Blog SaaS Metrics

How to Strategically Use NPS to Overcome Growth Obstacles

Updated on October 4, 2023 12 minutes read

Summary points:

As more SaaS brands compete for public attention, impeccable customer experience is your best shot at cutting through the noise.

Whenever someone signs up for a tool, they aren’t only testing your product. They want to check your onboarding process, adaptability, and level of technical support. Here, quality CX can give your product the advantage, increase satisfaction, and foster loyalty.

But are your efforts resonating with your customers? How do you quantify their loyalty and use it to drive business growth?

Calculating your Net Promoter Score is the simplest way to benchmark CX. Regular mapping of it enables:

  • Constant strategy refinements
  • Improved VoC implementation
  • Better customer retention
  • Enhanced recurring revenue

Today, we discuss the basics of NPS and how you can implement yours to overcome obstacles and drive growth.

What Is NPS?

Net Promoter Score (NPS) is a metric that measures customer loyalty and satisfaction. It benchmarks data primarily through a single question: “On a scale of 0 to 10, how likely are you to recommend our product/service to a friend or colleague?”

Based on the recorded responses, divide customers into the following three categories:

  • Promoters (9-10): Refers to your loyal customers likely to recommend your products to peers.
  • Passives (7-8): Indicates satisfied customers who aren’t immensely enthusiastic about your business. Attractive competitor offers may make them switch.
  • Detractors (0-6): Refers to dissatisfied customers at risk of attrition, who may spread negative word-of-mouth.

The Surprising Ways NPS Fuels SaaS Growth: A Deep Dive

Let’s dive into the nitty-gritty of how the Net Promoter Score (NPS) is not just a cool metric to flaunt but a goldmine for sustainable growth in the Software as a Service (SaaS) landscape. So, let’s untangle this jigsaw, shall we?

1. Customer satisfaction and retention

In the SaaS world, recurring revenue is the Holy Grail. It’s like having a subscription to a treasure chest that keeps filling up each month. And guess what? A study by Bain & Company from Harvard Business School puts it in no uncertain terms: a minor 5% increase in customer retention can skyrocket your profits by anywhere between 25% to 95%.

So, how does NPS play into this? An NPS score is like your happiness thermometer. A higher score? That means you’ve got more fans cheering in the bleachers than critics booing from the stands. Fans keep coming back to the games, buying the jerseys, and you guessed it—making repeat purchases. It’s like having a standing ovation at every game!

Real-life Example: The Amazon Prime Loyalty

Let’s talk about Amazon Prime. It’s like the VIP club of the online shopping world. But why do millions stick around year after year, even as the membership fee goes up? It’s not just about free shipping; it’s about the entire experience. Same-day delivery, Prime Video, Prime Music, and the list goes on.

Amazon continually checks in with their customers through feedback loops, including NPS surveys. If they see that their score is dipping due to, let’s say, late deliveries, they don’t just shrug it off. They pump more resources into their logistics network, like a doctor would inject more oxygen into a failing heart.

The result? Customers stay, spend more, and sometimes they don’t even look at other vendors. Amazon’s consistently high NPS indicates a high level of customer satisfaction, which is critical for customer retention. In a world where new competitors pop up every

2. Helping End the Churn Nightmare

If you’re in SaaS, you know that ‘churn’ is the monster under the bed. But what if I told you a higher NPS could be the garlic to this vampire? High NPS scores are like a loyal group of guardians that protect the fortress of your customer base. Their shields? Renewals and long-term commitments.

Remember, SaaS is the subscription game, and customer churn is the bad referee you didn’t invite. A high NPS score keeps the ref in check, ensuring you don’t lose players (or in this case, customers). This stability in your clientele forms the bedrock for consistent revenue and unlocks the doors to the enchanted lands of growth.

Real-life Example: The Adobe Creative Cloud Evolution

Adobe used to sell software as packaged products, remember those? Then they switched to a subscription-based model called Creative Cloud. During the early days, they had a bit of a churn problem; people were dropping off all the time. But Adobe wasn’t flying blind; they had their NPS surveys. Based on the feedback, they identified that customers were overwhelmed by the number of tools and the complex interface.

So, what did Adobe do? They didn’t just release new features; they also refined existing ones and provided more educational content. They even started to recommend tutorial videos and webinars within the app based on what tool you were using. Think of it as a scarecrow for the nightmare of churn, scaring it away with easier usability, engagement and user support.

This led to an increase in their NPS scores and, more importantly, a reduction in churn. It’s akin to installing a really good security system that keeps the nightmare of burglars (or churn) at bay.

3. Cross-selling and upselling opportunities

Let’s talk magic wands and how NPS is one for upselling. Loyal and happy customers tend to explore upgrades and complementary products of their favorite SaaS provider. A high NPS shows the majority of your customers are open to considering and adopting cross-sells and upsells

Damian Grabarczyk, the Co-founder of PetLab Co., gets it. He uses NPS as a heat map to find out which customers are ready for a little more magic—like a premium feature or an additional service. By pointing this wand at the right crowd, the results are spellbinding—increased Customer Lifetime Value (CLV) and faster growth.

“Strategically harnessing NPS data for cross-selling and upselling opportunities is an effective approach we often use. An NPS insight can help us uncover customer sentiment and loyalty, enabling us to identify receptive segments for additional products or services.
By tailoring cross-selling and upselling efforts to customers who value our brand, we enhance their experience and drive incremental revenue. This data-driven approach boosts sales and deepens customer relationships, which can help foster long-term growth and overcome obstacles through precision and customer-centricity. ”

Damian Grabarczyk – Co-founder of PetLab Co

So, if you know your customers are head over heels in love with what you’re offering, why not take the next step? It’s like offering a second slice of cake to someone who couldn’t stop raving about the first. Sweet deal, right?

4. Your Reputation: The Magnet for Quality Leads

Think of a high NPS as your company strutting down the red carpet with cameras flashing. It builds an aura around your brand, attracting star-studded, high-quality leads. After all, who wouldn’t want a piece of something everyone else is loving?

That’s not all. High NPS scores churn out your army of brand ambassadors. You know, the kind of fans who shout your name from the rooftops? This creates a cascade of social proof—think testimonials, five-star reviews—that serve as magnets for new customers.

Real-life Example: The Tesla Effect

Imagine you’re Tesla, the electric vehicle giant. Your NPS score is through the roof, much like one of your SpaceX rockets. You’ve got an army of Elon Musk fans and satisfied Tesla owners tweeting, posting, and even making YouTube videos about their awesome, eco-friendly cars. That’s not just feel-good stuff; it’s powerful marketing.

When Joe Public sees this torrent of positive chatter, he’s not just thinking, “Hmm, maybe Tesla is good.” He’s thinking, “I’ve got to get in on this.” So when Tesla rolls out a new model or feature, guess who’s at the front of the line? That’s right, Joe and thousands like him. That’s how you transform reputation into a magnet for quality leads, effectively turning each promoter into a lead-generating engine.

5. Feedback: Your Treasure Map to Gold

Let’s not forget the crown jewel—customer feedback. NPS surveys often come with open-ended questions that serve as an X-ray into your customer’s mind. This feedback is your treasure map, showing you exactly where to dig for gold—be it refining your features or ironing out those pesky bugs.

Real-life Example: The Netflix Algorithm Refinement

Remember when Netflix first rolled out its recommendation engine and it was, well, a bit hit-or-miss? Thanks to feedback, which came in part through NPS surveys, Netflix knew exactly where they needed to improve. Comments like “I keep getting recommended action movies, but I love rom-coms,” allowed them to fine-tune their algorithm.

Today, their recommendation system is one of their most lauded features, keeping customers glued to their screens and reducing churn. In other words, they found the ‘X’ on the treasure map and dug up the gold.

6. Investors and Stakeholders: Your Willing Shipmates

If you’re looking to hoist the sails and venture into new waters, you’ll need more than just a sturdy ship—you’ll need a willing crew. A solid NPS score waves the flag of a reliable, growth-bound vessel, making it much easier to bring investors and stakeholders onboard.

Real-life Example: Slack’s Ride to IPO

Before its IPO, Slack was already a darling among its user base, boasting high NPS scores. During investor presentations, this became a pivotal point. “Look, not only are we gaining customers, but those customers absolutely love us. They’re staying, they’re happy, and they’re telling their friends.”

This was a powerful narrative that helped attract investors willing to pump money into the company’s growth ambitions. In a sea full of potential investments, a high NPS made Slack’s ship the one everyone wanted to board.

7. Employee Engagement: The Unsung Hero

Last but not least, let’s give a standing ovation to the unsung heroes: your employees. A higher NPS score often echoes the harmonious tunes of a well-engaged team. A well-oiled machine of innovation, service, and sheer will to make things happen.
It’s a virtuous cycle: happy employees create happy customers, and guess what? Happy customers make everyone’s life a bit easier.

Real-life Example: The Zappos Model

Zappos, the online shoe and clothing retailer, is renowned for its company culture and emphasis on customer service. They recognized that if their employees were happy, engaged, and aligned with the company’s values, then they would go the extra mile in serving customers.

Consequently, Zappos saw its NPS scores soar. It’s like a loop of positivity—employees are happy, so they make customers happy; customers are happy, so they give good NPS scores; good NPS scores make stakeholders happy, and back again. The end result? A strong, sustainable, and harmonious business.

Your Game Plan to Using NPS as a Growth Strategy

1. Battling Churn and Boosting Customer Retention Through NPS

Think of NPS as more than just a scoreboard showing your customer happiness level; view it as a dashboard that pinpoints exactly where the engine is stuttering. Let’s get practical here. When you see a dip in your NPS, it’s akin to a warning light in your car. You wouldn’t ignore that, right? You’d get to the mechanics of the issue.

Actionable Steps:

  • Root Cause Analysis: Start by identifying who your detractors are. Engage them in conversations to get to the root of their discontent.
  • Prompt Issue Resolution: If customers say the user interface feels like a maze, maybe it’s time to bring in a UI/UX expert to simplify things.
  • Keep Customers In the Loop: Update these customers as you make changes based on their feedback. You’ll not only prevent them from churning but might even turn them into promoters.

2. Use NPS to improve customer success

Analyze NPS insights to unlock customer-led growth. If your surveys are one-hit wonders, you’re missing the full album of benefits NPS offers. Simply incorporating a survey into your workflow isn’t enough. Instead, make NPS surveys a recurring norm and prioritize customer success in the NPS application.

Actionable Steps:

  • Deep Dive Into Feedback: Instead of just glancing at scores, dive into the customer comments. What’s the story behind the number?
  • Segmentation and Prioritization: Let’s say 30% of your detractors complain about poor customer service. That’s your cue to organize a staff training session, pronto.
  • Interdepartmental Collaboration: Share your NPS data with all departments, from product development to marketing. It’s like a town hall meeting where the customer is the guest speaker.

3. Transforming Promoters into Brand Advocates

High NPS scores mean you have a fan base, so why not turn those fans into brand ambassadors? Identify your promoters through NPS analysis and create personalized strategies for them.

They already love your product; all they need is a nudge to shout it from the virtual rooftops. See how they contribute to your growth by tracking the number of referrals.

Actionable Steps:

  • Personalized Engagement: Send these promoters targeted emails with personalized recommendations or exclusive offers. Think loyalty programs or VIP access to new features.
  • Reward Referrals: Implement a referral program where promoters can earn points or get discounts for bringing in new customers.
  • User-Generated Content: Encourage these happy customers to share their experiences on social media. A promoter’s testimonial is worth its weight in marketing gold.
  • Early Feedback: Offer promoters early access to the beta version or new product features. Their feedback improves the product, makes them feel appreciated, and enhances your brand’s image.
  • Showcase your advocates: Ask promoters to create and share on social media. Encourage them to share reviews on third-party websites and submit testimonials. Use these stories to create compelling case studies and feature across your website.


For example, at Custify, we love showcasing data-rich case studies. They include quantifiable evidence of our platform’s capability and show why our customers love it.

Source

Another company you may have heard of, Salesforce, features customer testimonials on its website to showcase how it solves customer problems. As the social proof comes from real people, it convinces prospects of Salesforce’s capability as a CRM solution.

4. Leveraging NPS for Upselling and Cross-Selling

Upselling and cross-selling aren’t just sales techniques; they’re opportunities to add value to your customer’s experience. Did you know you could be sitting on a goldmine of untapped revenue among your current clientele? That’s where your NPS comes in. It’s not just a mood ring for your brand; it can be a crystal ball predicting future customer expansion.

Actionable Steps:

  • Filter Out Promoters for Potential Upsells: Look at your list of promoters—these are your satisfied customers. They’re not just happy; they’re happy enough to tell other people how good your service is. Sort through their feedback, and you’ll often see hints about what else they might want. It’s like reading tea leaves, but instead of vague shapes, you get clear data.
  • Identify Common Themes and Patterns: Maybe a large chunk of your promoters rave about your product’s ease of use. Well, there’s your clue. What other features or add-ons could make their experience even more effortless?
  • Personalized Recommendations: Don’t send generic messages. Personalization is the key. If a customer loves Feature A of your product, show them how Feature B will make Feature A even more effective. It’s like knowing someone loves peanut butter and introducing them to jelly.
  • Data-Backed Communication: When reaching out for an upsell or cross-sell, bring your A-game. Use past case studies or industry statistics to show how the upgrade has benefitted others. It’s akin to showing reviews and ratings when recommending a new restaurant.
  • Continual Relevance Check: Markets evolve, and so do customer preferences. The hit song of today can be the forgotten track of tomorrow. So, routinely look at your NPS data in the context of market trends. Adapt your upselling and cross-selling tactics as needed.

By understanding your customer’s happiness through NPS, you’re not just shooting in the dark hoping to hit a target. You have a spotlight showing you exactly where to aim your upsell and cross-sell opportunities. Now, how’s that for smart growth?

5. Scaling NPS efforts for continuous growth

To maintain growth, successful SaaS companies consistently scale their NPS efforts. This ensures continued customer loyalty and retention, sustaining the revenue stream.

Let’s look at an example:

Symantec, a global software company, deployed NPS in the Consumer Business Unit. The department was responsible for developing and marketing the brand’s Norton products, accounting for over 30% of the company’s revenue.

  • After applying insights gathered from NPS, CBU achieved more than a 50% surge in NPS score for the Norton Internet Security and Antivirus products.
  • Call time also reduced to 10% from 12%, along with a 13-point improvement in satisfaction scores for customer support.

But the company didn’t treat this as a one-time effort. They scaled their initiatives and integrated NPS into a holistic customer-centric culture.

Likewise, you can achieve good results in terms of loyalty and retention and sustain growth with persistent NPS efforts. Besides following best practices, opt for an AI-powered NPS automation platform. Look for features like online survey creation, distribution, data collection, analytics, and reporting. The solution should support a growing team and your expanding NPS initiatives.

Examples of successful SaaS companies using NPS

Applying insights from NPS surveys can turn a fading company into a profitable one — and here are some notable examples of that.

1. Homebase

Homebase, an employee scheduling software, heavily relies on NPS feedback tracking. The founder, John Waldman, realized their existing individual communication approach didn’t serve their growing company. So, he started NPS surveys as an open and honest communication channel with Homebase’s customers.

Homebase has two user segments — employers and employees. They needed a balanced UX that perfectly accommodated both categories. For holistic customer success, the SaaS brand integrated NPS surveys into its software. The in-app NPS questionnaires let both user segments communicate their suggestions to the brand.

Moreover, the founder delivers the collected NPS feedback to the Homebase team weekly. The system sends automated alerts whenever issues arise. By proactively focusing on NPS, Homebase could:

  • Quantify customer sentiment for stakeholders
  • Enable better product development and improvements.
  • Ensure the satisfaction of two distinct user groups
  • Align NPS initiatives with the startup’s growth

2. Entelo

Entelo, an AI-powered talent acquisition solution, used NPS to improve customer satisfaction. The brand built a customer success team to track customer satisfaction through the NPS survey.

Loni Spratt, the director of Customer Success at Entelo, revealed in an interview that NPS surveys were only bi-annual when she joined the company. The lack of real-time monitoring led to serious issues going unidentified for months. This was one of the significant reasons for customer churn at the company.

Spratt implemented an in-app NPS survey to let customers submit feedback instantly, as one of her team’s duties was to reduce customer churn. This lets the company track customer suggestions, demands, and frustrations and promptly act on those insights.
Diligent tracking and application of NPS let the company achieve the following results:

  • Regular NPS data collection lets the team improve the platform’s CX daily.
  • The customer success team can now accurately identify customers at churn risk and take action to prevent it.
  • Entelo uses these insights to elevate product development.
  • The sales department tracks high-value customers by monitoring NPS surveys and driving better cross-selling and upselling.
  • The marketing team also utilizes NPS scores to detect satisfied customers and use their experiences for testimonials, case studies, and brand advocacy.

In an interview, Spratt expressed how their prompt resolution to negative comments gained them appreciation from customers. They could also retain a big account on the verge of churn by running a root cause analysis.

Conclusion

From small SaaS companies to tech enterprises, NPS isn’t merely a nice-to-have metric; it’s the pulse of your customer relationship health. And as we’ve shown, it’s far more than a diagnostic tool; it’s a GPS guiding you toward revenue growth, customer loyalty, and long-term success.

It’s not just about asking a simple question, “How likely are you to recommend our service?” It’s about diving deep into the ‘why’ behind each score. It’s about transforming customer sentiment into actionable insights that echo across various departments—from customer service to marketing to product development.

So, if you’re a Customer Success Manager looking to strike gold in customer retention and business growth, you have an untapped treasure trove in NPS:

  • Use it to decipher customer emotions and foresee churn, treating detractors like canaries in a coal mine—warning signs of bigger issues.
  • Unlock the wisdom hidden in customer feedback. Think of it as reading the diary of your customer’s experience with your product. It’s intimate, revealing, and it tells you exactly what you need to change.
  • View your promoters as more than just satisfied customers; see them as allies in your quest for market dominance. They are your knights in shining armor, ready to battle negative perceptions and sing praises of your brand in the crowded marketplace.
  • Utilize NPS to fine-tune your upselling and cross-selling strategies. Imagine having a magic wand that tells you exactly who is most likely to buy that add-on feature or upgraded package. Well, your NPS can be that magic wand.

So, go beyond the rudimentary implementation of NPS. Be strategic. Be proactive. And most importantly, be customer-centric. Because the route to consistent revenue and business scaling isn’t just through customer acquisition, it’s through customer satisfaction.

Mehdi Hussen

Written by Mehdi Hussen

Mehdi Hussen is a SaaS marketing and organic growth consultant. He helps SaaS businesses drive organic growth and customer acquisition through SEO and data-driven content marketing strategies. Mehdi spends his spare time musing about startup growth strategies, personal productivity, and remote work.

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