What is a good NPS score for SaaS?
You’ve likely heard the term “NPS” or Net Promoter Score thrown around in terms of SaaS recently and it has a bit of a buzzword kind of feel to it. However, NPS is quickly being recognized as an important concept to understand in SaaS because it tracks something that is intrinsically important for SaaS: customer satisfaction and loyalty. Happy customers hold a lot of power for SaaS as the most influential sales and marketing tools. Additionally, SaaS success rides on retaining customers and happy customers keep your churn rate low and monthly recurring revenue high. Your NPS score gives your team a good understanding of how your product is being received by your customer base and how likely they are to help you spread the word.
“The secret to marketing success is no secret at all: Word of mouth is all that matters.”
– Seth Godin, Founder and CEO
As you can see, actually tracking a number like that is up for debate in terms of what the inputs are and how much weight SaaS companies give to certain things. The reality is, there are multiple ways to do this and every SaaS company is different in terms of what customer success looks like. We’re going to go through a few different perspectives on calculating and understanding NPS and likely one (or multiple) will resonate with your team and SaaS.
What is NPS and what does it indicate?
We started to talk about this a bit but we need to better understand NPS and what it really indicates for SaaS teams to really understand what a good NPS score is (for your team). NPS means Net Promoter Score and it is measurement of customer happiness, and in turn, loyalty to your product. It also measures how likely customers are to promote your product to other potential customers. Unlike other more traditional, generic metrics like customer engagement, NPS takes into account your customers’ happiness and the potential growth due to word of mouth. For SaaS teams, a healthy NPS score means that your product is solving customer pain points and providing value. It also means that your customers are likely to be generating leads that are highly likely to convert.
How do you calculate NPS score?
With a simple question. You’ve probably heard it and asked it a million times: “How likely are you to recommend ___ to a friend?” With a one to ten scale, preferably for easy math. The customer answers you collect to this question are all you need to calculate your NPS score. Anyone who gives your product a 6 or below are called ‘Detractors’. Anyone who scores you 7 or 8 are ‘Passives’. Lastly, anyone who gives you a 9 or 10 are your ‘Promoters’, your biggest fans. Detractors are not helping to promote your company nor are they likely very happy users of your products. Passives are not overtly thrilled to the point to where they’re going to help your marketing and sales team out. Promoters are the goal. Promoters are happy with your product, it provides them value, and they’re willing to share that with others like them who will hopefully become customers. To get your final NPS, subtract the percentage of respondents who were detractors from the percentage of respondents who are promoters.
How do you determine a “good” NPS?
Once you have your score, it’s still just a number that needs to be determined for your product. It can be hard to determine if your product is in trouble with so many different opinions on what a good score is. Here are a few different perspectives you can consider:
Compare with other companies in your niche:
NPS can vary greatly depending on what kind of audience your customers are within and what kind of industry you serve. For example, specialty stores and department stores have some of the highest NPS scores because they are normally specifically branded and their customers shop there because of the branded experience. On the other hand, internet services and cable services tend to have very low NPS scores because they’re not nearly as personalized, branded, and interesting to the vast majority of users. They’re a basic necessity. It’s just the nature of how customers relate to the industry overall, not the brands themselves. So in this case, an NPS score of 10-15 would be outstanding for a cable TV service but shockingly bad for a speciality store. Comparing your NPS to the industry you’re in and the customers you serve. Take a look at the averages for NPS scores by industry here.
Take into consideration SaaS benchmarks:
Aside from the industry of your SaaS services, taking into consideration SaaS NPS scores as a whole helps to better understand where your NPS sits. The SaaS industry as a whole has an average NPS score of 31. A score of 50 for a SaaS company would be considered quite good. That is a very general SaaS ballpark. According to surveys from Quora, many SaaS companies never break the 60% barrier in terms of NPS score and customers tend to be a little stingier in terms of positive feedback and promotion. This may have to do with the fact that SaaS is a background tool for many companies and there are few arenas to really share your opinion on software with peers online unlike more “sexy” industries like luxury stores and fashion. Taking this into consideration can help gauge whether your NPS score is aligned with SaaS and explain any concerns.
Are you international? Compare your NPS by geographical location:
Where your users and your users’ culture can affect your NPS score fairly heavily. In the United States, for example, customers are much more likely in general to share their opinion with others (both negative and positively). However, in Europe customers are much more reserved in general about their opinions and conservative with what we would consider positive feedback in the US. In the US, we are also more likely to give five star reviews and 10/10 when we are at least satisfied with a service. If you check out Amazon products, you’ll see much more five star reviews. We give them out like candy. Cultural differences can affect how customers score when asked on a scale of 1 to 10, even though their satisfaction is the same. If you have customers internationally, what may be best to get an accurate idea of the health of your NPS score is to take an average of the scores per region and adjust the weight according to cultural norms in terms of rating. This may help you get a better, more accurate idea of how your customers feel about your product.
Compete with yourself:
All SaaS products are different and their relation to customers are different. It’s also best to compare to your previous NPS results to see how well your team is doing at improving your customers’ experience. Based on the approaches above, you can come up with a general starting point based on where your SaaS sits in terms of industry and other factors. From here, consistently tracking your NPS score and comparing it over time is the most accurate way to determine customer success and promotion. Tracking your NPS score in app and outside of your app has become increasingly easier. There are plenty of tools to help you collect customer opinions at every point. You can send surveys via email to users or you can collect opinions within your product’s user interface.
With Beamer’s NPS, you can present a quick 1-10 survey throughout your products’ user experience. On the Beamer backend, you can see all results from your NPS surveys and get a quick view of how your customers are liking your product. Beamer is also a great way to keep customers in the loop. Beamer is an in-app changelog and news feed that sits within your app where you can post updates for anything from new features, company news, bug fixes, updates, and more. You can include photos, GIFS, videos, and CTA buttons to engage users. Adding surveys helps you further engage users and get their opinions in a much more in context way than email. Instead of sending emails that may go unnoticed and unopened, you can engage users and get their opinions where they are already engaging with your product. Customers can add comments and reactions like a social feed so you can get even more direct feedback from customers. Additionally, Beamer gives you the data on your open and click through rates for your updates so you can get a more complete picture of how your users are liking the development and further direction of your product.
NPS can be an incredibly valuable tool for your team to get a tangible view of how satisfied your customers are with your product and how likely that is to affect your sales and marketing efforts. Boosting NPS can be very beneficial for reaching new customers organically and ensuring that customers stay on board. Try Beamer for an easy way to both track your NPS score and boost engagement within your product.