Forget Net Promoter Score, success in SaaS means developing genuine customer partnerships

“What gets measured gets managed.” (Peter Drucker, The Practise of Management). Drucker invented many of the techniques used in business management today. His focus on measurement has been taken to heart by managers in virtually all sectors.

It’s essential to measure the right things, however. Adopting a particular metric, perhaps because it’s easy to measure, can cause management to focus on the wrong priorities. One example of this is Net Promoter Score (NPS)

Here we examine what NPS is, how it is used in B2B industries such as SaaS and why it is inferior to developing genuine customer partnerships.

What is Net Promoter Score?

NPS is a measure of customer experience. Existing customers are asked: “How likely is it that you would recommend this SaaS provider using a score of 1-10?” Responses are sorted into 3 groups:
–           Score 9-10: promoters, loyal long-term customers who may recommend via their networks
–           Score 7-8: passives, satisfied but indifferent customers who may be poached by a competitor
–           Score 1-6: detractors, unhappy customers who will give negative feedback through their networks

NPS is calculated by summing the number of promoters, passives and detractors to give a percentage for each group. NPS = %Promoters – %Detractors. In the SaaS market, the industry average is 31; an NPS of 50 is considered a good score and very few businesses achieve 60.

Many SaaS providers use NPS as an indicator of their overall success in serving their customers. Combining NPS with the subsidiary question “What is the primary reason for this score?” gives a starting point for understanding the level of customer satisfaction.

This information can be shared with colleagues across the business to drive through improvements. However, placing too much emphasis on NPS or using it as the only measure, can be misleading and restrictive. Genuine customer partnerships are far more important to business success.

Why are genuine customer partnerships more rewarding?

1.         NPS is a measure of where the business is today, not where it needs to go

Although NPS can be a useful indicator of customer satisfaction, it doesn’t help with setting the future direction of the business. It is a measure of whether today’s products and services are satisfying customers. Ultimately it is measuring the success of the SaaS provider rather than the success of its customers.

2.         Nurturing customer partnerships will lead to effective two-way communication

By viewing customers as partners, a SaaS provider perceives its customers’ success as a high priority. The question: “Is this solution meeting your needs and will it continue to do so?” will help to start a meaningful conversation.

An engaged customer, seeing the opportunity to influence the product roadmap, will reveal more about their aspirations and potentials. They will be more willing to contribute in the form of use cases, example data and discussion forums.

They will also be more loyal. As well as a source of dependable recurring revenue, a loyal customer is an essential asset in future growth. You’re then measuring Customer Lifetime Value (CLV) although even this is just another metric.

There’s a catch, however. NPS is easy. An administrator can circulate questionnaires and collate the results. Building customer partnerships is much more difficult. It may need a different approach in customer-facing teams; changing their hearts and minds requires influencing skills. Spending time with customers also requires talented individuals. If those people are on the payroll they will already be flat-out.

Management vs leadership.

Peter Drucker is best known for his quote about measurement. However, he also said, “Management is doing things right, leadership is doing the right things.” Choosing those “right things” is certainly a challenge in today’s business environment.

The speed of innovation demands new approaches and talented staff; even recruiting the right talent can feel like just one more challenge. Why not contact our specialist team at RC&A to see how we can help?

 

Don't just take our word for it

  • Tom Salvat, CEO, CONCURED
    "As a fast-growing start up, we need great people with a tough set of skills to find. They need to be hungry, experienced and fit the culture of a business that is always adapting and growing. Finding these people using Linkedin and other job boards is tough, time-consuming and rarely bears fruit. Ross has always been able to uncover gems for us, and we are benefiting greatly from his skills at CONCURED. Ross has a rare ability to really understand the business, the culture and the people that will nail the role. I couldn't recommend him highly enough, and he is the only recruiter we deal with"      
    - Tom Salvat, CEO, CONCURED
    Tom Salvat, CEO, CONCURED
  • Tariq Mahmood, Enterprise Sales, Concured AI Content Marketing
    I am writing to express my gratitude to Ross Clifford & Associates who helped me successfully secure the role of Enterprise Sales Executive at Concured. Ross was extremely professional and understood the specifics of the job I required. I especially appreciated his fast response, transparent communication, and coordination in a timely and efficient manner.
    - Tariq Mahmood, Enterprise Sales, Concured AI Content Marketing
    Tariq Mahmood, Enterprise Sales, Concured AI Content Marketing
  • Jessica Cole, Editor – Redwood London.
    Ross is one of the friendliest recruiters I've dealt with. He was always attentive, quick to respond and ready to help with any questions I had. He's very professional, and not at all superficial like so many other recruiters out there. I would highly recommend him.
    - Jessica Cole, Editor – Redwood London.
    Jessica Cole, Editor – Redwood London.
  • Gareth Lofthouse, Founding Partner, Longitude.
    “We look for commercial people with a rare blend of talents. They need to be able to advise our blue-chip clients on thought leadership strategy. They need to be highly strategic and purposeful in uncovering opportunity. And they need the hunger it takes to thrive in a rapidly evolving business. RC&A were quick to understand our needs, they only delivered high-quality people for interview, and succeeded in getting us a winning candidate incredibly fast.”  
    - Gareth Lofthouse, Founding Partner, Longitude.
    Gareth Lofthouse, Founding Partner, Longitude.
  • Johnny Meredith, Senior New Business Manager, The Bio Agency.
    I can't rate or recommend Ross highly enough. He brings a thoughtful, personal approach to the process, carefully matching opportunities with candidates, through a good understanding of their priorities and skills. Throughout, he keeps candidates up to date in an open, honest way. A genuine pleasure to work with.
    - Johnny Meredith, Senior New Business Manager, The Bio Agency.
    Johnny Meredith, Senior New Business Manager, The Bio Agency.
  • Karen Troman, Office Manager & HR Co-ordinator, VoucherCodes.co.uk part of RetailMeNot
    Ross is the best recruitment agent I have worked with, he stayed in contact, kept me informed and was with me every step of the process. He also checked in with me during my first couple of weeks in my new role to make sure I was settling in. I wouldn't hesitate to recommend him.
    - Karen Troman, Office Manager & HR Co-ordinator, VoucherCodes.co.uk part of RetailMeNot
    Karen Troman, Office Manager & HR Co-ordinator, VoucherCodes.co.uk part of RetailMeNot
  • Neil Kettleborough, CRO & Co Founder, Chalk Social
    I have worked with Ross over 4 years now and he has always delivered a really high standard of candidate both at senior and junior level. His online knowledge is second to none and all the candidates he has put forward over the years have only good things to say about Ross and his work ethic.
    - Neil Kettleborough, CRO & Co Founder, Chalk Social
    Neil Kettleborough, CRO & Co Founder, Chalk Social
  • Helen Rosemier, Commercial Director, Professional & Financial Services Practice, Longitude
    Ross is a fantastic recruitment consultant -  extremely professional, meticulous, patient and supportive. Throughout the process, I felt he represented me really well and genuinely cared about my career and finding the right role. Thanks to Ross I am now in a role I love, working with a brilliant team. Very highly recommended!
    - Helen Rosemier, Commercial Director, Professional & Financial Services Practice, Longitude
    Helen Rosemier, Commercial Director, Professional & Financial Services Practice, Longitude

© Ross Clifford Associates. Website by Outlines Design.