
Follow up and ask customers to explain their rating
The net promoter score alone doesn’t tell you much – but understanding the context of your NPS unlocks so much potential for your business.
To generate meaningful insights, reach out after the survey with follow-up questions to get qualitative feedback.
Go even further and personalize the follow-up question based on the NPS score. Use a tone of voice that is appropriate for each segment of customers.
For example, when speaking to detractors apologize and understand how you can enhance their experience. When speaking to promoters, there is obviously no need to apologize – instead, thank them and try to understand what they love most about your product.
Asking personalized survey questions will help you to increase the response rate and get more accurate feedback.
How do you track NPS?
Here are two ways to track NPS depending on the NPS question type:
Tracking NPS survey answers for a close-ended question
Tracking NPS for close-ended questions is relatively easy. The NPS software you choose will automatically calculate the survey results and visualize them on a dashboard.
A dashboard makes it easier to spot trends throughout a set period.
Tracking NPS survey answers for open-ended questions
Tracking NPS is a bit tricky when you asked open-ended questions, but it’s still very important.
With a tool like Userpilot, you can manually go over the qualitative responses and tag the recurring ones. You could have tags like “missing features” (as shown below), “UI update,” and so on.
Then, look for patterns in the tags. This will help you strategize to improve the areas that will make the biggest impact.
How to use NPS data to improve your product and CX
Here’s how to use the data collected to improve customer satisfaction:
Reach out to detractors and understand where you failed to delight them
Let detractors know that their voice matters.
Going the extra mile and sending them a personalized email can go a long way in retaining them. Once they see you are on their team and genuinely them to succeed, they’ll be more forgiving towards your mistakes.
Convert passives into promoters with incentives
Passives are price sensitive – often a small discount is all it takes for a competitor to steal them away from you.
Be one step ahead and give passives discounts, access to freemium features, and other incentives to boost customer loyalty.
Invite promoters to beta tests
Promoters are extremely valuable to your company – they’re the ones who’ve mastered your product. You can leverage them to get even more customers.
And of course, give them a small gift in exchange for their time.
What other metrics should you track alongside NPS?
NPS scores often fluctuate significantly based on virtually meaningless differences between weeks or months since they are calculated using rigid cutoffs (0-6, 9-10) and exclude some ratings altogether (7s and 8s).
Let’s think about this fictional scenario. A group of frustrated customers gives you a 1 on an NPS survey, and you categorize these customers as detractors. You listen to their suggestions and make improvements to the product. Then you decide to run NPS surveys to see if what you did actually worked. The same customers may be impressed with your efforts and be in the process of moving toward your side. So while they are impressed with your willingness to act on feedback and make changes, they are still not your fans and give you a 6.
When you look at your NPS analytics dashboard, the percentage of detractors is still the same. So you may get the impression that you are not improving and all your efforts were meaningless.
But that’s not the case, right? In reality, you got some of your extremely angry customers to become high-scoring detractors who have a high chance of becoming a promoter.
So in order to get a more comprehensive view, start tracking other customer experience metrics alongside NPS. Here are some metrics worth measuring:
Customer effort score (CES)
The customer effort score (CES) tracks how difficult or easy it was for a customer to complete a task.
Customer satisfaction score (CSAT)
The customer satisfaction score (CSAT) is exactly how it sounds – it measures how satisfied customers are with their entire product experience, or with one specific element.
To calculate this score, you send out an in-app single-question survey asking customers how satisfied they are with their experience.
Customer health score
Unlike the other metrics we discussed, the customer health score is not a simple average grabbed from survey responses. Instead, you customize a formula that tracks an individual customer’s “health” (their loyalty, activity, risk of churning, etc.).
Best tools for tracking NPS and other CX metrics
There are the two best tools to use to track your net promoter score and other customer experience metrics:
Userpilot is a digital adoption platform for product teams. With Userpilot, you can create in-app surveys code-free, customize survey questions and appearance, and collect quantitative and qualitative data.
You can easily tag responses to analyze the results. Then, you can design in-app experiences and trigger them based on NPS scores or responses to address the issues your customers are facing.
For example, if some detractors say that the reason behind a low score is a missing feature, but you do have that feature, you could trigger interactive walkthroughs to guide your users down the best paths to experience value.
SatisMeter is a specialized customer feedback tool that collects NPS, CSAT, and PMF data.
Just like with Userpilot, you can send different surveys to different user segments. However, unlike Userpilot, it has minimal customization options. You also can’t take action on that data by building in-app experiences afterward.
Tracking your net promoter score is an excellent way to keep tabs on how customers are feeling. That simple NPS question tells you so much about customer perception, loyalty, and satisfaction.
Want to get started with tracking your net promoter score? Get a Userpilot Demo and see how you can build and send in-app NPS surveys.