Software Growth

NPS (Net Promoter Score)

Net Promoter Score (NPS) is a loyalty metric from one question, how likely you are to recommend a product, scored as the percent promoters minus percent detractors.

Net Promoter Score is the most widely used customer loyalty number in business. It comes from a single question, and the answer boils down to one score between -100 and +100. Founders like it because it is quick to run and easy to track. Used well, it points you at the customers who love you and the ones who are about to leave. Used as a vanity number, it is easy to game.

Where it comes from

Fred Reichheld introduced NPS in his 2003 Harvard Business Review article "The One Number You Need to Grow." The question is: "How likely are you to recommend us to a friend or colleague?", answered on a scale from 0 to 10.

  • Promoters: 9 or 10
  • Passives: 7 or 8
  • Detractors: 0 to 6

How to calculate NPS

Passives count in the total but not in the subtraction. Example: you survey 80 customers of your $20k MRR product. 44 give 9 or 10, 24 give 7 or 8, and 12 give 0 to 6.

Your NPS is +40. Report it as a whole number, not a percent.

What good looks like

Benchmarks vary widely by industry and survey method, and I could not find a single authoritative SaaS benchmark, so treat published tables with caution. A more useful comparison is your own score over time, segmented by plan, tenure and acquisition channel. A score that is positive and rising, with fewer detractors each quarter, is the real goal.

Does it predict growth?

Reichheld's original data compared NPS to past growth, not future growth. Researchers who replicated the work with forward-looking data found that NPS explained roughly 38% of the variation in growth over two years, with large differences by industry (from 8% to 76%). The authors judged it a reasonably good predictor, comparable to other loyalty measures, but not always the best one. In short, NPS is a useful signal and not a growth law.

Using it well

  • Always ask "why?" in a follow-up. The comment is worth more than the score.
  • Read every detractor reply and call a few. These are your future churned customers.
  • Ask people who have used the product long enough to have an opinion, not day-one signups.
  • Send at relationship milestones (say, 90 days in), and use CSAT or CES for specific interactions.

Common mistakes

  • Treating the average score as NPS. They are different calculations.
  • Surveying only happy customers, or nudging people toward a 9 or 10.
  • Comparing your score with another company's without matching industry and method.
  • Collecting scores with no plan to follow up.

For small SaaS

With 50 customers, one response moves your NPS by two points. Do not chase decimals. Email each customer personally, then read the replies as interviews. The qualitative signal at this size beats the statistic.

Sources

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