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- Net promoter score (NPS) measures customer experience and loyalty and in turn helps SaaS companies predict revenue stability and growth.
- For SaaS companies, the median NPS is 36, with successful B2B companies typically scoring between 39-76. However, these benchmarks vary by industry, company size, and even role.
- NPS differs from CSAT (customer satisfaction) and CES (customer effort score) in that it measures long-term loyalty rather than specific interactions.
- Finance teams can use NPS to forecast retention, identify expansion opportunities, and assess revenue risks. By segmenting NPS data by contract value and user roles, teams can better predict customer behavior and adjust revenue projections accordingly.
- While NPS is valuable for its simplicity and benchmarking capabilities, it has limitations. The metric can oversimplify complex customer behavior and measures intent rather than actual advocacy. Companies should combine NPS with other metrics like churn, NRR, and GRR for comprehensive customer health monitoring.
- Finance leaders can maximize NPS insights by implementing closed-loop feedback systems, monitoring key touchpoints, and connecting NPS trends with broader business performance indicators. This comprehensive approach helps build more accurate forecasts and drive predictable growth.
For SaaS companies, NPS is a leading indicator of customer retention, expansion revenue, and, ultimately, recurring revenue growth. Unlike traditional financial metrics that provide historical insights, NPS offers forward-looking data that can predict future revenue stability and growth potential.
The net promoter score (NPS) is a customer loyalty metric that directly impacts a SaaS company's financial health and valuation. Also known as the net promoter system or net promoter index, NPS is a single-question survey tool introduced by Fred Reichheld, a partner at Bain & Company, in 2003. The metric measures customer satisfaction by asking users how likely they are to recommend a SaaS product to others on a scale of 0-10.
In this article, we’ll take a deep dive into NPS, explaining what it is, how it’s different from other customer-related metrics, how to calculate it and some benchmarks to help you understand what it’s telling you, and the benefits and limitations you need to know when using it in your business.
Table of Contents
What is the net promoter score, and why is it important for SaaS companies?
The net promoter score is a standardized metric that measures customer loyalty and satisfaction by asking customers a single question:
“On a scale of 0-10, how likely are you to recommend our product/service to a friend or colleague?”
Based on their responses, the customers are categorized into the below categories based on their score:
- Promoters (who rate 9-10)
- Passives (who rate 7-8)
- Detractors (who rate 0-6)
The final NPS is calculated by subtracting the percentage of detractors from the percentage of promoters.
For FP&A teams in SaaS, NPS expresses more than just another customer satisfaction metric. It’s a leading indicator of revenue stability and growth potential. This score correlates with customer retention rates and expansion revenue—two main drivers of net revenue retention, which is a key valuation metric for SaaS businesses.
NPS and eNPS
A lesser-known but increasingly important companion metric to NPS is the employee net promoter score (eNPS). This metric measures employee satisfaction using the same approach. Leading venture capital firms and private equity investors often review both NPS and eNPS as part of their due diligence process. Strong scores in both areas indicate sustainable growth potential and lower CACs.
What is a good NPS score?
Recent data from Customer Gauge places the median NPS for SaaS companies at 36. However, Retently's B2B SaaS benchmarks suggest successful companies typically fall between 39 and 76. According to Bain & Company, the creators of NPS, scores above 20 are considered strong, above 50 exceptional, and above 80 world-class.
That said, there is no single “perfect” NPS score. What’s considered good varies by industry. A score of 20 might be strong in one industry but may indicate room for improvement in another. While a positive NPS is a promising sign, it’s best to compare it to both industry benchmarks and direct competitors.
The variance in these benchmarks highlights a key takeaway: NPS should be assessed in context. Enterprise SaaS companies generally see lower NPS scores (20–30) due to complex implementations and diverse user bases, while SMB-focused solutions often score higher (40–50).
A high NPS can drive organic growth through word-of-mouth promotion, referrals, and stronger customer loyalty. In financial due diligence and investor valuations, the trend of NPS over time carries more weight than the NPS score itself. This is because a consistently rising NPS, even if below the industry median, can signal better product-market fit—which generally translates to better logo retention rates, lower churn rates, and stronger net and gross revenue retention.
NPS vs. CSAT and CES
CSAT (customer satisfaction score) measures customer sentiment about a specific product or service interaction. It’s helpful in evaluating short-term satisfaction, such as after a purchase or customer support interaction.
NPS predicts long-term customer loyalty and brand perception. Unlike CSAT, which focuses on isolated experiences, NPS reflects how customers feel about your company as a whole over time.
CES (customer effort score) assesses how easy or difficult it is for customers to complete a specific task, such as resolving an issue with customer support. Lower effort typically correlates with higher satisfaction and retention.
Beyond customer loyalty, NPS can also provide insights into product-market fit. A useful complement to NPS in this context is the “Sean Ellis Test” —a widely accepted PMF benchmark.
Developed by entrepreneur and startup advisor Sean Ellis, this test measures product-market fit by asking customers:
"How would you feel if you could no longer use this product?"
If 40% or more of respondents answer “very disappointed,” the company has likely achieved product-market fit. This metric, when viewed alongside NPS, can offer deeper insights into customer loyalty and future revenue potential. A high NPS but low Sean Ellis Test score may suggest strong customer relationships but weak product stickiness, indicating a risk to long-term retention.
For finance leaders, tracking these metrics together can provide a clearer picture of customer growth potential, expansion opportunities, and overall company valuation.
Learn more about SaaS metrics here
Components of NPS surveys
An NPS survey consists of two key components: the primary question and follow-up questions. Together, these elements quantify customer loyalty and provide qualitative insights into their experience.
1. Primary question
The core of every NPS survey is one simple question:
“On a scale of 0-10, how likely is it that you would recommend us to friends, colleagues, or business associates?”
Customers respond on a 0-10 scale and can be categorized into three distinct groups:
- Promoters (9-10): These are your most satisfied and loyal customers. They actively recommend your product, driving word-of-mouth growth and higher customer lifetime value (CLTV). A high number of promoters often correlates with strong retention and revenue expansion.
- Passives (7-8): These customers are generally satisfied but not enthusiastic. They won’t actively promote your brand, and they may switch to competitors if a better alternative arises. This category represents a neutral but important segment for improvement.
- Detractors (0-6): These are dissatisfied customers who are unlikely to recommend your product. They may churn or even discourage others from purchasing. Detractors signal issues in product experience, customer support, or overall value. Addressing their concerns can improve NPS and reduce potential churn.
An important point to note is that NPS scores can vary by demographics and geography. For example, younger customers may rate experiences more critically or cultural differences can influence the likelihood of giving a high score.
NPS scores can also differ significantly across user roles. Key users, administrators, and decision-makers all have different priorities and views on the product. A user might prioritize day-to-day functionality, while administrators and decision-makers focus on cost-effectiveness, ROI, and overall business value. As a result, NPS by role can be very insightful.
2. Follow-up questions
The primary question quantifies customer sentiment, open-ended follow-up questions provide context behind the scores. These questions often include:
- “What is the primary reason for your score?”
- “How can we improve your experience with our SaaS product?”
These responses help leaders identify specific drivers of customer loyalty, pain points, and potential improvements. From a financial perspective, these insights can highlight risks to retention, expansion revenue, and product-market fit – all of which impact revenue forecasts and valuation.
By analyzing both quantitative (NPS score) and qualitative (feedback) data, SaaS finance teams can gain a more complete picture of customer satisfaction, guiding strategic decisions on retention efforts, pricing strategies, and growth investments.
Types of NPS surveys and when to use them
There are two main types of NPS surveys, both used in different scenarios.
1. Relational NPS surveys
Relational surveys measure the overall, long-term customer relationship with your product or service. Most SaaS companies run these quarterly or bi-annually. This metric is ideal if you want to gauge the overall perception of your organization or benchmark against internal or external NPS data.
2. Transactional NPS surveys
These surveys measure satisfaction after a specific interaction, such as a support call, onboarding, or feature update. It provides immediate, actionable feedback to improve specific touchpoints. Transactional NPS helps pinpoint strengths and weaknesses in customer interactions and establish team-specific metrics at the transactional level.
Most successful SaaS companies use both types of NPS surveys, but with different weightings. Enterprise SaaS companies might lean more heavily on relational NPS due to longer sales cycles. At the same time, product-led growth companies often find more value in transaction-triggered surveys that capture feedback at key usage milestones.
How to calculate NPS
Net promoter score is calculated by subtracting the percentage of detractors from the percentage of promoters. The formula is:
Let’s understand the NPS formula with the help of an example. Let’s say your organization surveys 200 customers. The responses from these customers can be categorized below:
- 90 Promoters (45%)
- 70 Passives (35%)
- 40 Detractors (20%)
Net promoter score = 45% - 20% = 25%
The worst possible score a company can receive is -100 (if all customers are detractors), and the best possible score is 100 (if all customers are promoters). But both these scores are highly unlikely in real life. In reality, scores tend to fall within a more moderate range.
How to analyze your NPS score?
While calculating NPS is simple, analyzing it requires a more detailed approach. Here are three steps to follow to analyze the NPS scores most effectively.
Step 1: Segment your customer base by NPS scores
The first step is to identify patterns among promoters, passives, and detractors based on factors like industry, company size, and plan type. In SaaS, enterprise customers may rate differently than SMBs, and customers using advanced features might show stronger loyalty than those on basic plans.
Step 2: Cross-reference NPS data with product usage analytics
Next, analyze how different NPS segments interact with your product. Promoters may follow specific usage patterns, like adopting key features or engaging with support resources. Detractors might experience common friction points. This helps leaders prioritize product improvements that drive higher retention and satisfaction.
Step 3: Analyze open-ended NPS responses
When you complement NPS with follow-up questions, the comments provide important context that helps predict and influence future revenue.
How can SaaS finance leaders and teams use the NPS results to improve business performance?
SaaS companies use NPS to improve their product, enhance customer experience, boost loyalty, and drive positive word-of-mouth. But beyond these benefits, NPS can also help companies improve impact business performance. Here’s how finance leaders can use NPS to accelerate financial growth.
1. Revenue and LTV analysis
Connecting NPS scores with core SaaS metrics can help them identify and understand the value differential between promoters and detractors. This means conducting an in-depth analysis of whether promoters demonstrate higher LTV, better renewal rates, and stronger expansion revenue potential. They can then leverage these insights to create more accurate future revenue projections and adjust forecasts based on NPS trends.
2. Forecasting customer retention and expansion
When teams segment NPS by contract value and role, they can better understand revenue risk profiles. High-value customers with low NPS scores signal increased renewal risk, impacting gross revenue retention (GRR) and predictability. By correlating NPS trends with expansion patterns, finance leaders can strengthen net revenue retention (NRR) forecasts, especially when NPS survey data shows promoters consistently expand usage. This analysis helps teams build revenue models that account for both retention risk and expansion opportunities based on customer satisfaction.
3. Assessing risks and preventing churn
SaaS leaders should monitor NPS as a leading indicator of churn by calculating the potential revenue impact of converting detractors to passives or promoters. Building early warning systems that flag at-risk accounts based on NPS changes can help teams intervene proactively. This preventive approach is far more cost-effective than reactive retention efforts after customers have already decided to leave.
4. Better resource allocation
Optimally following up on NPS’s primary question with additional queries can shed light on the underlying reasons behind the rating. The feedback received can help teams make data-driven resource allocation decisions. When NPS scores reveal specific pain points in onboarding or support experiences, finance leaders can strategically direct budgets toward strengthening customer success teams, implementing automation solutions, or funding targeted product improvements. By connecting customer satisfaction metrics to specific operational challenges, teams can justify investments that address root causes rather than symptoms.
How to improve your net promoter score
The four points below make up a good NPS improvement plan:
1. Touchpoint monitoring
Implement NPS surveys at key customer journey touchpoints rather than just annual assessments. For example, measure NPS after onboarding, major feature releases, support interactions, and renewal discussions. This approach helps identify specific experiences that create promoters or detractors.
2. Activate promoters
Another way to improve NPS is to transform enthusiastic customers into growth engines by creating structured advocacy programs. For example, leaders can start a rewards system where promoters earn benefits for referrals, case studies, or product feedback.
3. Address detractors’ concerns
Implementing a closed-loop feedback system where every detractor's response triggers an action plan can help them move up the score. For instance, if a customer gives a low score citing integration difficulties, rather than just logging the feedback, schedule a technical review, provide extra resources, and follow up to confirm improvement. Moving a customer from a score of 3 to 7 has more impact than moving from a score of 7 to 9.
4. Engage passives
Passives represent untapped promotion potential. Targeted engagement strategies like inviting them to product advisory boards or providing exclusive training sessions can help them become more engaged, and they might shift into the promoter territory.
The benefits of using NPS and limitations to keep in mind
NPS is a proven method to predict customer loyalty and business growth and is widely used in SaaS. However it’s not without its limitations.
SaaS companies, especially finance leaders interpreting NPS as a growth metric, should approach its insights with caution.
We'll explain why below. But first, let's look at some key advantages using NPS can have for your business.
- Simple and efficient: The simplicity of NPS surveys leads to higher response rates compared to lengthy feedback forms. This simplicity makes deployment, tracking, and analysis more efficient across large customer bases.
- Closes the feedback loop: NPS creates a structured framework for closing the feedback loop. When customer success managers follow up with detractors early, they can prevent churn by addressing concerns early.
- Indicates growth: NPS quantifies word-of-mouth potential through promoter scores. Companies with higher NPS scores typically demonstrate stronger revenue growth, while tracking eNPS helps align internal culture with customer satisfaction goals.
- Easier benchmarking: NPS enables easier benchmarking against industry competitors. Companies can track their performance and identify areas for improvement.
Now, let’s look at the limitations of NPS
- Oversimplifies human behavior: NPS is a directional metric, not an absolute truth. Human behavior is complex and NPS often misses these nuances.
- Signals intent, not actual behavior: NPS measures intention (how likely someone is to recommend) rather than actual advocacy. This gap can sometimes lead to overestimating customer loyalty.
- A simple indicator: NPS’s strength is its simplicity, but that’s also its limitation. A single-question survey offers broad strokes, like a compass, but not the detailed map needed to navigate customer retention and growth challenges.
- Timing challenges: The timing of the NPS surveys can skew results due to recency bias. Customers are more likely to give extreme scores right after significant interactions. Also, many companies selectively survey certain customer segments, missing feedback from the broader user base.
- Action gaps: Oftentimes, companies struggle to translate NPS data into actionable insights, particularly when dealing with passive scores. They tend to focus only on promoters or detractors while neglecting passive feedback.
Transform your financial planning with automated metrics and deeper customer insights
NPS is a strong indicator of customer loyalty, retention, and potential revenue growth. But it’s just one piece of the puzzle. The real power of NPS lies in connecting it with broader business performance indicators like churn, NRR, GRR, customer cohorts, LTV:CAC, and more.
However, most finance teams struggle to gain this holistic view because they spend countless hours gathering data from disparate systems and manually calculating key metrics —time that could be better spent on strategic analysis and planning.
Drivetrain, a comprehensive financial planning and analysis (FP&A) software, transforms this complex process by automatically calculating these metrics in real-time through direct integration with your source systems.
Finance teams can track all customer experience and retention metrics in a single dashboard. They can also drill down into specific metrics, understand underlying trends, and generate accurate revenue forecasts based on comprehensive customer health data. The platform's powerful visualization capabilities make it easy to analyze relationships between different metrics, helping finance leaders identify growth opportunities and retention risks before they impact the bottom line.
Most importantly, Drivetrain bridges the gap between finance and other teams, fostering collaboration between finance, product, customer success, and implementation teams to drive better customer engagement and revenue growth. By bringing all your critical metrics into one place, you can move beyond basic NPS tracking to build a truly predictable growth engine.
Want to see how Drivetrain can accelerate your growth? Explore Drivetrain today!
FAQs
A good NPS score for SaaS varies by industry and company size. Generally, 20+ is strong, 50+ is exceptional, and 80+ is world-class. The SaaS median is around 36, with successful B2B companies typically scoring between 39 and 76.
NPS categorizes respondents into three groups based on their ratings:
- Promoters (9-10): Highly satisfied customers who are likely to recommend your SaaS product.
- Passives (7-8): Neutral customers who are satisfied but not enthusiastic enough to promote.
- Detractors (0-6): Unhappy customers who may spread negative word-of-mouth.
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