Does NPS matter in SaaS business?
Before jumping to answering that question let’s first understand what NPS is.
What is NPS?
Net Promoter Score, a concept developed by Bain and Company now has become standard to measure customer loyalty. Over the period NPS has replaced customer surveys and long feedback forms to measure customer experience.
NPS gives a realistic picture of customer sentiments. For instance, a customer may have negative feedback but that does not mean he or she does not value your product or services. NPS helps the way to capture the real sentiment of a customer, he is a promoter or a detractor.
Net Promoter Score consists of two questions:
Based on the score given in first question users are classified as:
- Promoters- Users with a high score and have positive feedback.
- Passive- Users with intermediate scores and have neutral feedback.
- Detractors- Users with a low score and have negative feedback.
How is the NPS score calculated?
Net Promoter Score is calculated with a simple formula:
NPS score = %of promoters – %of detractors
Fibotalk provides a one-stop solution as it offers NPS as a feature that can be configured very easily.
Why choose NPS?
NPS not only helps to understand customer sentiments and their feedback but helps you analyze and predict churn, retention, and revenue.
Some of the few reasons to implement NPS are listed below.
Competitive Market: In Saas, business competition is ever-growing day by day. With new products launching at a pace and they are thriving by getting a slice of the same pie. More and more options are available to customers.
Increasing CAC: Fierce competition in Saas business has increased the cost of new customer acquisition, making customer retention very crucial for success.
Statistics says new customer acquisition cost is 2 times more than retaining a customer.
CX a new paradigm: Understanding customer sentiment will let you know their views about your product, and help you to take the right action at the right time. Resolve issues, take your product in the right direction.
NPS is not a one-time activity
NPS is a continuous process to measure important product KPIs which are dynamic in nature. Today’s passive users may move in detractor or promoters category. It is not just to measure customer loyalty but gives insights to predict customer churn and retention which impacts revenue.
Categorize users and build your strategy
- Understand the reasons for detracting users.
- Assign the best of resources to move them up to promoters.
- Learn from promoters what is working for them and try to replicate with others.
- With behavioral analysis understand the persona of each category and customize campaigns and communication.
- Understand the user’s expectations of the product.
- Each user category needs specific communication for effective retention, build campaigns based on target users.
Persistent but small improvement makes one winner
One may be at the top but in a fast progressing tech environment, it is easy to catch you technically.
You have a huge competitive advantage in understanding the customer and their goals and relationship. Tools like NPS help track these parameters on a regular basis.
NPS is not only numbers, but feedback can also give a good insight into real sentiments. What problems detractors are facing, what is making promoters loyal. These insights will help you to make that little tweaks in product features, customer support communication.
Distribution of NPS
We know the importance of NPS, but it is not straight forward to get a response from the customers.
It is important to know when and how to reach out to the customer to get the maximum output.
In Saas product, there are mainly two methods.
- Email: Send an email with a link to the NPS survey.
- In-app messaging: Push message to the user when he is using the application.
Even though both methods are contextual, In-app messaging is more engaging, has better reach and more contextual. For Saas, in-app messaging is the most suitable, can be delivered based on defined event, timing, usage pattern or customer profile.
There are no hard and fast rules but there are some best practices to implement in-app messaging NPS survey. Define some important events of customer success for example they activated some features or crossed certain thresholds like usage of product for 2 quarters.
Not too early nor too late: NPS Survey to be conducted at the right stage of the user’s journey. Let your new customer explore the product and get the expected results. Feedback sought at this stage won’t be relevant. The best time to get feedback is when a user has achieved some specific milestone or activated new feature.
NPS is a continuous process, but don’t overdo: User profiles may change as the product evolves, they may move from promoter to passive or detractors to passive. It is important to track user sentiments periodically, otherwise, you may miss engaging the customer at the right sentiments.
Fibotalk not only provides the NPS as a feature but also the required analytics requires so that a proper solution plan can be made for customer engagement and maintaining the user base