NPS : That is the question
People pay for irreplaceable value. That's why most of the companies are worried about their customers' satisfaction. Actually, it's the key question you should ask yourself when thinking about delivering value through your service.
Net Promoter Score (NPS) is a customer loyalty metric developed by Fred Reichheld. It divides your costumers by detractors, passives and promoters with the following question: "How likely is it that you would recommend our service to a friend or colleague?". Doing this question you can measure the customer desire to recommend your service for their friends. Initially, it was made to be a comparable metric of customer satisfaction between companies. So, if everyone have the same measurement method, it would give an uniform result.
Everything seen to be pretty, until you apply it.
The fact is that each company applies NPS in a different way, making it incomparable. Some of them are still trying to show great NPS score instead of dealing with the real customer satisfaction. Others, measures quarterly and it get too slow to use it on daily decisions. Actually, that ain't no correct way to evaluate NPS, the moment you ask the question to your customer depends of your service modeling and what you are looking to get from it. Transitional NPS (sent after having support, for example) depends on the tool you use to measure NPS and how long does it takes to your customer actually answer. In February of 2017, I was on SAASTR in SF and there were some talks discussing that NPS measures customer delight, not exactly satisfaction. Meaning that NPS is much more impacted by brand engagement than service quality.
“How likely is it that you would recommend our service to a friend or colleague?”.
The NPS question tries to measure an intension to recommend, it doesn't means that your customers will actually spread your value to other friends. Once, I was speaking with Bill Macaitis (CMO of Slack) and he said that to NPS have impact in conversion you should call your customer to action. If the customer says that it would recommend your service, show him three email fields or facebook connection to complete his recommendation. Doing this you will have a real amount of recommendation from your promoters and it begins to have direct impact on MRR. To do it, I recommend Loyalnow.
Many CEOs and CMOs, on SAASTR 2017, repeatedly said that NPS isn't a Key Metric of the company. It's a "nice to have" number, to compare you with yourself. None of them found a direct relationship between NPS and Churn or MRR. Actually, it's really hard to measure how much revenue do you get from 1% up on NPS.
A really common question when dealing with NPS feedbacks is "What should we solve first? Passives or detractors?". NPS qualitative feedbacks are inconsistent data about any subject, it's hard to find a principal motive from detractors and much harder to understand why passives wouldn't recommend. To do it, you will gonna have to get deeper on the feedbacks to understand the root problem behind what customer said on the NPS feedback, almost always meaning that you will have to do a long research on it.
On SAASTR 2017, many entrepreneurs were looking for a silver bullet metric or a growth hacking technique to be the next unicorn. What I found was that there is no magic formula, it's all about people you hire and the way you find out from your business.
"Retention is the best growth hacking"
Blake Bartlett [Partner at OpenView] — SAASTR 2017
Each conference I went on the last years shown me that we have to focus our energy on solving real problems for real people. The disruption comes from doing for people first and getting results by consequence. Trello, Slack, Intercom, FullStory, Typeform, Mailchimp, Airbnb, Stripe, Github, Netflix are some examples of delivering irreplaceable value first, through an amazing experience of use.
Hope you like this reflection about NPS…
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