Everything You Need To Know About The SaaS NPS
What makes the SaaS business model such a great opportunity is its recurring revenues. With traditional businesses, revenue generally comes from one-time transactions.
SaaS businesses, on the other hand, have the potential to generate revenue continuously from customers who pay for their service on a monthly or yearly basis.
But that can also be a challenge in running a SaaS company.
To maximize your long-term revenue, you need to make sure that your customers are happy and that they continue to use your service month after month.
One way to measure customer satisfaction is through the SaaS NPS or Net Promoter Score.
In this article, we’ll discuss what SaaS NPS is and how it works. We’ll also cover why it’s important, when you should run an NPS survey, how to find your NPS rating, how to analyze it, and how to improve it.
What is The Net Promoter Score?
The NPS is a measure of customer satisfaction that is specifically designed for SaaS businesses and other business models that rely on continuous relationships with customers.
The NPS is based on a simple question: “How likely are you to recommend our product or service to a friend or colleague?”
Based on the answers, you can quantify the general mood among your customers. We will talk about the specifics further down this blog post.
Why Is The Net Promoter Score Important For SaaS Businesses?
As we mentioned earlier, the NPS is one of the ways to measure customer satisfaction, which is essential for a SaaS company.
If customers are not happy with your SaaS solution, they will eventually stop using it. And if they stop using it, they will also stop paying for it.
Tracking your NPS score will help you anticipate your customer churn and retention rates.
It’s also important to keep in mind that it costs more to acquire a new customer than it does to keep an existing one.
So, if you’re losing customers, you’re not only losing revenue but also incurring additional expenses to replace them.
Being aware of your customer base’s current mood will help you keep them happy and lower your churn rates in the near future.
When Should You Run A SaaS NPS Survey?
There are two things you need to know when it comes to the timing of your NPS survey.
Number one: Do it when your customer experiences your product’s value.
And number two: do it regularly.
For New Customers: Send The Survey After The “A-ha!” Moment
Ideally, you should send an NPS survey to your customer once they have experienced the value of your SaaS product. This is also known in the SaaS industry as the “A-ha!” or “Eureka!” moment.
So why do you need to send your survey while they have a fresh experience of your SaaS solution’s benefits?
Simple — it can help you make sure that they are familiar enough with your product to give you an accurate rating.
That also entails tracking their engagement with your SaaS solution.
You can track engagement metrics like monthly active users and feature usage.
A good time to reach out and ask for their feedback is usually when they become more engaged with your product or anything that may indicate that they have experienced its value.
For example, let’s say you have a customer relationship management (CRM) solution that specializes in sales. The “A-ha!” moment could be your customer being able to close at least ten deals using your product.
Or for lead generation software, the value could mean capturing at least fifty qualified leads.
Of course, this will vary depending on your SaaS product. But the important thing is that you identify when your customers have realized its value so you can accurately gauge their satisfaction levels.
For Existing Customers: Send A Survey Regularly
Another thing that you need to know about NPS is that you should monitor it regularly.
Think of it as a routine check-up.
You need to keep track of your SaaS NPS score over time to see if there are any changes or trends in customer satisfaction. You never know when you might need to take action to prevent churn.
How often you should run a SaaS NPS survey will depend on your business.
A good starting point would be once or twice a year. But if you have a large customer base, you might want to run it quarterly or even monthly.
The important thing is to be consistent in how often you measure your SaaS NPS so that you can track changes over time.
How To Find Your Net Promoter Score
Now that you know when to measure your SaaS NPS, the next step is to actually calculate it.
The process is pretty simple and only requires a few steps:
- Create Your NPS Survey
- Launch Your NPS Survey
- Categorize Your NPS Survey Responses
- Calculate Your NPS Score
Let’s go through each step one by one.
1) Create Your NPS Survey
The first thing you need to do is create your NPS survey. Businesses usually make their surveys using tools like SurveyMonkey and Hotjar.
Below are some things you need to include in your NPS questionnaire:
The Standard Question: As we mentioned earlier, the general NPS question is something like “How likely are you to recommend our product or service to a friend or colleague?”
You can personalize it to fit your branding and product messaging, but the important thing is that you use the word “recommend.”
What’s more, you need to make sure that your respondents can answer the question on a scale from 0 to 10, 0 being the least likely and 10 being the most likely.
Follow-Up Questions: Once you have the standard question, you need to include follow-up questions.
These are optional, but they can give you more insights into why your respondents gave you a certain score.
For instance, you can ask happy customers who rated you 9 or 10 what they like best about your SaaS solution.
Even better, you might want to introduce them to your referral program or anything that can turn them into advocates for your product.
On the other hand, you can ask those who rated you 0 to 6 to explain what improvements they want to see.
This way, you can quickly address any areas of concern and turn them into satisfied and loyal customers.
What’s more, you can also ask all of your respondents an open-ended question at the end of the survey where they can leave any additional feedback.
Permission For You To Contact Them: This is also optional, but another useful thing you can have in your survey is another question or tickbox that asks your customer’s permission for you to contact them.
This way, you can easily follow up with those who need more help or assistance. This can also be a chance to get more details about their feedback.
Moreover, it can show that you really value their opinion.
2) Launch Your NPS Survey
Once you have your survey ready, it’s time to launch it and send it to your customers. There are a few things you can do to make sure that your survey reaches your customers:
Send Your Survey Through Visible Channels: Your product’s interface itself can be a good platform to show your survey since customers are already using it.
If you have an in-app messaging feature, you could use it to invite them to take the survey. You could also place banners or pop-ups on specific pages of your SaaS application showing a quick NPS survey.
You can also send a link to your survey using email. This is especially useful if you have a lot of customers or if you want to target specific segments of your customer base.
What’s more, it could cover your bases just in case your customers don’t notice the invitations you place on your SaaS product’s interface.
Offer Incentives To Your Respondents: Another great way to increase your response rate is to offer an incentive, like a discount or a freebie, for those who take the survey.
This doesn’t have to be something grand. Even a one-month free upgrade could be enough to encourage more people to participate.
Make Your Survey Mobile-Friendly: Since an increasing number of people are using their mobile devices to go online, it’s important to make sure that your survey is mobile-friendly.
This way, people can easily take your survey even when they’re on the go.
3) Categorize Your NPS Survey Responses
Once you have all of your NPS responses, it’s time to categorize them so you can start calculating your score.
As we mentioned earlier, there are three types of NPS responses: promoters, passives, and detractors.
Here’s how you can put your respondents into these categories:
Promoters (score 9 to 10): These are your most satisfied and loyal customers who are most likely to continue using your product. They can even build your brand through positive word-of-mouth.
Passives (score 7 to 8): These are customers who are somewhat satisfied with your SaaS product but could still be persuaded to switch to a competitor’s product if they see a better deal.
Detractors (score 0 to 6): These are customers who are unhappy with your SaaS product and are likely to spread negative word-of-mouth about it.
4) Calculate Your SaaS NPS Score
Once you have your NPS responses categorized, it’s time to calculate your SaaS NPS score.
You can do this by subtracting the percentage of detractors from the percentage of promoters.
For example, let’s say you have a total of 100 responses and 50 of them are from promoters, 20 are from passives, and 30 are from detractors.
This means that 50% of your customers are promoters, 20% are passives, and 30% are detractors.
To get your SaaS NPS score, simply subtract the detractor percentage (30%) from the promoter percentage (50%). In this case, your SaaS NPS score would be 20.
Your overall NPS rating could range from -100 (if all are detractors) and 100 (if all are promoters).
5) Analyze Your SaaS NPS Score
Once you have your SaaS NPS score, it’s time to analyze it so you can determine what areas need improvement.
Here are some things you can look at:
A score below 0 is obviously alarming since it means that you have more detractors than promoters. This could be a sign that your SaaS product is not meeting customer expectations in some areas.
A score of 0 to 50 means that you have room for improvement. This is because a high number of your customers are unhappy with your SaaS product. You need to find out why and take steps to improve the situation.
A score of 50 to 80 is a good NPS score but there’s still room for improvement. In this case, you need to focus on retaining your promoters and converting your passives into promoters.
A score of over 80 is excellent. This means that you’re doing a great job and your SaaS product is well-liked by your customers. However, you should still strive to improve so you can maintain this high score.
How To Further Analyze Your NPS Score
Calculating your overall NPS score is a big step in measuring your customer satisfaction.
However, it is just an overview. It just gives you a general sense of how your customers feel about your SaaS product.
To get a more detailed picture, you need to further analyze your NPS score.
Here are some things you can do:
Segment Your Respondents Based On Demographics
One way to further analyze your NPS score is to segment your respondents based on demographic factors.
This includes characteristics like age, gender, location, and more.
By doing this, you can identify patterns on which groups of people are more likely to be NPS promoters or detractors.
You can then adjust your marketing and product development strategies accordingly.
For example, if you find that a certain age group is more likely to be detractors, you can focus on making your SaaS product more appealing to them.
Categorize Answers To Follow-Up Questions
Another way to further analyze your NPS score is to categorize the specific comments that your respondents left you.
When you send out your NPS survey, you should also include a question that asks respondents why they gave the score they did.
This will give you valuable insights into the reasons behind your SaaS product’s NPS score. It can help you see where your customers are having the most issues regarding your SaaS product and services.
You might find some common areas of improvement, such as the following:
- Product’s functionality
- Ease of use
- Customer support
- Customer success
Note Changes In Between Survey Cycles
As we mentioned earlier, monitoring your NPS isn’t a one-time thing.
You should be constantly measuring and re-measuring your NPS score on a regular basis.
When you’re analyzing your SaaS NPS score, it’s also important to note any changes between survey cycles.
This will help you see if the improvements you’ve made (in terms of product development, marketing, customer service, etc.) are having a positive or negative effect on your NPS score.
It’s important to survey your customers on a regular basis so you can track these changes over time.
Perform A Root Cause Analysis
According to systems thinking and the Iceberg model, there is more to the problems we see than meets the eye.
Like some people say, “The issue isn’t the issue.”
In other words, the symptoms (or problems) that we see are often just the tip of the iceberg.
There are usually underlying causes for these problems. And if we want to address the problem, we need to get to the root cause.
This is also true for SaaS NPS scores.
A low NPS rating could be caused by a variety of factors.
It could be due to problems with your SaaS product, your marketing strategy, your pricing model, or something else entirely.
To figure out the real reason why your NPS score is low, you need to do a root cause analysis.
This is a systematic process for identifying the underlying causes of problems.
There are many different methods for doing a root cause analysis. But one of the most popular methods is the 5 Whys method.
The 5 Whys method is a simple but effective way to find the root cause of a problem
You start by asking “Why?” five times in order to drill down to the root cause of the problem. By the time you get to the fifth “Why?”, you should have identified the root cause of the problem.
For example, let’s say your SaaS product has a low NPS score. That is the symptom or the tip of the iceberg.
So, you start asking “Why?”: Why does my SaaS product have a low NPS score?
The first answer might be because the product is buggy.
Then you ask “Why?” again: Why is the product buggy?
The second answer might be that the development team is not following the agile development process.
So, you ask “Why?” again: Why is the dev team not following the agile development process?
The third answer might be that the dev team is more concerned about meeting deadlines rather than ensuring proper quality assurance.
So, you ask again: Why is the dev team more concerned about meeting deadlines than quality assurance?
The fourth answer might be that their supervisor doesn’t give them any room for error.
Then you ask for the final time: Why doesn’t their supervisor give them any room for error?
The fifth answer might be that the supervisor themselves is under a lot of pressure from the upper management to meet deadlines.
And there it is.
By asking “Why?” five times, you’ve identified the root cause of your SaaS product’s low NPS score.
In this case, it’s because of a prevalent culture or mental model in your company that puts meeting deadlines above ensuring quality.
Remember, though, that the point here is getting to the root cause of your problem. It could take less than five whys. It could take more. The important thing is that you get to the bottom of what you’re dealing with.
And once you’ve identified the root cause of your SaaS product’s low NPS score, you can start to develop a plan to address the issue. The real issue.
How To Improve Your Net Promoter Score
Looking at what we’ve just discussed, the best and most long-lasting way to get a good NPS score is to address not the mere symptoms, but the underlying issues behind them.
But still, there are things you can do more in order to improve your NPS and its accuracy.
Here are a few of them:
Ensure That Your SaaS Product Is Top-Notch
This should go without saying, but it’s worth mentioning anyway.
If you want to improve your SaaS product’s NPS score, you need to ensure that it is of high quality and that it offers a lot of value to your customers.
If it doesn’t, no amount of marketing or salesmanship will be able to save it. You need to have a solid foundation to build upon.
And that foundation is a great SaaS product.
Act On Your Customer Insights ASAP
When you get feedback from your customers, whether it’s through an NPS survey or some other means, act on it as soon as possible.
Don’t wait months or years to address the issues that your customers are facing. Address them now.
The sooner you act on customer feedback, the more likely it is that you’ll be able to improve your SaaS product and increase customer satisfaction.
And the more satisfied your customers are, the higher your SaaS product’s NPS score will be.
Make sure to also show your customers that you’re acting on their feedback.
This will instill confidence in them and make them even more likely to continue doing business with you and recommend you to others.
Improve Your Customer Support
Customer service or support is another important factor in satisfying your customers.
You see, not all issues that your customers face will show up in your root cause analysis or even feedback categorization.
Some may be just simple isolated cases that a decent support team can troubleshoot.
That’s why it’s important to have a great customer support team.
They can help address the issues that your customers are facing and improve customer satisfaction, even if those issues are not related to your SaaS product itself.
Do NOT Send An NPS Survey After A Major Update
One mistake that a lot of SaaS businesses make is sending out an NPS survey right after they’ve released a major update, such as a new feature or a new interface.
This is a big no-no.
Don’t get me wrong here. This is not about manipulating the timing of your survey in order to avoid getting negative feedback.
Rather, it’s about giving your customers time to use your SaaS product and get used to the new update before you ask them for feedback.
This way, you’re more likely to get accurate feedback that reflects their true experience with your SaaS product.
You see, when you release a major update, there will inevitably be some bugs and issues. And your customers will be quick to point them out.
But even if these updates are really good and bug-free, some customers may still be cranky about the change. They may need some time to get used to the new interface or feature.
In any case, if you send out an NPS survey right after the update, your SaaS product’s NPS score will tank.
And you would probably end up with a score driven by temporarily heightened emotions, which is not accurate.
So, when is the best time to send out an NPS survey?
You should wait after the excitement of the update has died down and your customers have had some time to use the new feature or interface.
This way, you’ll get a more accurate picture of how they feel about your SaaS product.
Final Thoughts About The SaaS NPS
The Net Promoter Score is one of the most important retention metrics for SaaS businesses. It’s a great way to measure customer loyalty and satisfaction.
And you can further use that information, not only to prevent churn in the future. But even improve your SaaS product and other services.
The most important thing here is to find the root cause of your NPS scores, not a band-aid solution to make you look good. If you find the real issue behind your NPS data, then you can do what’s necessary to make long-lasting changes.
And remember, the SaaS NPS is not a static number. It can change over time. So, make sure to regularly measure it and take action on the feedback that you receive.
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