How to Accelerate Growth with Net Promoter Score
Product-led growth companies are the avocado toast of 2020. And no wonder — they have significantly outperformed their SaaS peers and continue to pull away:
Thanks to laser-focusing on delivering customer value quickly and frequently, these companies are able to acquire users cheaper and retain them longer. But what do you do if your product and go-to-market strategy are not quite there yet or if you have just embarked on the product-led growth train?
The main predictor of any product’s success is customer engagement. It can be quantified via MAU/DAU, time to value, frequency or adoption etc. — and thanks to Amplitude and MixPanel it is easier than ever to capture and analyze. Repeatable and sustainable customer engagement indicates that the product solves a problem and its customers understand how to realize value from it. What it does not tell us is how the customers feel about using it.
If this metric is overlooked, you can have high engagement and high churn at the same time: unhappy customers who get the value but abandon your product at first possibility. And since churn is a silent killer of any subscription business, knowing how your customers feel about your product all of a sudden becomes a key growth metric. Respectively, converting these “low motivation” customers to motivated “high expectations customers” will boost your growth.
While there are different ways to find out how your customers view your product, Net Promoter Score (NPS) is one of the simplest and most powerful ways to do it. “How likely are you to recommend this product?” has emerged as a critical element of any company’s growth strategy: a big part of any flywheel relies on the user’s willingness to use and promote the product.
Solved a user’s problem? Great. Got the user to the solution faster than a competitor? Even better. But to fully scale up growth and leave competitors in the dust, you need to rely on behavioral or emotional value outcomes. In growth marketing in particular, where product’s virality is key, your customers need to feel great about recommending your product, whether it is to create value for themselves via a network effect or to add own social capital.
Where to start
When measuring NPS, make sure to ask the user around the time she experiences the key value of your product. But be mindful of not interrupting an existing user workflow. An in-product NPS survey is ideal; save email for something else.
A common mistake is not getting enough responses and ending up with a high margin of error. Make your math airtight: https://www.genroe.com/blog/how-to-calculate-margin-of-error-and-other-stats-for-nps/5994 Yep, you may have to get thousands of users to respond!
Analyze your NPS by customer cohort (for example age or size), acquisition channel, adoption, or persona and make sure to exclude non-ideal customers. Consider the results in the context of your GTM strategy: your target audience must have the highest NPS. If that’s not the case, your heads of product and revenue need to talk. After all, it’s difficult to grow if you’re building a product for the wrong customers.
View it over time
Plotting a trend from your NPS shows how your users’ perception changes over time. Ideally, you want NPS to be growing for newer customers and be consistently high for the core target customers.
Just like user engagement tells you how successful your product and features are, an improving NPS indicates that you’re on the right track. If your NPS is tumbling, you need to dive deeper into the user cohorts and compare the score to your engagement data to understand what’s driving the slump — wrong targeting, poor activation, product stability, or the value just isn’t there or isn’t easy to discover.
Know where you stand
NPS is also a great way to gauge how your product compares to your competitors’. It may even allow you to charge a higher price: “yes, our product is more expensive, but more customers like you love it and recommend it.”
Make feedback optional
NPS can be followed up with a question asking the customer to submit optional feedback. The key here is optional: you need to make NPS as frictionless as possible, and any feedback is secondary.
Some of the most successful companies have high NPS (Netflix 68, Amazon 62, Starbucks 77, Tesla 96). It is one of the easiest ways to learn how satisfied the customers are with your product and if you’ve been making meaningful improvements to customer experience. Especially in a product-led growth scenario, where customers who do not love your product will be very difficult to convert to paid even if they check every other qualification box.
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