
Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Join companies like Zoom, DocuSign, and Twilio using our systematic pricing approach to increase revenue by 12-40% year-over-year.
In today's competitive SaaS landscape, customer satisfaction and loyalty have become crucial differentiators. Among the various metrics available to measure customer sentiment, Net Promoter Score (NPS) has emerged as one of the most powerful and widely adopted tools. This straightforward yet insightful metric helps SaaS executives understand customer loyalty and predict business growth. Let's explore what NPS is, why it matters for your business, and how to implement it effectively.
Net Promoter Score is a customer loyalty and satisfaction measurement obtained by asking customers a single question on a 0-10 scale: "How likely are you to recommend our company/product/service to a friend or colleague?" Based on their responses, customers are categorized into three groups:
The NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters:
NPS = % Promoters - % Detractors
This yields a score between -100 (all detractors) and +100 (all promoters), with higher scores indicating better customer loyalty.
Research by Bain & Company, who developed the NPS methodology, found that companies with the highest NPS in their industry typically outgrow competitors by at least 2x. For SaaS businesses specifically, a strong correlation exists between NPS and annual growth rates. According to a study by Temkin Group, companies with an NPS above 50 are likely to experience year-over-year growth rates that exceed 20%.
In the subscription-based SaaS model, customer retention is paramount. Promoters have a 5-8x higher retention rate compared to detractors, according to research by CustomerGauge. Given that increasing retention rates by just 5% can increase profits by 25-95% (according to Bain & Company), monitoring and improving NPS directly impacts your bottom line.
The beauty of NPS lies in its simplicity. It distills complex customer sentiment into a single, easy-to-understand metric that can be tracked over time. It also enables benchmarking against industry peers. For context, the average NPS for SaaS companies is around +30, with top performers reaching +70 or higher, according to Retently's industry benchmarks.
NPS helps executives identify systemic issues versus individual customer problems. When combined with follow-up questions (e.g., "What is the primary reason for your score?"), it provides qualitative insights to complement the quantitative score.
For SaaS products, there are two primary types of NPS surveys:
The key is finding the right cadence. Too frequent and you'll create survey fatigue; too infrequent and you'll miss opportunities to address concerns quickly.
Consider these common distribution methods:
Most successful SaaS companies use a combination of these channels, with in-app surveys typically yielding the highest response rates (30-40% versus 10-15% for email).
The NPS score alone provides limited actionable insights. Always include 1-2 follow-up questions:
These qualitative responses often reveal the "why" behind your score and specific areas for improvement.
Top-performing companies don't just collect NPS—they act on it. A closed-loop system includes:
Companies who follow up with detractors within 48 hours can convert up to 20% of them into promoters, according to research by CustomerGauge.
While benchmarking against industry averages is useful, the most valuable insights come from tracking your score over time and analyzing:
Successful NPS programs require executive buy-in. The CEO of Slack, Stewart Butterfield, famously tracked NPS as one of his three key metrics during the company's hypergrowth phase. When leadership pays attention to NPS, the entire organization follows.
While customer success often administers NPS programs, the insights should influence multiple departments:
NPS improvement takes time. Rather than targeting a specific score, focus on continuous improvement:
Net Promoter Score has earned its place as a core metric in the SaaS executive's dashboard because it effectively bridges customer sentiment and business outcomes. When implemented thoughtfully, NPS provides a continuous feedback loop that helps identify loyal customers, address pain points, and drive sustainable growth.
For SaaS executives, the question shouldn't be whether to measure NPS, but rather how to implement it most effectively within your organization. By following the guidelines above and treating NPS as an ongoing conversation with your customers rather than just another survey, you'll develop deeper customer relationships and gain a competitive advantage in today's customer-centric market.
Join companies like Zoom, DocuSign, and Twilio using our systematic pricing approach to increase revenue by 12-40% year-over-year.