Category Archives: Startup Journey

saas tools

The 45 Tools We Use to Run Promoter.io

According to the data gathered by Siftery, a tool that tracks and suggests software used by businesses, top companies today use an average of 37 different tools or software platforms to run their day-to-day operations.

Whoa!

That is an amazing fact to consider, especially when compared to how few tools businesses used just a handful of years ago.

According to @Siftery, top companies use 37 different tools to run their day-to-day operations. Click To Tweet

The reality is, it takes a lot of products and services to run a growing startup, let alone a large organization (which use an average of nearly 90 different tools according to Siftery).

Honestly, it’s kind of hard to imagine what it was like to run a business before the convenience of SaaS products, or even before just software for that matter.

With the need for so many services, it’s often times that many of these products are fighting against each other for the same budgets.

In order to stay within the stack, you need to provide unquestionable value at a bare minimum.

But even then, you’re still up against all of the other tools in the arsenal when budgets don’t grow as fast as the teams around them (or worse, get cut) because value isn’t the only deciding factor.

Customers need to see the value in your product AND maintain a high sentiment towards your brand to justify a coveted and protected position within their toolset.

This doesn’t just begin and end with the decision maker either. This permeates down to everyone who uses your product, including the general users (who have more influence than you think).

If you can deliver on your value proposition, as well as ensure your customers continue to have a high sentiment and loyalty towards your brand (by … ahem, measuring and acting on your NPS data), you will assuredly surpass your indirect competition and avoid unnecessary churn.  

As a software company ourselves, we make every operational, product, marketing, and sales decision around this belief. And, we support our growth with tools that do the same.

With that in mind, here are 45 tools that we use (and proudly advocate) to run and grow Promoter.io:

Accounting & Finance

Baremetrics

Baremetrics makes sense of all our Stripe and manual invoice data into easily consumable metrics for our SaaS business (MRR, ARR, LTV, Churn, etc). We also use their “Recover” feature for dunning management so it’s a breeze for customers to keep their payment methods up-to-date. Don’t run a business without this kind of dashboard.

Expensify

Expensify removes almost all the most painful parts of submitting expense requests. Gone are the days of expense report hell. Yeehaw!

Flightpath Finance

While Baremetrics (more on this tool below) gives us the proper metrics from Stripe, Flightpath makes sense of it all into a long-term model that we can use to inform strategic decisions from hiring to product investment.

Freshbooks

I hate QuickBooks invoices so we use Freshbooks for this exclusively. Sure you can make simple invoices in a number of ways but tracking them can become a pain, and Freshbooks makes them beautiful in the process. Your larger enterprise (or international) customers will appreciate it.

Quickbooks

While I’m not a fan of their invoices, you have to keep the books somewhere. QuickBooks works well enough and is deeply integrated with many other tools, so we’ve stuck with them.

Stripe

Our go-to payment processor. It’s simple to use and is very secure … almost to a fault. Which is good in their case.

Customer Support

Grasshopper

You have to have that 800 number, right? While we don’t receive a ton of calls, we love having our phone number out there to engage with customers and prospects who prefer this method of contact. Business tends to happen a lot faster through the phone as well, which is never a bad thing. Grasshopper makes it a breeze to handle these calls and route them appropriately, or take a message when necessary.

Groove

While there is some overlap with tools like Intercom, we have found that it doesn’t fully replace a true purpose built customer support solution, which is where Groove really shines. When we need to handle cases that aren’t quickly resolved, we move them to Groove.

Inspectlet

This tool can selectively record the sessions of our users and has come in handy on many an occasion for resolving user support issues and for improving user experience.  

Intercom

Our primary tool for daily customer support and interaction, used to help customers while they’re in the app, address immediate concerns and push out effective notifications. We also push our NPS data into Intercom (here’s how you can do the same), which arms us with our customer’s sentiment ahead of our interactions.   

LiveChat

A much more fluid “live chat” service compared to others who have recently built solutions in this space. We use this for certain customers and touch points where true real-time interaction makes all the difference.

Promoter.io

I think this goes without saying. But yes, our own product is an absolutely essential tool to the success of our business that we use on a daily basis. :)

Development

AWS

Infrastructure

(The incredibly detailed description above was provided by my Co-Founder & CTO, if you hadn’t already guessed.)

Bugsnag

We use Bugsnag for our application exception logging, error tracking and performance metrics.

Encrypt.me (formerly Cloak)

Security is paramount in all we do, down to our individual connections. Encrypt.me (formerly Cloak) has been a great provider with very reliable speeds.

Dome9

Active protection, access and policy management for all of our infrastructure.

Email on Acid

When you send millions of emails per month to countless email clients, this is a must. Test and render your emails across the most popular clients, apps, and devices.

GitHub

We use Github for our source code management and to perform code reviews.

Loggly

App logging.

(This guy, I tell you.)

Namecheap

A great domain management platform with “cheap” rates, for when you need to register every possible variation of your brand or product name :)

Rackspace

Rackspace is a highly reliable managed hosting/cloud provider who we use to host failover services outside of AWS along with some other non-performance impacting pieces of infrastructure. Best not to keep all of your eggs in one basket, dare I say.

SendGrid

Email relay

(Yep, CTO again. They’re a really good email relay.)

Operations

Adobe Creative Cloud

Let’s be honest. When you get that creative spark, MS paint (R.I.P.) is just not going to cut it. That’s why we rely on the best-of-breed suite of tools that Adobe has to offer, most notably Illustrator and Photoshop.

Carta (formerly eShares)

Excellent cap table and digital certificate management, plus a reliable 409A valuation service. We love it and our investors/advisors do too.

Flow

Simple yet extremely powerful task and project management. Great team support as well.

Google Apps

For when you don’t need the full power of Microsoft Office, or easier collaboration :)

Gusto

Gusto is hands down one of our favorite services. They make payroll, benefits, taxes and reporting an absolute breeze and the team is always super helpful. If you are still doing payroll in house or through a larger firm, give them a look. You won’t regret it.

HelloFax

They’ve made faxing fun again, sort of. :)

Microsoft Office 365

The world grinds to a halt sometimes without true Microsoft Excel. Google Sheets works okay for a lot of use cases, but when it doesn’t, it’s painful.

Segment

Analytics wrapper

Slack

As a semi-remote team, Slack helps provide powerful team communication/collaboration that keeps everyone on the same page and productive all day long (as long as you don’t have any gif/giphy integrations that is).

productivity

Visible

Visible makes updating our investors far easier (and more beautiful). Easily capture key performance data and share your story with your stakeholders all in one platform.

Zapier

Simply put, Zapier is the most powerful platform for connecting our different systems and data together. This single tool powers the the bulk of our back-end workflows and business logic.

Sales & Marketing

Adroll

Retargeting is one of the easiest and most cost-effective ways to capture new revenue. And, Adroll is the best tool for doing it (and also our favorite). It’s easy to use, works across multiple channels and has robust options as you advance your campaigns. It’s a staple in our marketing arsenal.

Buffer

Maintaining an active social presence can be an absolute grind, but well worth the effort. Any tool that makes this job easier, we’ll happily pay for. That’s especially true for Buffer. Not only does it free up our time by scheduling our sharing just once per week, but it gives us better results when doing so.

Calendly

Every year, the average business person spends the equivalent of 2 days going back and forth attempting to find a day and time that works for meetings. Actually, I just made that up, but it’s probably not far off. Calendly solves that pain. It’s a shareable calendar that allows our customers and prospects to pick the time that works best for them (without the hassle).

In fact, while I have you, if you want a demo of Promoter, book a time here. :)

Clearbit

Clearbit provides “integrated intelligence for every stage of your sales & marketing workflow”, and let me tell you, it’s quite magical. The data we’re able to surface helps us understand our customers and prospects better so we can deliver a superior level of service along with driving up conversion rates.

ConvertKit

In spite of what anyone tries to tell you, email is still, hands-down, the most effective way to communicate with your customers in mass (also the best method for NPS, but this isn’t the time or place for that discussion). ConvertKit has got us covered in this department. From weekly newsletters to intelligent on-boarding sequences, this tool has quickly become a must-have.

GoSquared

Actionable analytics from our marketing site and our app which helps us increase conversion from prospects or even for certain features/usage within our app.

Join.me

Join.me lets our team reliably hold meetings with audio conference lines globally and reliable screen sharing. On a weekly basis, we have dozens of meetings from any given country. There are a lot of fancy features in web conferencing applications, but Join.me has a simple scheduling link to Gmail so our team doesn’t run into any conflicts. Oh, and they’ve got one of the best product jingles ever

Pipedrive

A great sales focused CRM which helps us keep our sales and onboarding pipelines organized. The direct sync with Gmail also makes it easy for the team to see all the conversations with prospects in one place.

Sumo

When content is a such a huge part of your marketing strategy (which it is for us), it’s critical that you have the right tool to properly promote it. That tool is Sumo. It’s like the swiss army knife of content promotion — lead-gen, sharing, tracking, etc. It’s a must have x10.

Unbounce

With paid acquisition, it’s important to remember that your primary landing page copy won’t necessarily work to convert every audience equally. That’s where Unbounce comes in for us. Creating unique landing pages that match both the audience and the messaging we’re using within our ads has been essential to increasing our conversations and reducing our cost per acquisition (CPA).

WebinarNinja

Webinars can be a highly effective tool for educating both prospects and current customers when done right, but the tools in this arena have left a lot to be desired in recent years. Trust us, we’ve tried many. WebinarNinja is a fine-tuned and streamlined service built to do this one thing really well, and it’s reinvigorated our efforts around providing great content through this channel.

Wistia

Powerful video hosting platform with valuable analytics that helps us improve our video content.

Do you know of any good tools or services that we should absolutely check out? Let us know in the comments below!

Chad Keck

As a product lead and executive for numerous successful ventures (Rackspace, HP Cloud, AppFog), Chad founded Promoter.io to help bring the actionable insights provided by Net Promoter to all businesses. He is a native Texan with a passion for helping other entrepreneurs.

Website

How To Grow

“Your chances of building a giant company are much higher when you have a product that spreads by word-of-mouth.” – Sam Altman, Before You Grow

Last week, Sam Altman, President of the famed technology startup accelerator Y Combinator, opined on the importance of creating a product (or service) that customers love before spending your efforts on scaling and growing your business.

In his argument he stated, “focusing too heavily on growth before you’ve built something people love leads to the leaky bucket problem. You can get users [sic] to come in the door, but they don’t stay, and likely won’t return.”

Altman further added that, “If your product isn’t loved, you might get early users [sic], but growth will get hard later on. You’ll have to rely on inorganic means like ads, marketing, or PR to maintain your growth, and this gets very hard to sustain.”

To Sam Altman we say … Amen.

One of the biggest challenges facing any new business, or heck … even an existing business for that matter, is understanding the needs of the customer.

One of the biggest challenges facing any business, is understanding the needs of the customer. Click To Tweet

Understanding these needs is essential to building a product or service that customers love and in turn, recommend to others (or even defend from other brand detractors on your behalf).

To put the importance of recommendations into some context, just consider a few of these statistics:

  • According to a study done by the Word of Mouth Marketing Association (WOMMA), one word-of-mouth impression drives sales at least 5 times more than one paid impression (in some cases it’s as much as 100x more).

    In other words, for every dollar you invest in listening and reacting to your customers needs, you’re essentially reducing your effective marketing spend by 80% or more.
  • 20 – 50% of all purchasing decisions are driven by word-of-mouth recommendations according to research done by McKinsey & Company.

  • Wharton School of Business found that the LTV (Lifetime Value) of a referred customer is 25% higher than that of other customers.

All combined, it’s pretty clear to see from the data that word-of-mouth recommendations are the key to building a highly-profitable and sustainable business (regardless of whether you’re an emerging startup or a Fortune 500 enterprise).

But, as Altman pointed out, recommendations won’t come if customers don’t first love your product themselves. In fact, it could have the opposite impact.

As we’ve mentioned in our post, The Anatomy of a Detractor, the average customer is twice as likely to share a negative experience as they are a positive one.

In order for someone to recommend your company to another, their experience needs to be exceptional. However, the opposite isn’t true. It doesn’t take much to trigger negative word-of-mouth. And, unfortunately, the people who are listening to that customer are 10x more likely to be drawn into their negative experience than their positive recommendation.  

So, to add to the “leaky bucket” that Altman was referring to, you also need to consider that unmet customer needs within your product or service can also lead to an overall decline in growth through negative word-of-mouth and customer churn.

Growing Through Word-of-Mouth Recommendations

“The first step in solving any problem is recognizing there is one.” Will McAvoy – The Newsroom

Creating growth through brand advocacy requires an open mind. In spite of your domain expertise and what you may believe, if referrals aren’t driving your business today, you may not be meeting the needs of your customers. You need to be willing to listen and commit to making the changes required for your customer’s happiness.  

This starts though conversation. And, conversation ultimately begins with NPS.

Using NPS Makes a Critical Difference

Altman’s article lead to a pretty significant discussion/debate on the news aggregator site, Hacker News. One of the commenters challenged the NPS methodology by stating, “Attributing verbatim feedback to NPS is misleading though. Getting feedback is just talking to customers … surveys and methods that have existed for years. Saying it’s part of the NPS methodology is giving it credit for something it did not invent.

The commenter is absolutely correct in stating that customer feedback isn’t exclusive to NPS, but what he failed to recognize is that not all feedback is given equally.

There are in fact many ways to converse with your customers. You can ask any customer any question by any means available and (hopefully) get a response.

Alternatively, the NPS question and process was designed, tested and proven to deliberately elicit feedback that is specific to the growth of your business.

Quite frankly, traditional surveys generate such a low response rate that the results can often be meaningless. And, doing one-off calls and meetings with customers is just simply unscalable. In fact it often times exposes only a vocal minority which can be very deceiving.

Many people are quick to dismiss the NPS survey because of its perceived simplicity. But, make no mistake, what may just seem like a simple survey, is in fact a data-rich treasure trove of predictive customer intelligence. The kind of intelligence that makes it possible turn your product into one that your customers love and recommend.

It’s never too late (or too soon)

Although Altman was largely referring to early-stage startups in his post, his logic and reasoning apply to any business at any stage of growth.

Take for example, Hiveage, a Promoter.io client who recently shared their growth experience in a post titled, How We Track Net Promoter Score (NPS) to Foster Growth.

In the post, they acknowledged that even as a later-stage business experiencing growth, it’s easy to lose touch with customers and continue on assuming that your growth is a sign of customer love.

Once you have built a product that the market has accepted and the business is growing, it is easy to fall out of touch with your customers. When your decisions during the early days start paying off, complacency can set in. Worse yet, you can start overdosing on your own hubris, attaching too much importance to your intuitive genius.


To Hiveage, hiveage-nps-emailNPS was their “defense against complacency” as they described. Within just two days of launching their campaign, they were able to quickly identify the source of customer discontent and make a couple of clear-cut strategic product decisions which put them back on the right course.

Hiveage closed their post by stating,Without NPS, we never would have known how Lite customers saw Hiveage and what effect it had on our brand.”

—-

With the potential of up to 50% or more of your total revenue coming from word-of-mouth and personal recommendations, building and maintaining a brand that customers love should be the highest priority for every company.

At the end of Altman’s post, he added a note which stated, “Net Promoter Score can be a good way to measure user love too.”

And once again, we say … Amen.

Chad Keck

As a product lead and executive for numerous successful ventures (Rackspace, HP Cloud, AppFog), Chad founded Promoter.io to help bring the actionable insights provided by Net Promoter to all businesses. He is a native Texan with a passion for helping other entrepreneurs.

Website

Behind the Curtain: How We Use NPS to Grow Promoter

If it weren’t already obvious, Net Promoter is making a major resurgence. Every company, big and small, are now seeing that NPS is one of the most important measurements for their business.

In just the past two years, organic search for NPS related terms has increased by over 100%.

And, in the same amount of time, Promoter has grown by a staggering 455%, without spending a dime on marketing or paid customer acquisition.

In fact, just this week at the SaaStr Annual conference in San Francisco, Jay Simons from Atlassian stated, “End-user NPS is the most important leading indicator of future growth.”

End-user NPS is the most important leading indicator of future growth - @jaysimons @Atlassian Click To Tweet

NPS is serious business and has massive implications for your bottom-line (via growth and retention).

But, why the sudden surge in interest? After all, it’s been roughly 13 years since NPS as a concept was first introduced and some of the top companies in the world (Apple, Southwest Airlines, Nordstrom, USAA, etc.) have been using it religiously for nearly a decade.

Well, first, and possibly most important, NPS has been proven to be the most accurate and effective way to measure true customer sentiment (which is a predictor for behavior). There are plenty of products to monitor customer behavior, but NPS is the only true way to monitor intent. At least in a way that you’ll actually get customers to engage.

Also, up until just a couple of years ago, most companies believed that it was a tool used only by the largest and most elite corporations on the planet. Which is no longer true.

NPS is now accessible to companies of all sizes. In fact, Promoter was the first to offer a SaaS-based solution with enterprise features, making it reasonable for any company (big or small) to affordably use NPS.

So, what kind of company would we be if we didn’t measure and engage with customers using NPS ourselves?

If you’re a customer of Promoter, you undoubtedly know that we’re very prescriptive in our guidance of NPS best practices. So, of course, when it comes to our own usage, we tend to follow our own advice.

Here’s how we run our own NPS program

We do NPS daily – The process is continual. The real value of NPS is generated by responding and closing the loop with your customers. When you drip your surveys out each day, this allows you to effectively follow-up with each and every customer that has responded.

Also to note, NPS is most accurate over time. You don’t want to send large sets of surveys  when a singular event occurs, impacting your results either positively or negatively. This is a false reading. This same issue arises even when surveying randomly but all at once. Essentially you are flying blind until the next survey which is dangerous as sentiment changes rapidly and it becomes nearly impossible to effectively close the loop with large amounts of responses.

We start with our detractors – When we respond and close the loop with customers, we start with our detractors (hint: every company has them) then move to passives, and ultimately move to promoters. We don’t automate this process and we don’t provide canned responses. We read every bit of feedback, dig in to understand the issue and respond accordingly.

If it’s not obvious why you should be highly proactive and focus on detractors first, it’s because 40-50% of your detractors will churn within 90 days or less. That’s huge, but that’s not all. Passives (your “satisfied” customers) also tend to churn in high numbers, just over a longer period of time. Nearly 30-40% of your passives (the 7-8’s) will churn within 180 days. That could potentially be a massive amount of revenue you’re about to lose in a short order (or recover if you engage properly post-survey).

We take a very proactive approach with our detractors. It’s our opportunity to learn, prevent churn, build advocates and stop negative sentiment in its tracks. Quite often, our detractors will tell us exactly what we need to do to keep their business. We simply listen and act accordingly. Surprisingly, some of your strongest future promoters are detractors today who want your solution/product to work for them, but it simply doesn’t for one reason or another today.

We don’t ignore our passives – In many cases, passives represent the largest majority of your customer base. And, too often they go largely ignored. Companies mistakenly view them as content customers. This might be true in a sense, but contentment is negative in this case. As I mentioned previously, nearly 40% of passives will churn as well within a 6 month period. They are highly susceptible to competition in the marketplace. Why? Simply put, they are not LOYAL to the brand. There is a major disconnect between satisfaction and loyalty.

Think about brands you are truly loyal to. Something you’d never switch from, regardless of price, packaging, marketing, etc. That is how your customers need to feel about your brand to drive in strong organic growth, internal growth and strong retention.

Passives represent a BIG opportunity to capture additional revenue and grow lifetime value. They are sitting on the fence between displeased and ecstatic, so it’s imperative to engage with this group in a timely fashion.

We engage and strategically leverage our promoters – If you read last week’s post, you’ll know that your BIGGEST growth opportunity is within your current customers. Forget paid customer acquisition, your cheapest CPA channel is within your own customers.

80% … I repeat, 80%, of the customers that are willing to recommend you, are sitting on the sidelines awaiting instructions. They’re willing and able to drive new business for you, but they don’t know how.

80% of the customers that are willing to recommend you, are sitting and awaiting instructions. Click To Tweet

Our strategy is simple, we ask.

We don’t ask the same thing of everyone, nor do we automate our requests. We look at each promoter uniquely and identify the most useful request. That could be an introduction to a potential customer or investor, a testimonial or in-depth case study we could use for other customers, their participation in an article, a guest post on their blog, direct referrals, etc.

The point is, you must be strategic in how you leverage your promoters if you want to generate the best results. It takes time and effort, but it will pay off in spades.

We filter results and trend (tag) feedback – If you want critical and actionable insights, you need to be tying meaningful data and attributes to your NPS data. Who are your best and worst customers according to the data. Where are they located? How much do they spend? What plan are they on? How many purchases do they make on average? Etc.

We use attributes to help us break down NPS data on each of our plans, industries, locations, integrations used, number of surveys sent number of users per account, etc. We want to know precisely where our biggest opportunities exist, so we get granular.

In addition, we look for trends within the open-ended feedback we receive. If you’re doing NPS for yourself, this is an ABSOLUTE MUST. We read and tag each piece of feedback we receive to measure trends, along with assigning a sentiment to quantify the data for immediate action. This is where the rubber meets the road in terms of company changing decisions. Get rid of the subjective analysis.

We include everyone in the company – Lastly, as a transparent company, we feel it’s critical to keep everyone in the company informed on how we’re doing as a company — both financially and externally. The truth is, everyone in the company touches the customer, no matter if they’re an engineer or head of HR.

As a group of Slack super-users, we’ve chosen to send every piece of feedback we receive to a channel we aptly call, #nps-feedback. This allows anyone within our company to subscribe to the channel if they’d like to see incoming feedback in realtime. We even discuss the customer praise or concerns as a team.

If you’re a Promoter customer, the Slack integration is available to you as well.

So, that’s our approach. It’s one that has worked tremendously for us and one we prescribe to anyone using our product.

And, lastly, because we get asked so often, here is a snapshot of our own NPS campaign as of this week.

Screen+Shot+2016-02-11+at+2.20.03+PM

If you walk away from this post with just few pieces of advice, it’s this:

  1. Don’t focus on the score. In the end and by itself, it means nothing.
  2. Follow up with EVERYONE in some form. This is the magic behind everything.
  3. The more customer data you map to your NPS results (custom attributes) the more insight you’ll capture.
  4. NPS is a continual measurement that should be captured DAILY for a subset of customers. We help you do this in an automated fashion so there is no additional work involved.
  5. Trend every common bit of feedback from the verbatim responses to get a clear picture of what is driving the positive or negative sentiment at this point in time.

Chad Keck

As a product lead and executive for numerous successful ventures (Rackspace, HP Cloud, AppFog), Chad founded Promoter.io to help bring the actionable insights provided by Net Promoter to all businesses. He is a native Texan with a passion for helping other entrepreneurs.

Website

How Investors Should Be Measuring Startups Today

What’s the best way to measure a startup?

Profit is non-existent for most startups. Even revenue can be elusive at the early stages. And what’s the magic number for users or customers? 100? 10,000? 100,000?

In the book Startup Wealth: How the Best Angel Investors Make Money in Startups, Josh Maher interviews many legendary investors including Brad Feld, Mark Suster, Catherine Mott, Christopher Mirabile, Allan May, Joanne Wilson, and more. What heuristics did they use to know whether or not to invest in a startup?

Right now the answer is all over the board. There are no standards. Some people invest purely based on their relationship with the founders and do little to no due diligence. Others spend months or even years tracking a startup before taking the plunge.

I’d argue that Net Promoter Score (NPS) should be a required foundational metric behind measuring startups of every size. If you are a startup founder, it should be used as a KPI. If you are an angel investor, you should request it for due diligence. And if you are a venture capitalist, you should be requesting your entire portfolio to be reporting NPS figures to you.

I’ll break down my argument into three sections:

1) Universal Applicability

2) Honest Customer Feedback

3) Implicit Accountability

Universal Applicability

Whether you are running a consulting company or a high tech mobile app… whether you have just one customer or tens of thousands … whether you have no revenue or millions in profit … you can still run NPS campaigns.

That’s because fundamentally all businesses have customers. Even if you don’t have revenue yet (maybe you are still building out your user base) you still have users. And with users you can have an NPS score.

With NPS, you ask just one question: How likely (from 0 to 10) are you to recommend my product or service to a friend or colleague? As long as you have some kind of product or service, you can measure NPS.

This makes NPS an ideal key performance indicator if you are trying to evaluate a startup.

TIP #1: Don’t fret about the exact score.

If your potential investment is running an NPS campaign for the first time, the chances are that their score is not going to be that great. Many products find that their first score is not what they expect. That’s what makes NPS such a powerful survey technique. It gives you an honest assessment of how well you are turning users into fans.

You might be hoping that they are in the high +70’s like Apple. But as long as they are positive (and not net-negative), it should not be raising any big red flags at this point.

(After all, the real power of NPS is in the follow-up process)

The score is just a starting point on a journey.

So if you aren’t overly concerned with the NPS score, how do you use NPS as a metric for evaluating a startup? Good question! That brings us to our second point.

Honest Customer Feedback

Most investors ask for customer references as part of the diligence process before investing. But this has always confused me. Whenever you ask for a reference, the people given as references are intrinsically likely to tell you good things, since they are often friends with the person in the first place.

But ideally, you would want a way to get a more critical eye for some honest customer feedback rather than just talking to the one or two best references that a startup can provide you.

If you have an NPS campaign as part of due diligence, spend most of your time evaluating the individual responses rather than obsessing about the overall score. And if you are not given all the individual responses, insist on seeing them.

The second question in a NPS survey is: What was the biggest reason for having given that score?

This open-ended question lets customers praise and vent about what they care about most. Reading through these responses will give you the most independent and honest feedback you can get when evaluating a startup.

Often, these responses will include the best and worst of a startup. People who love the service will tell you why they love it. People who are having trouble with the service will tell you why they are having trouble. Those problem areas can then be used as starting points for further diligence.

Many people underestimate how powerful NPS is, especially because it is so simple to implement with just two quick questions. But done correctly, these two questions really are the only two questions that need to be asked.

Implicit Accountability

Although I’ve already said that the first NPS score doesn’t matter, I don’t want you to come away with the impression that none of the NPS scores matter.

In fact, tracking NPS scores over time is a fantastic way to audit that progress is being made to improve the product or service.

After the first NPS campaign, you will know the top three biggest problem areas. The next time an NPS campaign is sent, if the same problems come up again in the same frequency (or worse), then it is a sign that something is deeply wrong.

Ideally, as an investor in startups, you should be able to keep track of all your portfolio’s NPS scores over time. Comparing them to each other is a possible way to keep an eye on the investments that might need more of your attention. However, a better indicator is to make sure that all of your portfolio’s NPS scores are steadily improving over time.

No other score that I know of can provide this kind of warning system no matter the underlying business model or source of revenue. NPS gives you a tool that uniquely can predict breakout success or imminent failure for venture capitalists.

Conclusion

Implementing NPS as a key performance indicator can easily be done whether you are a startup founder, an angel investor or a venture capitalist. And done properly, the results can be amazing. For example, after we implemented just one sales technique into our NPS process at Promoter.io, we were able to increase MRR by 32%. You can even use NPS to drive a marketing campaign. So add this tool to your diligence worksheet and ensure that all the startups you work with start tracking it today.

Chad Keck

As a product lead and executive for numerous successful ventures (Rackspace, HP Cloud, AppFog), Chad founded Promoter.io to help bring the actionable insights provided by Net Promoter to all businesses. He is a native Texan with a passion for helping other entrepreneurs.

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How NPS Helped Grow A $174,000/Month Business

This is an excerpt from our upcoming NPS book which will be published this year.

Alex Turnbull’s an entrepreneur who lives in Rhode Island with his wife and dog, Honey Badger. When he isn’t building startups, you might find him surfing. But when he is working on building his startup, you might find him reading through Net Promoter Surveys (NPS).

What does Alex think is the single most important part of running NPS? I will tell you in just a second.

If you don’t know Alex, he started Groove, a help desk software company, in 2013 and grew it from no revenue to over $174,000/month in just 2 years. Now he’s become obsessed with growing it to $500,000/month in revenue.

For any business big or small, growing by 5X requires some major tools. That’s why Alex focused on NPS recently.

Groove’s First NPS Score Result

Groove is a simple help desk software that helps businesses manage customer support. In June 2014, the company used Promoter.io to measure its NPS score. What do you think his score was?

Beginners tend to obsess about their number. If it’s too low, they don’t want people to know. If it is very high, it’s the only thing they will talk about. There are even companies dedicated to benchmarking NPS scores.

In hotels, Westin recently got a +59. Motel 6 got a -15 (more detractors than promoters). Netflix got a +54 and Blockbuster On Demand got a +11. Southwest got a +62 and US Airways got a -8.

But as Groove CEO Alex Turnbull noted, “[O]n its own, that number is pretty meaningless to us. But as a benchmark metric for gauging the sentiment of our customers, it’s absolutely critical and precisely the reason that we did the survey.”

Groove started its NPS journey in the good zone with a +11. On par with Blockbuster On Demand’s score.

Alex didn’t get upset or even spend a lot of time ruminating on the absolute score. Instead, he recognized that the score was just a starting point, and that the real goal was to move the needle forward by the next time they surveyed their customers.

How To Use NPS Feedback

In order to move the needle forward, Groove focused on learning from the open-ended feedback they received from customers. According to Alex:

If there’s one tactic you take away from this post for your own NPS surveys, I hope it’s this one: do not neglect to follow up with your customers after the survey.

The feedback we got opened a lot of doors for conversations with our customers we might not have otherwise had. In some cases, it helped us dig in and get to the bottom of tough product issues that our customers were facing. And in many cases, it strengthened our relationships and made customers happier.

Alex took the time to tag each and every response from his 1,901 users so that he could keep track of any trends.

Here’s one example of how Alex and his team used that feedback. After their first survey, they discovered through the tags that the major trending driver of customer loyalty was the simplicity of its software, which Groove regards as its central mission.

In Alex’s words, “we’ve set out to build the simplest help desk software out there. A huge focus of ours in the last few months has been tackling some long-standing bugs that have been hurting the user experience for some groups of our customers, as well as putting a lot more ‘general polish’ on our app.”

Groove’s Second NPS Score Result

After three months of polishing and bug fixing, Alex decided to run another NPS campaign.

I bet you want to know the score, don’t you? Haven’t you realized that the score isn’t the important part yet? Ok, ok, I’ll tell it to you anyhow. But first, let me tell you about the driving trend update.

When they surveyed their customers a second time, customers who named “simplicity” as the main reason for loving Groove went from 48 percent to 55 percent. Fortunately all the work Alex had put into tagging those responses made it easy to calculate.

These and other changes helped Groove increase its overall NPS score to +16 in just three months. That’s a great result for any business because the direction the score is going is of much more importance than the absolute value at any point in time.

Would you rather have a +60 score that hasn’t changed in 2 years or a +50 score that keeps going up every 3 months? I always prefer growth to stagnation in any key metric.

As Alex summed up his experience:

NPS has been a game-changer for us. It doesn’t just give us incredibly valuable feedback directly from our customers, but it gives us an important benchmark to measure ourselves against each quarter, which is the critical piece missing from most customer feedback approaches.

It can certainly be painful to have customers give you negative feedback on your product, but think about it this way: if you didn’t give them this channel to share their thoughts with you, they’d probably never say a word; instead, they’d simply leave. Getting honest feedback every quarter has helped us build a much stronger product by showing us exactly what we need to be focusing on. I’d recommend it to any founder.

Alex is an exceptional entrepreneur, not only because of his ability to grow companies, but because of his innate ability to focus on the important parts of his key metrics. He doesn’t flip out when a score comes in lower than he hoped. He just focuses on what he can do to change it for the better. May we all be able to cultivate that kind of wisdom in our lives.

Chad Keck

As a product lead and executive for numerous successful ventures (Rackspace, HP Cloud, AppFog), Chad founded Promoter.io to help bring the actionable insights provided by Net Promoter to all businesses. He is a native Texan with a passion for helping other entrepreneurs.

Website