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What is Net Promoter Score (NPS)?
A metric used by SaaS companies to measure customer loyalty and satisfaction based on the likelihood of customers to recommend the product or service to others.
NPS is a widely used method in the SaaS industry to gauge customer sentiment. It is calculated by asking customers a simple question: 'On a scale of 0 to 10, how likely are you to recommend our product/service to a friend or colleague?' Based on their responses, customers are categorized as Promoters (score 9-10), Passives (score 7-8), or Detractors (score 0-6). The NPS is then calculated by subtracting the percentage of Detractors from the percentage of Promoters. A high NPS indicates satisfied customers who are likely to advocate for the product, while a low NPS suggests areas for improvement.
Examples
- A SaaS company saw their NPS increase from 20 to 40 after implementing new customer support initiatives, leading to a rise in customer referrals and retention.
- Another SaaS company used NPS feedback to identify common pain points among customers, resulting in product updates that addressed these issues and improved overall satisfaction.
Additional Information
- NPS is a valuable tool for SaaS companies to track customer loyalty over time and make data-driven decisions to enhance the customer experience.
- Regularly surveying customers and analyzing NPS trends can help SaaS companies identify areas for growth and prioritize customer satisfaction initiatives.