What Is Net Promoter Score in B2B SaaS? + Use This Formula to Calculate NPS

Last updated on August 20th, 2024 at 07:37 am

Ever stumbled upon that question asking how likely you are to recommend a service?

That’s all about Net Promoter Score (NPS), and it’s super relevant for B2B SaaS companies like yours.

Essentially, it measures customer enthusiasm.

A high score?

You’re acing it, creating experiences that keep customers returning and referring.

It’s proof your hard work is paying off, as happy customers often turn into free marketing for your business.

But a low score is your chance to step up your game.

It’s like an early-warning system, letting you know it’s time to give those ‘meh’ experiences a serious makeover into ‘wow’ moments.

By listening to that feedback and making the right tweaks, you can harness the power of NPS to ensure that customers are not only satisfied but eager to spread the good word about your SaaS business.

Now to the crux of it: What’s a good NPS, you ask?

Stay tuned.

What is Net Promoter Score in Simple Terms?

Net Promoter Score (NPS) is like a recommendation meter for your business.

NPS relies on customer feedback to gauge how likely customers are to recommend your product.

Imagine you’re a software provider, and you want to know how likely your clients are to recommend your product to others.

NPS helps you measure this by asking your clients one simple question: “On a scale of 0 to 10, how likely are you to recommend our software to a colleague?”

Responses are grouped into three categories: Promoters (scores 9-10), Passives (scores 7-8), and Detractors (scores 0-6).

Promoters are your loyal enthusiasts who will keep using and advocating for your software.

Passives are satisfied but not enthusiastic, while Detractors are unhappy customers who can hurt your brand through negative word-of-mouth.

Earlier, we asked how relevant this B2B marketing terminology is to a SaaS business.

Let’s find out!

Why is Net Promoter Score Important in B2B SaaS?

Understanding how happy and loyal customers are is super important in the competitive world of B2B SaaS right now.

By understanding NPS, businesses can also identify potential customer churn and take proactive measures to retain customers.

To keep customers happy and build lasting relationships, SaaS providers use Net Promoter Score (NPS) as a vital measure.

This section delves into why B2B SaaS businesses should prioritize NPS, highlighting its significance through three crucial reasons.

1. Customer Retention and Customer Loyalty

NPS directly measures customer loyalty by identifying promoters, passives, and detractors.

Alongside NPS, businesses can use customer satisfaction scores to get a comprehensive view of customer loyalty.

Promoters are likely to stay with your service, renew their subscriptions, and advocate for your product.

Understanding this segmentation allows businesses to tailor their customer success strategies, focusing on converting passives into promoters and addressing the concerns of detractors.

High retention rates lead to predictable revenue streams and lower customer acquisition costs.

2. Product Improvement and Innovation

By regularly collecting NPS feedback, SaaS companies gain valuable insights into what aspects of their product delight or frustrate users.

Enhancing customer experience based on NPS feedback can lead to higher satisfaction and loyalty.

This feedback loop enables continuous improvement and innovation.

For instance, if detractors frequently mention a specific feature as problematic, prioritizing its enhancement can turn negative experiences into positive ones, thus boosting overall satisfaction and NPS.

Listening to your customers is crucial for maintaining a competitive edge and achieving product-market fit.

3. Brand Advocacy and Growth

Promoters are not just loyal customers; they are enthusiastic advocates who can significantly influence your brand’s growth.

Mapping the customer journey helps businesses understand key touchpoints that influence NPS and brand advocacy.

They are more likely to recommend your software to peers, write positive reviews, and share their experiences on social media.

This organic word-of-mouth marketing is invaluable for B2B SaaS companies, driving new leads and reducing marketing expenses.

A higher NPS indicates a larger base of promoters, which translates to a stronger, more reputable brand presence in the market.

NPS rocks for B2B SaaS businesses!

It gives you the scoop on keeping customers happy, improving products, and boosting your brand.

Take NPS seriously, and you’ll ace customer expectations, paving the way for lasting success.

NPS is all about the numbers. So, what score should you aim for?

What is a Good Net Promoter Score?

A good NPS score for businesses typically falls between 20 and 50.

Scores in this range mean that many customers are happy and would recommend the business to others.

But if you’re aiming for excellence, shooting for an NPS above 70 is ideal. This score indicates a high level of customer satisfaction and loyalty.

According to Bain & Company, the creators of NPS, anything above 0 is generally good, as it means you have more promoters than detractors.

However, industry benchmarks can vary. For example, an NPS of 30 might be great for one industry but only average for another.

So, it’s essential to compare your score with others in your field.

But before you compare, you have some calculations to make.

How is NPS Calculated?

Calculating your Net Promoter Score (NPS) might sound tricky, but it’s actually pretty straightforward.

Collecting and analyzing NPS data helps businesses understand customer sentiment and areas for improvement.

Let’s clear up the misconception that it’s hard. You don’t need to be a math whiz or have fancy tools—just a basic understanding and some simple numbers.

First, the formula: NPS = % of Promoters – % of Detractors

That’s it!

To break it down, you ask your customers one question: “How likely are you to recommend our company to a friend?”

Then, when they answer, they answer on a scale from 0 to 10.

But what do these scores tell you?

• Promoters (score 9-10): These are your biggest fans.
• Passives (score 7-8): They’re satisfied but not over the moon.
• Detractors (score 0-6): These folks aren’t too happy.

Here’s an example to make it crystal clear. Let’s say you surveyed 100 customers:

• 50 customers scored 9 or 10 (Promoters)
• 30 customers scored 7 or 8 (Passives)
• 20 customers scored 0 to 6 (Detractors)

To calculate the percentages:

• 50 Promoters out of 100 = 50%
• 20 Detractors out of 100 = 20%

Plug these into the formula:

NPS = 50% – 20% = 30

So, your NPS is 30.

Simple, right? This number helps you see how well you’re doing in terms of customer satisfaction and loyalty.

If you want to improve, focus on turning those Detractors into Promoters.

Here’s how you can do that…

How to Increase NPS?

Getting a low Net Promoter Score (NPS) might feel like a setback, but it’s not the end.

You can boost your NPS with a few targeted tricks that have helped many businesses bounce back from low NPS.

Improving customer perception through targeted strategies can significantly boost your NPS.

Let’s dive into five best practices that can help you improve customer satisfaction and loyalty.

1. Listen to Feedback

This practice is effective because it shows customers that you care about their opinions.

You can make better decisions when you understand their needs and pain points.

• Conduct regular surveys.
• Monitor social media for mentions.
• Have a dedicated feedback section on your website.

2. Improve Customer Service

Great customer service creates positive experiences and builds trust.

Happy customers are more likely to recommend your business.

• Train staff to be friendly and responsive.
• Offer multiple channels for support (phone, email, chat).
• Resolve issues quickly and follow up to ensure satisfaction.

3. Enhance Product Quality

Delivering high-quality products ensures that customers get what they expect—or more.

This boosts their satisfaction and loyalty.

• Run quality checks regularly.
• Update products based on user feedback.
• Invest in research and development for continuous improvement.

4. Engage with Your Customers

Regular engagement keeps your brand top-of-mind and nurtures relationships.

When customers feel valued, they’re more likely to stick around.

• Send personalized emails with special offers.
• Use social media to interact and share updates.
• Create loyalty programs to reward repeat customers.

5. Address Negative Feedback Proactively

Tackling negative feedback head-on shows that you’re committed to improvement.

Turning a bad experience into a good one can win back unhappy customers.

• Respond promptly to complaints.
• Offer solutions or compensations where appropriate.
• Analyze feedback trends to identify and fix recurring issues.

Focus on these practices, and you’ll boost your NPS and build a loyal customer base that’s eager to recommend your business to others!

Remember, though, it’s not wise to be sending an NPS to your customers anytime.

There’s a perfect timing to it.

When to Use NPS Survey?

Using NPS surveys strategically can give you invaluable insights into customer satisfaction.

Net promoter score surveys should be timed to capture the most relevant and actionable feedback from customers.

But timing matters.

You don’t want to overwhelm your customers with too many surveys, and you want their feedback to be relevant and fresh.

The right timing can improve response rates and the quality of feedback you receive.

When you ask for feedback at key moments, you capture your customers’ genuine feelings and experiences.

So, the question now is, “When can you use an NPS?”

Well, it’s going to differ from business to business. Why?

Because not all products and business models are the same.

What you offer and how your customers use your product or service will greatly influence this question.

Nonetheless, you will have plenty of examples to learn from different businesses.

In common, many of them use NPS around these moments:

• After onboarding: When a user completes onboarding, they’ve had enough interaction to form an opinion.
• Post-purchase: Right after a customer buys something, while the experience is still fresh.
• After using a feature extensively: For example, after creating 50 designs with your editing tool or completing a project on your platform.

It’s also going to differ from industry to industry.

How Netflix uses its NPS is not going to be the same as how Canva uses its NPS. They’re just two very different businesses.

Here’s how a business in three different industries could best use an NPS:

1. Software as a Service (SaaS)

Imagine a project management tool. The best time to ask for an NPS is after a user has completed their first major project.

They’ve experienced the full process and can give detailed feedback.

2. E-commerce

For an online clothing store, sending an NPS survey a week after delivery allows the customer to try out their purchase.

Their feedback will reflect their satisfaction with both the product and the delivery service.

3. Hospitality

A hotel might send an NPS survey the day after guests check out.

Their stay is fresh in their minds, and they can provide accurate feedback about their experience.

By timing your NPS requests thoughtfully, you gather actionable insights that help you improve and grow your business.

Let’s Bring It All Together: Your Guide to NPS Mastery

So, we’ve journeyed through the ins and outs of your Net Promoter Score (NPS), unraveling it strand by strand.

Think of your NPS not just as a metric but as your secret tool in building a thriving, customer-focused business.

If your score has room for improvement, great! Now you know exactly where your efforts need to go.

Remember, a strong NPS signals happy customers and a healthy business.

The secret sauce is action if you want to get your score up or maintain your top-tier status.

Use the insights from your NPS to make impactful changes.

This is your chance to turn feedback into your roadmap for success.

But why stop here?

Your appetite for growth has got you this far, and we’ve got just the thing to keep you moving.

Dive into our treasure trove of articles focused on digital marketing, business strategies, and the mindset shifts that propel you forward.

Each blog is packed with actionable tips, just like the ones you’ve soaked up here.

Ready for more?

Check out our other blogs for endless inspiration and practical strategies to rocket your business to new heights.

Let’s harness the power of digital marketing, sharpen your business acumen, and tweak your mindset for success.

Together, we’ll make sure that your customer base is not just growing but thriving.

Your journey to business brilliance is just beginning!