How NPS for Mobile Apps Predict Growth

Today, let’s talk about Net Promoter Scores and why they’re an essential part of your product management toolkit. Two-thirds of Fortune 1000 companies use NPS surveys, and they’re one of Instabug’s most popular user feedback features. So what’s the big deal with NPS?

Long story short, they’re easy and effective. These simple 1-2 question surveys take just a few seconds to complete. NPS scores are also correlated with company growth. How can just one question reliably predict what happens to a business? We’ll explore that further down the page.

In this blog post, you’ll learn where NPS came from, how to calculate your score, the underlying psychology behind its power, and how to think critically about your results.

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What is the Net Promoter Score?

The emotional connection your brand builds with people will either build their foundation of loyalty or drive them away, making it crucial to the success of your mobile app. This is supported by data—earning and prioritizing loyalty is a key strategy for building successful, lasting businesses.

There’s one big question that the world’s most profitable companies have been asking their customers repeatedly for the last 15 years:

On a scale of 0–10, how likely are you to recommend our products or services to a friend?

No doubt you’ve answered that one at least a few times in your life. But why is it this particular question that prevails? What does the answer really tell you?

One number doesn’t seem like it can tell a company a lot about your feelings or your likelihood of buying again. But the beauty of NPS is that it’s very effective at doing just that.

It’s a question about loyalty. Loyalty is a measurement of your relationship with your user.

All companies have benchmarks for profitability and quality. Your KPIs likely include numbers for conversions and churn. If asked which numbers are most important to a company, few people would name loyalty first. It seems like a squishy, soft variable, a qualitative topic with an immeasurable answer.

As it turns out, loyalty is measurable, and it can tell you a lot. Loyalty can be observed from consumer behavior, but watching and waiting isn’t the best choice for all industries due to the availability of data or the length of the purchasing cycle. SaaS companies typically have lots of user data at their fingertips but nothing measures as quickly and accurately as the NPS survey.

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How to calculate your NPS score for your mobile app

Your NPS score is easy to calculate (the heavy thinking comes later). Let’s look at the question again.

On a scale of 0–10, how likely are you to recommend our products or services to a friend?

Your respondents are grouped into three categories based on the number they choose.

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You’ll use two of these categories to calculate your score. Subtract the percentage of Detractors from the percentage of Promoters. That’s it. That’s your NPS score. If you’re using Instabug, this step will be done for you automatically and your score will be displayed in your survey analytics tab.

The possible range of scores is between -100 and 100. Neutral ground is right there in the middle at 0, where you have the same number of Promoters as you do Detractors.

You might be tempted to compare your NPS score to industry averages, but keep in mind: your product, location, and customer segment will all impact your score, so really you're competing against yourself to improve your baseline NPS. It’s important to consider context with NPS results. For example, telecom companies typically underperform in NPS surveys. A score of zero might have some PMs jumping for joy. The average NPS in the software industry was 31 in 2018.

When your NPS score starts dipping into the negatives, that means you have more Detractors than Promoters, a sign of unhappy customers. You’re probably also experiencing high churn or can expect to start seeing it soon. But don’t worry—this can be fixed! We’ll talk more about this below.

In general, any number above zero is considered good. If your NPS score is positive, then you’ve got more Promoters than Detractors. If your NPS score is above 50, that’s excellent. Anything over 75 is really impressive: examples of these world-class companies include Amazon, Apple, and Costco.

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Why are Passives excluded from my NPS score?

Passives are left out of this equation on purpose. These are people who aren’t major influencers on your brand’s growth, as they’re not likely to speak up about you one way or another. They're just not emotionally connected to it, either positively or negatively. If NPS is a way of measuring the overall sentiment of a conversation about your brand, Passives are the people who aren’t saying anything at all.

In NPS surveys, your respondents’ categorical distribution means more than your numerical score. A score of 3 weighs the same amount as a score of 6 — both are Detractors and they both impact your final score equally. Similarly, an 8 is not "almost as good" as getting a 9. These customers are Passives, not promoters, even if 8 out of 10 seems pretty good. This may seem reductive at first, but NPS has proven to be a highly effective indicator of customer loyalty, and even future sales: Promoters are 92% more likely than Detractors to make repeat purchases… and they bring their friends with them.

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How customer loyalty predicts growth

Measuring loyalty was the subject of an article in HBR in 2003 by business strategist Frederick Reichheld, “The One Number You Need to Grow.” Reichheld’s article explored the concept of customer loyalty as a measurable metric and laid out the foundations for the Net Promoter System. His preoccupation with loyalty earned him the nickname “the high priest of the loyalty cult” from The Economist.

At the time, Reichheld was impressed by the polling tactics of Enterprise Rent-A-Car, which was asking its customers how they rated the quality of their rental experience and how likely they were to rent from them again. This simple approach yielded quick results, and soon Enterprise branches were comparing feedback and learning from each other.

This approach was different than the traditional feedback route, which was to learn from dissatisfied customers and see what you can do better. Though it is true that feedback will help you improve and iterate, Enterprise was doing something smart with its customers—by choosing to focus on their happiest, most enthusiastic customers, they were pinpointing a major factor in their growth—a segment of people who were happy, likely to repeat the experience, and likely to recommend it to their friends.

Reichheld, fixated on loyalty, iterated upon the Enterprise example and came up with this:

On a scale of 0–10, how likely are you to recommend our products or services to a friend?

Since 2003, this question has become a standard across industries.

But why customer loyalty? What makes this The One Number?

Customer loyalty, or a person’s willingness to recommend a brand to friends and family, is a better predictor of future growth than retention.

These days, we have the whole world at our fingertips when we want to research a product or service. But 83% of people still rely primarily on recommendations from friends and family, Nielsen reported in 2015. There’s social pressure in making recommendations, and that pressure makes people think carefully before making suggestions or taking advice to heart.

This dependence on recommendations from trusted people pointed to the need for a consumer loyalty survey. Reichheld’s Net Promoter System quickly proved to be an elegant solution that delivered surprisingly reliable and insightful results.

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How to use NPS surveys to improve your mobile app

Aside from numbers, what can we learn from the Net Promoter System?

First, part of the success of NPS is that the question is so direct and simple. Response rates go up when a survey takes only a few seconds to answer. Make it easy for your users to respond to you. It doesn’t take a lot of questions, just the right ones.

And so far, industry best practice recommends asking just two questions: the first is the standard NPS question. Typically, the second is an explanation: “what is the primary reason for your score?” This quick and easy question adds some context to your results. If you’re using Instabug for in-app feedback, you can reply directly to users and address their concerns. “Closing the feedback loop,” as it’s called, is critical for building or repairing relationships with users and identifying points of interest.

Just measuring your NPS score is only half of the work. Asking that qualitative follow-up question is crucial to your action plan. Your NPS number is a KPI. Your customer feedback is an invaluable opportunity for you to learn and iterate.

In the 15 years since its introduction, businesses have iterated on the NPS model and created new variations. A similar question is on the rise: "how would you feel if you were no longer able to use this app?" If enough people (some suggest 40%) say they'd be "very disappointed" to lose it, you'll know you've created a product that resonates with your audience. This segment overlaps widely with Promoters. By focusing on the people who have an emotional investment in your product, you'll get closer to closing the product-market fit gap.

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What else can we learn from NPS?

Your Passives and Detractors can be saved.

Passives might not seem like an at-risk group, but their ambivalence to your product means they could churn simply because they’re open to alternatives. They’re not loyal to your brand, so there’s a chance of them leaving based on one main factor: price. The best way to avoid this is by increasing the value you offer to your customers if price isn’t something you can budge on. Listen and discover what that missing value might be.

And although it might be daunting to reach out to your unhappiest customers, your Detractors might be just a few conversations away from becoming your next biggest Promoters.

There’s an apt idiom for this. Love and hate are just two different sides of the same coin.

Your Detractors have something your Passives don’t, and that’s an emotional connection with your brand. They’re fired up about something, and that passion can be turned around. When you get in touch and directly address the source of their concerns, you’re closer to turning them into enthusiastic Promoters of your brand.

Instabug’s NPS flow helps your users take the right actions after surveys. When you send in-app NPS surveys, your Promoters are asked if they’d like to leave a review, which drives up your app store ratings. Passives and Detractors are asked what you could do better (or you can choose your own follow-up questions and actions) and you can reply directly through in-app chat, catching issues through conversation before they become negative reviews. You can also cross-reference individual responses with other feedback events from the same user—if they’ve reported a bug, suggested a feature, or sent you other comments, you can add that context to their NPS response.