What Is A Good NPS Score For SaaS Businesses?
Have you been wondering what is a good NPS score for SaaS businesses?
You’re not alone — many entrepreneurs and businesses are trying to figure out what the best Net Promoter Score (NPS) is for their businesses.
Right off the bat, a good NPS score for a SaaS company is around 30 to 50. With a general average NPS score at 36.
However, what matters more is what you need to do about your NPS score. What should you do if your NPS rating falls outside the 30-50 range?
In this article, we will talk all about NPS and what different NPS levels mean. We will also go through some best practices on how to improve your NPS score.
So let’s get to it.
What Is Net Promoter Score (NPS)?
Net Promoter Score (NPS) is a metric used to measure customer satisfaction with your product or service.
It can also help you identify loyal customers who can become advocates, as well as unhappy customers who have high risks of churning.
How NPS Calculation Works
It starts with a survey bearing this question: “On a scale from 1 to 10, how likely are you to recommend our product or service to your friends and colleagues?”.
Based on their response, you can group them into three categories:
- Promoters (9 to 10): These are happy customers that can help build your brand through word-of-mouth marketing.
- Passives (7 to 8): These customers are satisfied, but not passionate enough to recommend your product. What’s more, they may still decide to switch to another SaaS provider if they see a better deal elsewhere.
- Detractors (1 to 6): These are unhappy customers who may churn and even damage your brand reputation with negative word-of-mouth.
Now, to calculate your NPS score, subtract the percentage of Detractors from the percentage of Promoters.
You can have a resulting figure as low as -100 (where all are Detractors) or as high as 100 (where all are promoters).
2 Types Of NPS
There are two types of NPS that you need to take into account: the relationship NPS and transactional NPS.
Relationship NPS measures the overall customer experience including what your customers think of your product, customer support, and their relationship with you.
Surveys for this type of NPS may be sent periodically, such as every quarter or every year, through email or a survey software.
Transactional NPS, on the other hand, is what you measure at a single moment in time after a purchase or specific interaction with your business or SaaS product.
This type of NPS is more focused on what the customer thinks of that specific interaction they had with your business, such as customer support conversations or upgrading to a higher tier.
Transactional NPS surveys are typically sent right after the interaction or purchase, and are usually short-form surveys.
What Different NPS Levels Mean
Your overall NPS rating can be anything between -100 and 100. But what does that rating mean?
Let’s see some of NPS score ranges and what they imply for your SaaS company:
Below 0: Generally Poor Customer Experience
If your NPS score is below 0, it’s a red flag that something is wrong with your customer satisfaction.
Having more Detractors than Promoters can have a serious negative impact on your business. Should you find yourself in this situation, find out what ‘s causing your customers to be unhappy and prioritize fixing it.
0 to 30: Good But Not Great
A score between 0 and 30 is good, but what you should strive for is to reach the higher end of this range.
An NPS score within 0 to 30 means most of your customers are happy, but there are still a considerable number of Detractors.
That could lead to customer churn (which reduces your recurring revenue) and negative word of mouth which can discourage potential customers from buying your SaaS product.
Try to look into what you can do to move your NPS further in the right direction, such as improving your customer service or making changes to improve your SaaS solution’s customer experience.
30 to 50 (NPS Benchmark): Customers Are Generally Happy
As we mentioned earlier, 30 to 50 is the standard NPS for the SaaS industry.
If your NPS falls within this range, it’s a sign that most of your customers are satisfied with what you offer.
You may have some customers churning here and there, but your numbers likely still fall within the churn rate benchmark.
What’s more, your happy customers may also be contributing to more revenue through upsells and referrals.
However, there is always room for growth. Keep on doing what your Promoters love about your SaaS product and keep listening to what Detractors don’t like about it.
50 to 80: Your Business Is Doing Great
If your NPS rating is within this range, it means that you have a lot of happy customers who are actively promoting your product.
What’s more, what these customers say about you likely carries enough weight for prospects to trust you and consider buying from you.
Moreover, having a high NPS score like this can be key in getting featured in app marketplaces or having investors interested in what you do.
For perspective, NPS scores for some of the most popular SaaS brands today also fall around this range. These include Slack (55), Netflix (67), and Zoom (72).
Above 80: Your Business Is Outstanding
If your NPS rating is above 80, this means that you have gone above and beyond what most customers expect. Most likely, what you’re doing or what your SaaS product offers stands out from the competition.
Having an NPS score like this is what sets you apart from the rest, giving your brand credibility and trust.
However, that doesn’t mean you can be lax about keeping your customers happy.
Maintaining a rating this high requires constant attention, so try to keep what your customers like about what you do and address any complaints or issues promptly.
How To Improve Your NPS Score
Improving your NPS score is centered around making your customers happy and helping them make the most out of what your SaaS product has to offer.
Here are some tips on how you can do this:
Add Follow-Up Questions To Your NPS Survey
Sure, you have your standard NPS survey question. But what if you could gain more insight into what your customers think of your SaaS product?
Adding follow-up questions to your NPS survey can help you gather data on what went well, what didn’t go well, and what changes they would like to see.
Now, to have more specific responses from your respondents, you can set up different follow-up questions for Promoters, Passives, and Detractors.
Follow Up For Promoters: Ask what specific feature or service they liked or what made them give your SaaS product a high rating.
You may also ask them to leave a review on social media or a SaaS review site like G2 or TrustRadius. To give them an incentive to do this, you can reward them with a temporary free upgrade, or free credits, or anything relevant to how your SaaS platform works.
This can further improve their satisfaction and loyalty to your SaaS product.
Follow Up For Passives: The Passives among your customers are usually in the middle ground.
So what you can do is ask how you can improve their experience or what changes they’d like to see.
Try to engage with them further to find out what would make them more satisfied, and what would keep them from churning.
Follow Up For Detractors: Your Detractors provide valuable feedback that can help you identify what areas of your SaaS product need improvement. Urgent improvement.
Ask about what made them give a low rating and what SaaS feature or service didn’t meet their expectations.
It’s best if you address these issues promptly so that these customers may eventually become Passives or even Promoters in the future.
Segment Your NPS Respondents
The more data you have about each of your customers, the better you can see what affects their satisfaction with your product and how you can improve it.
Instead of simply getting all your NPS survey respondents into one group, try to segment them based on different factors. This could be demographics, what features they’ve used, and what type of customer feedback you received from them.
Having this data will help you gain more insight into what your typical existing customer has to say about what you do and the differentiators that make them rate your SaaS product highly or negatively.
For example, you may find out that older age groups tend to be Detractors. This can help you adjust what features or design elements you can change to improve customer experience for that particular demographic.
Perform A Root Cause Analysis
Performing a root cause analysis helps you identify not just the reasons behind the problems your customers encounter, but even the reasons behind those reasons.
Does that make sense?
Let’s look at it with the Iceberg model in systems thinking, which essentially says, “The issue is not the issue.”
Whatever problem you see on the surface, it’s just the tip of the iceberg, so to speak.
So you need to dive deeper to see the root cause of the issue. Addressing that root cause is the only way to permanently address whatever problem you are facing.
Let’s talk about one specific way of performing a root cause analysis: the Five Whys method.
With it, you simply ask “Why?” five times.
For example, let’s say your surface-level problem is a low NPS score. So you ask the first “Why?”
1) Why do we have a low NPS score? Imagine posing this question and the answers to your follow-up questions reveal one common point: most of your customers find your support team to be unhelpful.
So you ask the second “Why?”
2) Why do our customers find our support team unhelpful? After some more digging, you may find that the reason behind this is that your customer support team doesn’t follow your standard response procedure.
So you ask the third “Why?”
3) Why doesn’t our customer support team follow the standard procedure? The answer to this question might be that your support team is more concerned about closing more tickets instead of striving to provide the best level of customer service.
So you ask the fourth “Why?”
4) Why is my customer support team more concerned about closing more tickets? You may find that their performance metrics are based on how many tickets they close regardless of whether or not they actually solved the customer’s problem.
Now, you’re getting deeper into the system that perpetuates the problem.
And you ask the final “Why?”
5) Why are their performance metrics based on the number of tickets closed? After some more investigating, you may find that the problem is that your incentives and rewards system puts too much emphasis on the number of tickets closed.
Finally, you have reached the root cause of the surface-level problem.
Note that it doesn’t always have to be exactly five “Whys.” Sometimes, fewer is enough to find the root cause of your problems. Sometimes, it takes more. The point is to keep asking until you find the system where your surface problem roots from.
And when you know what the root cause is, you can implement a deeper and more permanent solution to your problem. This ultimately improves customer satisfaction and loyalty.
Invite Your NPS Respondents To Join Your Brand Community
If you have a brand community, it can be a great platform for nurturing your relationship with all Promoters, Passives, and Detractors among your customers.
And if some of your NPS respondents haven’t joined your community yet, what better way to get them involved than by inviting them through your NPS survey?
If or when they’re already in your online community, you can leverage your Promoters to help other customers and share what they love about your product.
You can also engage with your Passive and Detractor respondents, getting a better sense of what they want or what’s preventing them from using (or recommending) your product more.
You never know — getting help from the Promoters in the community might just be what they need to become Promoters themselves.
What’s more, you can entice your NPS respondents by introducing rewards for engaging with your brand community. This may include exclusive discounts, invites to special events, or early access to new features.
Be More Proactive With Customer Success
Customer success is one of the most important and effective ways to keep your customers happy.
By proactively engaging with your customers and making sure they’re getting what they need, you can establish trust and loyalty, which are essential for customer retention.
But how can you be more proactive with your customer success services?
Improve Your Onboarding Process: A strong onboarding experience is key to customer success. If your customers have a great time getting started with your product, they are more likely to stay and continue using it.
So what can you do to improve your onboarding process?
First of all, you need to make sure that it’s as simple and intuitive as possible. This means eliminating any unnecessary steps or confusing processes that may scare away new users.
Also, most users prefer going through the onboarding process at their own pace. To cater to this preference, you can create a self-service onboarding experience that allows users to explore the features even without talking to a customer success representative.
Lastly, don’t forget to include tutorials or supplemental resources (such as FAQs or video guides) to help customers get started with your product quickly and easily.
Identify Each Customer’s Goal: Customer success is all about helping your customers reach their goal with your SaaS product.
But more than that, it’s also important for you to identify the specific steps and milestones they need to reach in order to achieve their goal.
Once you understand what customers are trying to accomplish with your SaaS product, it will be easier for you to come up with a tailored customer success plan that can help them get there.
Track Each Customer’s Usage: By measuring the usage of your product among different customers, you can identify which ones are at risk and need extra attention.
What’s more, by doing this, you can also identify which features your customers find the most beneficial and what they are missing out on.
This way, you can focus on what needs to be improved in order to drive customer satisfaction — which will eventually lead to improvement in your NPS score.
The NPS score is one of the most important metrics for any SaaS company today. It reflects the overall satisfaction that customers have with your product, and it serves as a benchmark for measuring your success.
That being said, it’s important to know the industry standards for a good NPS score, as well as what you can do to improve it.
That way, you can take the necessary steps to ensure your customers are satisfied with what you have to offer and make sure they stay loyal to your SaaS product.
After all, customer loyalty and satisfaction are what drive long-term success for any SaaS business.
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