Net Promoter Score, or NPS, is a metric that measures customer loyalty and satisfaction for businesses. It helps businesses identify the percentage of customers who are promoters, passives, and detractors.
In the SaaS industry, NPS plays a vital role in understanding customer feedback, measuring growth, and creating targeted campaigns. But what constitutes a good NPS score for a SaaS company?
NPS Score Range
NPS ranges from -100 to +100, and a score of 0 means that the number of detractors and promoters is equal.
A score above 0 is considered a good score. However, the benchmark for a good NPS score varies by industry, company size, and other factors.
SaaS companies generally have a lower NPS score compared to other industries because of the nature of their business.
Industry Benchmarks
Retently’s 2023 NPS benchmark report shows that the average NPS score for B2B industries ranges from 39 to 65, while for B2C, it ranges from 9 to 74.
While these are helpful benchmarks, it’s essential to benchmark NPS scores within industries and against competitors to gain a more accurate picture of where a company stands in the competitive landscape.
ChurnZero’s article on what is a good NPS score for SaaS companies states that a good NPS score for SaaS companies is around 28. However, experiential companies and competitive industries require a high NPS score to stay ahead.
Importance of Tracking NPS Score
Beamer’s NPS survey tool helps SaaS companies track and measure customer engagement within a product. This helps companies understand how customers feel about their product and identify areas for improvement.
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Real-Life Examples
We can see the importance of NPS scores in SaaS companies through real-life examples. For instance:
- Salesforce has an NPS score of 66
- Adobe has an NPS score of 45
- Intercom has an NPS score of 50
- Hubspot’s NPS score is 46.
These scores show that SaaS companies generally have a lower NPS score than other industries but can still achieve good scores with the right strategies in place.
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How to Calculate NPS Score
Calculating NPS score is a straightforward process that involves sending a survey to customers. The survey asks customers to rate the likelihood of recommending the product to others on a scale of 0-10. Based on the responses, customers are categorized as promoters, passives, or detractors.
The NPS survey consists of a single question: «On a scale of 0-10, how likely are you to recommend this product to a friend or colleague?» The responses are then categorized as follows:
- Promoters (score 9-10): Loyal enthusiasts who will keep buying and refer others, fueling growth.
- Passives (score 7-8): Satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
- Detractors (score 0-6): Unhappy customers who can damage the brand and impede growth through negative word-of-mouth.
Formula for Calculating NPS Score
To calculate NPS score, we subtract the percentage of detractors from the percentage of promoters. The formula for calculating NPS score is:
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Real-Life Examples
Real-life examples can help us understand how to calculate NPS scores better.
For instance, if a company sends out an NPS survey to 100 customers and 60 respond, with 20 being promoters, 20 being passives, and 20 being detractors, the NPS score would be calculated as follows:
In this case, the NPS score is 0, which means that the number of detractors and promoters is equal.
Strategies for Improving NPS Score
Improving NPS score is crucial for businesses that want to grow and retain customers. Here are some strategies that SaaS companies can use to improve their NPS score.
Address Detractors’ Concerns
When customers give a low score on the NPS survey, it’s important to follow up and address their concerns. This can be done through personalized emails, phone calls, or in-app messaging. By addressing detractors’ concerns, SaaS companies can turn detractors into promoters and improve their NPS score.
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Engage with Promoters
Engaging with promoters is just as important as addressing detractors’ concerns. By engaging with promoters, SaaS companies can turn them into brand advocates and encourage them to refer others to the product. This can be done through personalized emails, social media, or in-app messaging.
Offer Incentives
Offering incentives, such as discounts, free trials, or exclusive content, can encourage customers to become promoters. This can not only improve the NPS score but also drive growth and revenue for the business.
Monitor Feedback Regularly
Monitoring feedback regularly is crucial for improving NPS score. This can be done through surveys, customer support tickets, or social media monitoring. By monitoring feedback, SaaS companies can identify areas for improvement and take action quickly to address customer concerns.
Implement Changes Based on Feedback
Implementing changes based on feedback is crucial for improving NPS score. SaaS companies should take customer feedback seriously and make changes to the product or service based on that feedback. This can not only improve the NPS score but also drive growth and revenue for the business.
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Real-Life Examples
Real-life examples can help us understand how to improve NPS scores better. For instance, Intercom improved its NPS score by 10 points by addressing customer feedback and making changes to the product based on that feedback. The company also offered incentives to customers who referred others to the product, which drove growth and revenue for the business.
NPS Score Benchmarks for SaaS Companies
NPS score benchmarks can vary by industry, company size, and customer demographics. Here are some benchmarks for NPS scores for SaaS companies based on data from various sources.
Customergauge’s NPS Benchmarks
According to Customergauge’s NPS benchmarks, the average NPS score for SaaS companies is 30. The top-performing companies have an NPS score of 60 or higher, while the bottom-performing companies have an NPS score of 0 or lower.
Retently’s NPS Benchmark Report
According to Retently’s NPS benchmark report, the average NPS score for B2B industries ranges from 39 to 65, while for B2C, it ranges from 9 to 74. The report highlights the importance of benchmarking NPS scores within industries and against competitors to gain a more accurate picture of where a company stands in the competitive landscape.
ChurnZero’s NPS Benchmarks
According to ChurnZero’s NPS benchmarks, for SaaS companies, a good NPS is around 28. A score of 40 is considered solid, while 50+ is extremely positive and 70+ is exceptional. However, it’s important to keep an eye on NPS benchmarks and adjust accordingly.
Beamer’s NPS Benchmarks
According to Beamer’s NPS benchmarks, the average NPS score for SaaS companies is 30-40. However, benchmarks can vary by industry and company size.
Importance of Benchmarking
Benchmarking NPS scores is crucial for SaaS companies that want to improve their customer experience, retention, and referrals. By benchmarking NPS scores within industries and against competitors, SaaS companies can identify areas for improvement and take action quickly to address customer concerns.
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NPS score for SaaS Conclusion
Net Promoter Score (NPS) is a powerful tool that can help SaaS companies improve customer experience, retention, and referrals. By monitoring NPS score, addressing detractors’ concerns, engaging with promoters, offering incentives, and implementing changes based on feedback, SaaS companies can improve their NPS score and drive growth and revenue for the business.
Benchmarking NPS scores within industries and against competitors can help SaaS companies identify areas for improvement and take action quickly to improve their NPS score. By following best practices for NPS survey design, calculating NPS score, and analyzing NPS results, SaaS companies can turn NPS into a growth-driving tool.
Remember, improving NPS score is an ongoing process that requires continuous monitoring, feedback, and improvement. Keep an eye on NPS benchmarks and adjust accordingly to stay ahead of the competition.
NPS score for SaaS Q & A
Who sets the benchmark for a good NPS score for SaaS companies?
While benchmarks can vary, an average score of 30 is considered good for SaaS companies.
What is NPS, and how is it calculated for SaaS companies?
NPS is a metric that measures customer satisfaction and loyalty and is calculated by subtracting the percentage of detractors from the percentage of promoters.
How can SaaS companies improve their NPS score?
SaaS companies can improve their NPS score by addressing detractors’ concerns, engaging with promoters, offering incentives, monitoring feedback, and implementing changes based on feedback.
What are the benefits of a good NPS score for SaaS companies?
A good NPS score can help SaaS companies improve customer experience, retention, and referrals, which can drive growth and revenue for the business.
How can SaaS companies benchmark their NPS score against competitors?
SaaS companies can benchmark their NPS score against competitors by using industry-specific benchmarks and monitoring competitors’ NPS scores.
What should SaaS companies do if they receive a low NPS score?
If SaaS companies receive a low NPS score, they should follow up and address detractors’ concerns, make changes to the product based on feedback, and offer incentives to encourage customers to become promoters.
