5 Reasons Every Startup Needs to Start Measuring NPS

Nov 7, 2016 · 5 min read

No matter how cool or revolutionary it may be, your company means nothing without customers willing to endorse it.

When I wrote a post for Inc. called 38 Things Every Entrepreneur Should Know about a year ago, I stated that the only thing that mattered was sales. What I failed to mention is that the precursor to sales is customers.

You may have just built the coolest new technology on the planet, but without customers you literally have nothing … just vaporware.

The venture capital market could potentially burst at any moment, but if you’ve built a product that customers want to buy, you can survive. And, better yet, if you have happy customers, you can thrive.

Look no further than Amazon, Priceline or even eBay. They all survived the dot com bubble of 2000 for the simple fact that they had paying customers.

What’s even more important though is, if you want to truly flourish, you need happy customers. Customers that will not only buy from you repeatedly, but also tell everyone they know to buy from you as well. These customers are called promoters.

And the easiest way to find your promoters is to measure your NPS (Net Promoter Score).

The cool thing is, for startups, NPS can do so much more than just identify your promoters.

Here’s what I mean:

1. NPS can Help Startups Secure Funding

Investors are taking notice of NPS scores, in fact, it’s becoming one of the criteria they look for when gauging the future success of a current or potential investment.

Look no further than venture capitalist and Godfather of SaaS, Jason Lemkin. The prolific investor recently stated, “Track NPS as a core, monthly metric. Share it with everyone. And importantly — use it for a cross-functional discussion across Sales, Support, Customer Success, Marketing, Engineering, and Product.”.

We recently wrote a post about why the score is such a critical component in evaluating a potential investment.

2. Measuring NPS will Help you Identify PMF (Product Market Fit)

Despite what you may think, you don’t need 10,000 or even 1,000 customers for NPS measurement to be useful.

In fact, many Techstars companies in session are using it as an indicator of Product Market Fit with as little as 10 users/customers. The insights you gain with the Ultimate Question are invaluable even at this early stage.

3. Your NPS Data will Help you Better Forecast your Revenue

NPS is the only survey that has been proven to be an accurate indicator of customer behavior.

There are many ways to project revenue based on past behavior, but have you ever seen a tool that has that ability to predict revenue based on future intent?

NPS does just that.

Each score your customer gives you has an intrinsic predictive value/risk associated to it. An NPS ROI calculator, like the one that Promoter displays within your dashboard, will tell you what your future holds.

4. NPS Feedback will Help Guide the Direction of your Product Roadmap

At the startup stage, your product roadmap is one of the most critical components to your success. If you guess wrong and spend six months working in the opposite direction, you could be dead on arrival.

User/Customer feedback is critical to this process. The NPS questions are designed to elicit the feedback that is critical making the right call on future iterations.

Jet.com, the e-commerce upstart that recently sold to WalMart for $3.3B after only 12 months in market used their NPS insights to constantly evolve their product and become a customer-first organization, which some believe to be one of the main reasons for the meteoric rise.

5. NPS will Become your Biggest (and Least Expensive) Growth Hack

While customer insights are critical for product development, growth is equally, if not more important to success of your company.

On average, between 30–50% of any given company’s revenue is driven by WOM (word of mouth) and referrals (if you’re a SaaS company it can be upwards of 80%).

NPS identifies your biggest advocates and gives you the opportunity to leverage them through referrals, social sharing, testimonials, etc.

If you’re looking for other ways to leverage your promoters, here are six things you may not being doing yet.

At the end of the day, NPS is a core metric that every startup, even those in the earliest stages, should be measuring and tracking … starting today.


NPS Case Study: Techstars Barclays Cape Town and Tel Aviv

After completing the Techstars Barclays Accelerators in Cape Town and Tel Aviv, Techstars reached out to founders to obtain their NPS scores. Both programs received an NPS of 100+, meaning:

All of surveyed founders are promoters: They gave the program a minimum score of nine out of ten and would recommend it to other founders.

There are zero detractors, meaning no one had negative feelings towards the Techstars program.

Here is what some of the founders from these two classes had to say:

“The Techstars Barclays program beat my expectations and took Vala to a different level of business. The network, exposure and mentoring are priceless, and we feel lucky to be a part of this community for life.” — Tali Av-Zuk, CEO of Vala

“Bstow set out to achieve several objectives during our time at the Barclays accelerator and were happy to achieve all of them. During our 14 weeks in the program, we were able to collaborate with Barclays and other large enterprises, learn from top startup leadership, and gain access to a vast network of mentors and other resources to accelerate our growth. Highly recommend.” — Jason Grad, CEO of Bstow

This was originally published on the Techstars’ blog.

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