By now most executives have heard of the Net Promoter Score system, aka the #1 litmus test for customer loyalty: "On a scale of 1-10 how likely are you to recommend [your company] to a friend or colleague?"

As we've written about in past DBT blog posts, the NPS responses tell you a lot. . .

Starting from the left in red:

Detractors (0-6) borderline hate you. As unhappy customers the don't say nice things about you at cocktail parties or conferences, and they certainly wouldn't recommend your company or product.

Passives (7-8) are on the fence. They are the swing states of the NPS electorate.

Promoters (9-10) fucking love you. They'd hand out your goddamn business card at the mere mention of your company. Recall, when you asked them "How likely are you to recommend us?" they said 9! or 10! Promoters are super stoked about what you're up to.

So what is the most underrated growth strategy in tech/SaaS?

To illustrate—and as a bit of a teaser—here is how the NPS thing works at most tech/SaaS companies.

  • Company: "Dear [first name], How likely are you to recommend our product to a friend or colleague?"
  • Customer: 9 !!! You guys rock !!! My whole team LOVES your product.
  • Company: [canned response] Thank you for your feedback.
  • Company: [awkward silence]
  • Company: [awkward silence]
  • Company: [random marketing update]
  • Company: [six months later]: "Dear [first name], How likely are you to recommend our product to a friend or colleague?"
  • Customer: 10 !!! It's even better than last time. Honestly, I consider you family. Well done.
  • Company: [canned response] Thank you for your feedback.
  • Company: [awkward silence]
  • Company: [awkward silence]

Meanwhile at the Company's quarterly leadership offsite. . .

Chief Revenue Officer: "Thank you all for coming to this quasi-swanky venue today. We are here—as a leadership team—to figure out our growth challenges and brainstorm how we can grow revenue faster and hit our goals for 2017. I assume you all read the pre-read [blank stares] so we'll go right into the ideation phase. Who wants to go first?"

  • VP Marketing: "What if we did more EVENTS! Like real enterprise caliber events?"
  • VP Sales: "Pipeline generation is weak. We need more support in late stage deals."
  • VP Success: "We could hire more CSMs and Support reps to help customers drive more value."
  • VP Monetization: "We could rethink our pricing and packaging. . ."
  • Everyone: "Haven't we tried that like 3 times already?"
  • VP Monetization: "Or, I mean, Product could build new features that customers really want."
  • VP Product: "I think everyone's shared some great ideas today. I'll have the PMs incorporate all of this at our next release planning."
  • VP Engineering: "I mean, can't the sales people just close more deals? Sorry, why am I here again?"

Chief Revenue Officer: "Thank you—all of you—for the very, very good ideas. Growing revenue is challenging, especially during times like these [strong eye contact with VP Sales]. We just need to roll up our sleeves and get to work."

  • EA who's at the offsite for the sheer purpose of keeping track of time and taking notes: [brazenly] "What if. . . we asked our happy customers. . . to introduce us to people they know. . . who might consider buying from us?"
  • CFO: [looks up from his computer for the first time in 1.5 hours] "Go on. . ."
  • EA: "Well, we've been doing our NPS survey for 4 years now and some of our customers are actually quite happy and gave us a 9 or 10 when we asked them would you recommend us to a friend or colleague. . ."
  • CFO: [eyebrows raised] "Are you suggesting that we ask happy customers if they'd recommend us to a friend or colleague?"
  • EA: [looks around] 
  • EA: [brazenly] "Yes."

[10 seconds of silence that feels like 10 minutes to the EA]

  • Everyone: ". . .That's AMAZING! Holy smokes. It's SO OBVIOUS—why didn't we think of that? We could ask promoters to recommend us to a friend or colleague! I mean, that's the question in the NPS survey, right? Haha, it makes SO MUCH SENSE."

EA be like:

 So what is the most underrated growth strategy in tech/SaaS? You betcha. Customer referrals. Specifically, referrals from promoters (assuming you use NPS), or overall happy customers (if you don't use NPS).

Why are referrals so valuable?

  • 1-2x higher close rates
  • Shorter deal cycles (20-50% depending on complexity)
  • Lower customer acquisition cost (CAC) due to lesser marketing spend / nurturing
  • Higher retention (customers that were introduced from a friend/colleague are more likely to stick around)
  • More referrals: customers that were introduced via referral/promoter are 2x more likely to provide additional referrals—so the whole strategy can grow exponentially if you really get behind it

That's it really. At DBT we've witnessed several tech/SaaS companies make the grave mistake of clinging to what they know: hire enterprise AEs, hire more AEs, close deals, pay generous commissions, grow revenue, attract more investors, start thinking about retention when it dips, freak out when it dips more, hire more Customer Success people, "take a step back", think market share, craft go-forward strategy, growth decelerates, freak out, schedule leadership offsite for the Company.

If you want to equip your team on how to become dangerous with referrals, check this out:

Click here to download the whole PDF

We hope you find this resource helpful to empower your account teams to have more effective conversations with your happy customers to ultimately generate more leads the close quicker and more often to ultimately drive revenue to the heights of your ambitions.