A comprehensive guide to using Net Promoter Score (NPS)

Published in

UX Collective

11 min readFeb 23, 2022

As a Product manager at a fast growing SAAS startup, the most enriching part of my job is to deeply understand our customers. Usage data and customer interviews offers you fascinating insights into how customers perceive and use your product.

The most popular quantitative metric to gauge customer happiness is NPS. It is also one of the most controversial metrics. You will find abundant literature questioning the utility of NPS as a business metric.

My learning about NPS has been this — Hate it or love it. But you can’t ignore it. If you set it up right and perform an objective analysis, NPS can indeed help your product improve by leaps and bounds.

In the subsequent paragraphs, I will take you through what is NPS, how to leverage your promoters and detractors, what are the shortcomings of NPS and finally discuss the common challenges you will face while setting up NPS.

What is NPS

NPS, or the “Net Promoter Score”, is a widely used customer loyalty metric introduced by Fred Reicheld at Bain & Company in 2003.

It asks a simple question to the user — On a scale of 1–10, how likely you are to recommend this product to a friend.

The score is interpreted in the following way:

0–6 : Detractor (sees your product in poor light)
7–8 : Passive (okay okay impression)
9–10: Promoter (would actively promote your product)

NPS is calculated by substracting the % of Detractors from the % of Promoters. Thus, it can vary from -100(everyone is a detractor) to +100 (everyone is a promoter)

How to leverage NPS

The obvious benefit of measuring NPS is that it provides a simple score to understand how much customers like your product and the trust they place in the product. However, if used wisely, the benefits of measuring NPS go much farther.

To unlock the true benefit of NPS, its important to have a follow up question to the original NPS question. This question asks the user to specify the reason for their rating.

Leveraging unhappy customers (Detractors)

Unhappy customers are often your biggest source of learning.

Analyzing feedback from detractors will help you:

Identify product improvements: Many customers will highlight missing pieces in your product or gaps in your existing features. If some feature is critical enough to drive down your NPS score, it should figure high on your product roadmap.
Identify issues beyond the product: Sometimes, poor NPS scores are not directly a result of missing product features per se. Issues such as poor customer service, confusing pricing or even misselling by the sales folks have been brought to the fore by poor NPS ratings.
Reduce potential churn: Customers who gave a low NPS rating are highly likely to churn and opt for a competitor offering that meets their need. Timely intervention in such cases can help retain atleast some of these customers.

Leveraging happy customers (Promoters)

Happy customers can be be your greatest source of leverage as there can be no better marketeers than happy customers. You can use your happy customers to:

Generate Social Proof: Their experiences can be documented in the form of case studies, testimonials, online reviews. These help build trust among other potential customers.
Building a Referral Loop: A good referral programme can incentivize your happy customers to invite more customers into the platform.
Candidates for Beta Testing: Happy customers can receive early access to your features and help you test these before shipping them to a wider audience.

Major Shortcomings associated with NPS

NPS has its fair share of detractors (no pun intended). You will find tons of literature on the internet that bashes NPS and questions its utility as a metric.

Following are some major problems associated with NPS.

1. Might End up Being a ‘Vanity Metric’

A good rating may not actually translate to more usage or repeat purchase. Product usage depends on the customer need. If the user does not need your product in the near future, the rating might end up becoming meaningless. In this article, Airbnb highlights how a higher NPS did not significantly improve the chances of rebooking.

Further, when customer loyalties are fickle, all it takes is a slightly higher discount from a competitor for the customer to churn.

Solution

Complement NPS with other metrics such as churn rate, frequency of usage, feature usage, in-app behaviour etc.
Don’t see NPS as a replacement for having a solid product strategy to delight the customers and innovate for them.

2. Lack of objectivity in the ratings

The ratings given by some users could be arbitrary. Two people might be equally satisfied but they could give different ratings. A 9 from one user could mean 7 from another user.

Depending on age, location, cultural conditioning, the way a user rates your product could vary a lot. (I remember one happy customer giving us a rating of 6. He said though he was satisfied with the product, he gave us a lower score because he wanted us to be focused on improving.)

In such cases, an automated system might end up misclassifying someone as a promoter or detractor.

Further, NPS ratings could end up varying wildly depending on where in the user journey you ask customers for a rating. For eg. if you ask for a rating after a fantastic onboarding experience, the customer might rate you very high. On the other hand, if they are fresh from a poor customer service experience, they might rate you very low. In both cases, the product functionality remains unchanged.

Solution

Analyzing the response to the follow-up question is as important as the rating provided.
Be consistent as to when in the user journey you ask the customers for a rating.

3. Offers only a rough guide to advocacy

An intention to recommend or detract may not translate to actual behavior.

This fantastic article by Christina Stahlkopf in the harvard business review mentions some interesting facts based on a survey of 2000 customers:

- Their survey revealed that 52% of all people who actively discouraged others from using a brand had also actively recommended it. This indicates that humans are complex and often contradictory.
- When giving advice on a brand, consumers consider whether the pairing between the user and the product is right. Based on this, they recommend or discourage.
- Even though they might claim to love a brand, it does not mean the customers like all the products that the brand offers.
- 16% of consumers in the survey were detractors, yet only 4% of all the respondents had actually told others to avoid a brand.

As the above shortcomings indicate, NPS ratings must be taken in with a pinch of salt. A thorough analysis is needed in order to derive actionable insights.

Key Questions to consider while setting up NPS

As you begin setting up NPS, you will be stumped by a number of tricky questions. Here, I tackle the answers to these tricky questions to help you arrive at a decision.

1. When in the user journey should you ask for the NPS rating?

Timing is everything — both in life and business. Asking the customers for rating at the right time, can help you maximize both the quantity and quality of responses. You don’t want to be too late or too early.

Depending on your company’s product, industry, maturity (startup vs enterprise), the answer to the above question will be different.

Leading companies request transactional feedback after milestone transactions (i.e. onboarding, purchase, support), while monitoring overall loyalty with quarterly or biannual relationship feedback. — Delighted.com

The primary goal of the NPS survey is to measure the strength of the customer’s relationship with the company. Thus, you should ask it at multiple times during the customer lifecycle.

The following guideline by Delighted on survey timing for B2B/SAAS brands is quite useful:

Break the customer journey into phases — “early phase” and “ongoing phase”.
In the early phase, ask for feedback few weeks after the customer has purchased your product and completed onboarding.
For on-going relationships, ask for feedback on quarterly, semi-annual or annual basis. The time period should depend based on how frequently the customer uses your product and what is the speed (mature vs rapidly changing) with which your product/support experience is changing.

On a separate note, it is important to track the customer experience whenever they engage with your company. This is referred to as “transactional feedback” and could include the product purchase experience, interaction with customer support etc.

CSAT (short for customer satisfaction) is the perfect metric for gathering such transactional feedback. It targets a “here and now” reaction to a specific interaction, or event and is different from NPS, which asks the customer to take a much wider view of the brand or product.

Separating out the transactional feedback (CSAT rating) from the overall view of the product (NPS rating) is crucial to maximizing your learnings from NPS.

2. How frequently do you ask a customer for an NPS rating?

As discussed above, the frequency of asking depends on the frequency with which the customer interacts with the product.

Further, the frequency with which product updates are happening should determine the frequency of sending out an NPS survey. (Product enhancements are a key factor in improving NPS and your scores should ideally reflect the benefits accruing to your customers)

For us, a quarterly frequency for gathering NPS works best. Since it aligns with our product planning exercise that is done every quarter. This helps us incorporate the suggestions in the survey into our next quarter’s roadmap.

Intercom highlights how they survey customers at specific milestones after signing up, (2 months, six months and then every six months from then on). This helps them understand the customer’s journey from first time till the expert years.

3. Which channel to use to ask the customer for feedback?

There are two main channels to ask for NPS feedback:

In-app feedback: This is triggered within the app or website itself.

MIRO’s in-app NPS survey pop-up (Powered by InMoment)

Email Feedback: Here the NPS rating is asked from the customer via email.

Loom sends its email survey via email (Powered by Delighted)

While the Email based Surveys are less intrusive, they are likely to have a much lower response rate. Intercom mentions how in-app response rates were 123% higher than email for their NPS survey.

As a principle, I prefer asking for NPS ratings in-app. However, there is an important caveat to keep in mind. Make sure that the specific page/screen where the NPS survey pops up does not interrupt the user while they are trying to complete a task or finish a critical flow (like making a payment).

In the past, we have had multiple customers telling us that they gave a lower rating by accident as they were trying to quickly close the survey pop-up.

4. Which customers should you ask for NPS ratings?

You should ask every customer for NPS rating regardless of their pricing plan, segment or satisfaction.

This will help you generate a wholistic picture. Later on, you can segment the responses along different criteria to draw insights for a specific subset of customers.

5. Which team in the organization owns the NPS metric?

Net Promoter Score. It’s like a middle child: everyone loves having it, but it sort of ends up having to take care of itself — productcraft.com

A great NPS experience is a result of the combined efforts of multiple teams — product, customer support, sales, account management etc.

However, it’s the product managers who are responsible for crafting experiences that delight the customers. Since nobody apart from product is responsible for owning the end-end experience of the customer, its only natural that product should own NPS and build systems around improving it.

Analyzing the NPS feedback received

Analyzing the NPS feedback collected is the final and most critical step in the entire NPS process.

Following are some strategies I use to analyze feedback.

1. Tag the NPS comments based on the area of feedback received

For any product, you will have product leads responsible for different focus areas. Tagging comments based on the product area will help the respective product lead filter out comments relevant to them and take appropriate action.
NPS comments often touch upon areas that might be outside the immediate purview of the product team. For example, there could be concerns around pricing, support, account management, misselling etc. After tagging the comments, share it with other teams so that they can take action on the feedback that’s relevant to them.

Intercom mentions how NPS comments (after tagging based on area of feedback) are fed into a filterable NPS dashboard to surface findings to the internal teams ahead of critical planning milestones.

Tagging can be performed by the product operations team or the customer success team.

2. Segmenting the NPS feedback

In order to get richer insights, analyze NPS scores and feedback across different criteria — pricing plan, customer segment, geography, area of feedback, time since user has been using the product etc.

Different groups might have different expectations and this would reflect in the NPS score too. Segmenting and analyzing feedback will help you identify whether there’s an area you should focus more on. For eg. if customers who just got onboarded customers are consistently giving you low NPS scores, you might want to focus specifically on improving the onboarding experience.

3. Track Score over Time

Once you start measuring NPS, you will begin taking actions to improve NPS. Thus, its important to keep track of the score over time. Comparing each quarter/month’s scores to the previous time period will help you know whether your improvements are having the desired effect.

Post NPS follow up with customers

The customer will feel heard if you follow up with them after they have given the NPS rating.

Its crucial to follow up with detractors. These customers are at risk of churn and not following up might just hasten their exit.

Reach out to these customers immediately and tell them that you are sorry for their experience.
Based on the nature of the issue, you might have an immediate fix or the solution might take time to implement. If its an immediate fix (such as a pending support ticket), resolve it as soon as possible.
In case of a long term fix, be completely transparent with the customer. If its a product gap that’s probably not on your medium term roadmap, be honest with the customer. If its on the roadmap, do give them an approximate timeline by when you would be able to resolve that gap.
Timing matters and you should prioritize responding to the customer immediately, regardless of the nature of your response. (Nothing makes people happier than the feeling of being heard)

You should trigger a response to your promoters as well. This could include thanking them for their time and leveraging the opportunity to pull them in for a case study or an online testimonial.

Conclusion

SAAS companies rely on a subscription model to generate revenues. Thus, retaining customers and reducing churn is one of the most important tasks for a SAAS organization.

NPS is going to be your key friend in this journey, as it helps you identify unhappy customers along with the reason for their unhappiness. Thus, you should set NPS up in the right way to minimize the shortcomings associated with it. Following up with unhappy customers and taking concrete actions will help your organization grow by leaps and bounds.