NPS: a key indicator for your SaaS

There are many metrics that influence user and customer retention, but efforts should be focused when it is possible to anticipate. Evaluating the NPS can help us to do so. The Net Promoter Score (NPS) is an indicator that evaluates the customer experience.

Knowing the NPS is essential in the process of measuring the customer experience, it also serves to know the reasons why a customer stays buying your products or services.

In this article you will find information about NPS, what it is, its meaning, how to calculate it, its importance and other useful information.

What is NPS?

The Net Promoter Score, NPS, is an indicator that evaluates the customer experience. It is the most efficient way to quantify key aspects of the customer experience, thanks to this metric it is possible to put a number on customer loyalty, satisfaction and enthusiasm for the brand or for a particular product or service.

If you’re wondering what NPS means, a good way to sum it up is: how happy the customer is with everything about your company. Some more specific NPS are able to give hints around a particular area of their relationship with the brand, i.e., it opens up to the possibility of evaluating customer service, quality of shipping, efficiency of the buying process, or any other.

How to calculate the NPS?

The process of calculating the NPS score is not particularly complicated. As with all metrics of these characteristics, it is important to know how to interpret the data obtained through the calculation and understand how it impacts your business.

Here’s how to calculate NPS quickly and easily.

The survey or question

The first step is to determine what you want to evaluate, part of the advantages that this metric has is the possibility to measure any area of your brand, including specific products or services. So, once you know what you want to evaluate, it’s time to generate a survey or question, where your answer indicates the customer’s evaluation.

It is advisable to ask as few questions as possible so that customers do not reject the survey based on your number of questions. In fact, some consider that the best option is to ask only one question that gives an accurate view of the aspect being evaluated.

Well then, you must remember that the correct formulation of the question or survey is key to getting a result that is close to reality. In addition, the questions should be designed to be answered with a number from 1 to 10 to evaluate the stated aspect, where 1 refers to the worst rating and 10 represents the best.    

The promoters, passives and detractors

Now, once the question or survey is formulated, it is time to evaluate the results from the customers. These should be separated into three categories that then give way to the calculation of the result:

  • Promoters: are those who answered 9 or 10. They are usually loyal customers to the brand, satisfied with their experience and enthusiastic about sharing something related to the business.
  • Passive: are those who gave answers of 7 or 8. In general, they are satisfied with the experience they had thanks to the brand, but would not be willing to share it.
  • Detractors: are those who gave answers from 0 to 6. They are customers who are quite dissatisfied with the experience obtained, the most likely result is that they will abandon their customer figure and even discourage other potential customers.

Calculate the NPS score

After having the corresponding results and categorization. It’s time to proceed to the calculation which is quite simple.

To obtain the NPS, subtract the percentage of detractor respondents from the percentage of promoter respondents. After the calculation you will get a result ranging from -100 to 100, of course, ideally you want to get a number that is as close to 100 as possible.

Interpret the result

Once the result is obtained, it is time to evaluate what it represents for the company and what it means for the customer experience. In that sense, it’s useful to have an idea of what qualifies as a good or bad NPS.

Generally, an NPS that is above 70 is considered an excellent result. Leading companies in a niche usually have results close to that number. However, achieving a result between 50 and 60 is not alarming. In fact, for 2018 Apple scored an NPS of 49 and Google scored an NPS of 53, both major industries in their respective sectors.

Now, a result that reaches negative numbers means bad news. However, it is advisable to evaluate the results obtained by other companies in the same sector to have a clearer idea of the average that your business should manage.

The NPS benchmarks for SaaS

The NPS results can be between -100 and 100, theoretically speaking. However, extremes are not a likely scenario.

It is important to keep in mind that NPS metrics can be considered good or bad depending on the industry your company is in. In any case, rather than focusing on having a better NPS than your competitors, it is best to focus on your own goals and give a good interpretation of your problems.

Now, according to information from NICE Satmetrix NPS 2021, the benchmark for SaaS companies stands at 41. In other words, a good score is around that figure.

There is no doubt that in recent years the industry has become more demanding and the rise of the benchmark makes this evident. Just 3 years ago, a good NPS was positioned around 30 points.

Why the NPS score is so important?

NPS is a key metric in the evaluation of any business. A high NPS, or at least high by the standards of your niche market, means that customers are happy with the experience received or the particular area of the survey. In addition, assessing NPS lets you know how many customers are willing to evangelize your brand, which translates into more efficient growth cycles for your business.

Not only that, NPS is so important because of its specificity characteristics. That is, it allows you to get an overview of the customer’s experience with certain questions, and it is also capable of giving you a more detailed report on the customer’s relationship with more specific aspects of the company or with a particular product.

Thanks to these benefits of specificity, you can know which areas of your brand or business need to work harder to improve and achieve more satisfying customer results. Of course, this allows you to create more tailored growth plans with an emphasis on specific departments.

I hope you enjoyed this post and that it will help you to value the great importance of quantifying customer perception in order to make decisions and take new actions within your company.

You can use our tool, if you need track and calculate NPS and other Saas kpi´s.