Think of NPS, or Net Promoter Score, like rocket fuel. If you leave it alone, it won’t do much. But when you load it into a responsive, proactive, customer-driven company: blast off.
The most successful companies are those that take NPS data and use it to fuel and direct their marketing methods and even product development.
But while obtaining your NPS is easy, knowing how best to use the information is anything but. Ask any rocket scientist. Many of the highest-tech rockets don’t make it to orbit; they fall ‘clunk’ on the launch mat.
To help provide some clarity, we’d like to introduce you to four companies using NPS data in very interesting ways. Check them out below.
What's a Net Promoter Score?
NPS, or Net Promoter Score, is a simple metric to get. All you have to do is ask customers: “On a scale of 1–10, how likely are you to recommend this product?” Anyone who scores a 9 or 10 is a “promoter." Your NPS comes from subtracting the number of detractors from the number of promoters, and dividing by the total number of respondents.
4 Interesting Ways to Use NPS Data
1) Use it to polish interactions with prospects and customers.
Tracking how likely your customers are to recommend you is the first step towards a customer-driven culture committed to improvement. Constant improvement. Because NPS doesn’t stand still. It shifts in response to your actions or inaction; it moves with trends and competitors.
No one understands this better than Bill Macaitis, CMO of Slack, former CMO of Zendesk, and former SVP of Online Marketing and Operations at Salesforce. It’s basically his job to create marketing teams for the fastest growing companies on the planet ... and NPS is a central part of his method.
In an interview with Tomasz Tunguz in SaaS Office Hours, Macaitis answered the question “Which marketing metrics are most important?” with:
One metric that most SaaS marketers don’t measure frequently, but should, is Net Promoter Score. NPS measures the likelihood of customers to recommend the product. Best in class companies achieve a score of 70 on a scale of 100, but according to Zendesk data, the typical B2B software company achieves only 29.
NPS is a leading indicator of future growth. The larger the number of advocates for product, the lower the customer acquisition costs for the company, and the more effective customer success team will be."
If you’ve been living in a cave with no internet service you may not know that Slack is on fire. The company has been setting record highs for growth, gaining a $1 billion valuation in just a year. How? Through word-of-mouth marketing tracked by NPS.
In a live Ask Me Anything with Jim Williams, VP of Marketing at Influitive, Macaitis summed it up like this:
Every CEO should be able to answer this question: What are the top 3 reasons why people recommend and do not recommend your brand?"
Macaitis uses NPS to polish every interaction prospects and customers have with Slack, taking a holistic view of UX that includes not just customer service and sales, but things like online ads and their legal terms of service. He says he’s not satisfied by prospects signing up for Slack, or becoming paying customers -- the bar is set at whether they recommend it.
2) Use it as a product development tool.
Magoosh, an online test prep company for the GRE, GMAT, TOEFL and SAT exams, also considers NPS to be among the most important metrics they track. They understand better than most that in order for their service to be successful, their customers have to be successful and achieve their goals outside of their product. As Peter Poer writes on Magoosh’s blog:
It helps us determine not only whether students like our customer service and user interface, but also how well our products prepare students for their exams. And most importantly it has been a reliable leading indicator of growth in word-of-mouth referrals – our largest marketing channel."
Magoosh’s NPS is inextricably tied to how well their customers perform on their real-world exams. This means that instead of asking the NPS question after purchase of their product, as most companies do, Magoosh had to wait until after the student took their exams and saw their final scores (which often aren’t sent out for weeks after exams take place).
Poer went on to explain:
The proof is in the pudding. You can’t fully decide if you’re willing to recommend Magoosh for GRE prep until you’ve taken the real GRE."
So, when Magoosh noticed that their NPS sank for their GMAT product, it was a red flag that something was very wrong. That dip in their NPS led them to discover that students were complaining that the scores they had on their Magoosh practice tests didn’t match up with their real scores in the GMAT. Poer also spoke to this in his article:
Our algorithm was telling students to expect one score, but, for some, their official reports were coming back lower -- obviously a frustrating experience ... We determined that we needed to fix our score prediction algorithm to be more accurate, but we were left with a major concern: would an improved algorithm that displayed a lower predicted score be demoralizing for students? Which was worse for customer satisfaction -- a lower predicted score while studying, or a disappointing final score after the exam?"
Magoosh had three problems:
- They needed to make a change
- That change could result in an even worse NPS
- They wouldn’t know for months, because of testing and results dates
Making a significant change that could tank their word of mouth marketing, and not knowing for months if it worked, was too great a risk. So, Magoosh modified their NPS gathering technique to deliver faster answers while students were still studying. They used an NPS tool called Wootric to ask the NPS question within their own product. They were then able to A/B test their algorithm change with half of their GMAT students and track their “likely to refer” rating at the same time.
The change in algorithm didn’t end up demoralizing students, and when the change was implemented for all GMAT test-takers, their post-exam NPS scores improved dramatically.
3) Use it to reduce churn.
As a recruiting analytics software company, Entelo’s purpose is to help their customers achieve their recruiting goals. To do so, they have a designated Customer Success team, directed by Loni Spratt, who keeps careful tabs on NPS.
They field issues that improve customer experience every day, whether it’s a big change like improving their products, or small changes that help customers see more value. But, since one of the team’s main tasks is to reduce churn, monitoring customer satisfaction and reacting quickly to complaints is of primary importance.
When Spratt first joined the company, Entelo was collecting NPS data as part of a bi-annual survey, making it nearly impossible to track how customers were doing in real-time. Serious customer satisfaction issues could go unidentified and unaddressed for months -- and that’s when customers bothered to respond to the survey at all.
Spratt now uses an in-app NPS tool to present the NPS question to their customers, which means customers can share their thoughts (or frustrations) instantly, as they experience them. More importantly, Spratt’s team can respond to any issues the same day. As Spratt said in a case study interview:
Some of our customers are actually shocked at how fast we react when a negative comment comes in. We’ve definitely received comments of, “Whoa. I just did this an hour ago. Is this an automated thing?” They think it's really cool."
Spratt’s customer success team can now predict with greater accuracy which customers are most at risk of churning, and can take action to prevent the churn from happening. But that isn’t the only benefit they’ve experienced from tracking NPS so closely.
Entelo’s sales department has also been getting in on the action by tracking which customers give high scores. They’ve found that these customers are more likely to be profitable targets for cross-sells and upsells. The marketing team appreciates the data too -- they can identify their most satisfied customers for future case studies and use cases.
4) Use it as a channel for communication with customers.
When John Waldmann, founder of Homebase, employee scheduling software, realized that the personal, individual approach he preferred to take with his customers wouldn’t scale with his quickly-growing company, he searched for the next best thing: adopting NPS early to track customer feedback. His advice to other business owners is to “turn NPS on sooner than you think you need to.”
He uses NPS in a unique way, as a channel for open, constant communication between him and his users:
The original intent with Net Promoter Score was to give us a more quantitative view of how are we doing on the product, but it’s actually become a new channel of communication and feedback from users that we wouldn’t have received otherwise."
Homebase serves two segments of users -- business owners, and their employees. In other words, those who create schedules, and those who receive them.
For his customers to be successful, both sides of that equation have to be happy with his software, which requires a careful balancing act to not skew UX towards one side or the other.
To keep on top of making both sides happy, Homebase has built NPS surveys into their software as an integral part, and Waldmann delivers that NPS feedback to his team every week to alert them to issues that may arise and to keep product development focused and on target.
NPS: A Simple Solution to a Complicated Problem
NPS is very simple, but that one question can be used in a multitude of ways by companies of any size to improve customer experience, reduce churn, and increase the number of delighted customers who become brand advocates. Huge companies like Airbnb and Amazon use NPS. Quickly growing companies like Slack and Unbounce use NPS. Even small companies like Homebase and Entelo use NPS. And, of course, Hubspot uses NPS.
In Satmetrix 2015 Consumer Net Promoter Benchmarks, which ranks industries by average NPS, the “software and apps” segment ranks low -- just above health insurance, cable, and internet service providers. Clearly, most software companies are leaving their users unsatisfied, likely focusing on acquisition goals instead of retention.
Consider this not as a warning, but as an opportunity. We work within a crowded marketplace, but by using NPS, we have a chance to set ourselves apart.
How does your company use NPS? Share your thoughts in the comments section below.
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