The metric that your startup needs to measure: Net promoter score

Startups are full of uncertainty — and prospective clients know that.

Credibility and reputation are both keys to a company’s ability to not only sell a product or service, but also to create brand ambassadors that will promote it to friends and others. As the saying goes, your customers are your best salespeople.

“If you want to truly flourish, you need happy customers,” Startups Anonymous co-founder Dana Severson recently wrote. “Customers that will not only buy from you repeatedly, but also tell everyone they know to buy from you as well.”

The easiest way to determine your ambassadors is with an NPS, or net promoter score. The score itself is quite simple to gather with a single survey question, though its implications and applications are wide-reaching.

Typically captured via a scale from 0 to 10, an NPS measures your customers’ likelihood to recommend your company, product or service to friends or colleagues. Survey respondents dishing a score of 9 or 10 are your promoters and folks submitting a 6 or below are detractors. Your NPS is the percent of responders that are detractors subtracted from the percent of responders that are promoters, marketing strategist Tom Smith writes.

The metric is used by companies big and small, and you’ve likely helped inform dozens of companies’ NPS already. And as Severson contends, it’s a metric you should start measuring for a variety of reasons, including help with securing capital, identifying product market fit and determining where your firm should go in the future.

Here are two excerpts from his recent blog on the subject, which you should check out for more information on the value of your NPS.   

NPS can help startups secure funding.

Investors are taking notice of NPS scores, in fact, it’s becoming one of the criteria they look for when gauging the future success of a current or potential investment.

Look no further than venture capitalist and Godfather of SaaS, Jason Lemkin. The prolific investor recently stated, “Track NPS as a core, monthly metric. Share it with everyone. And importantly — use it for a cross-functional discussion across Sales, Support, Customer Success, Marketing, Engineering, and Product.”.

Your NPS data will help you better forecast your revenue.

NPS is the only survey that has been proven to be an accurate indicator of customer behavior.

There are many ways to project revenue based on past behavior, but have you ever seen a tool that has that ability to predict revenue based on future intent?

NPS does just that.

Each score your customer gives you has an intrinsic predictive value/risk associated to it. An NPS ROI calculator, like the one that Promoter displays within your dashboard, will tell you what your future holds.