Starting up? Don’t overlook the value of early stage feedback. In this article I’ll explain 3 key reasons why metrics like Net Promoter Score and Customer Effort Score will be instrumental to your growth.
Feedback is an incredibly versatile instrument in business growth. It’s well-established that feedback generates insight into why your business performs as it does.
Its value isn’t limited to grown-up, later-stage companies. Feedback also fuels the growth of a start-up. If you’re starting up then feedback needs to figure into your toolkit. Here are three ways feedback will help you propel your startup towards hypergrowth.
1. NPS indicates product/market fit
One of the most crucial steps a young startup goes through is establishing product/market fit. You’re ready to receive funding and the world’s at your feet. Venture capitalists basically only care about their return on investment in your business (i.e. will this yield me more money than it will cost me?), so they’ll look at the product/market fit for your product or service.
Net Promoter Score (NPS) is a great indication for product/market fit. NPS separates customers into categories based on a simple question: ‘would you recommend us?’ The higher your NPS is the better your product/market fit must be. A high ratio of high-scoring early-stage adopters of your product will show any VC that you’re extremely likely to build a loyal customer base.
2. Using CES to improve product onboarding & adoption
Building a great customer onboarding is another vital step in your startup’s journey. You’ll want to evaluate how your product performs in this regard: Can your customers easily navigate your product? Do they know where to find specific settings? How easy was the onboarding process in general?
Customer Effort Score (CES) is the right metric for evaluating your onboarding. It’s an ease-of-use question: it asks your customer how easy it was for them to do X. You can zoom in and ask about a specific feature or step, or ask how easy onboarding was in general.
With your CES baseline established you can get to work improving and bulletproofing your onboarding. Identify the strengths and pitfalls in your product. Look to correlate satisfaction with specific elements of your product or service with your CES – this will show you where to improve and what to leverage based on early usage of your product.
Don’t wait until you’ve got too many customers and you’ve not got time for this. If there’s any phase you should consider crucial to the health of your startup it’s this – get onboarding right and you’ll have happy customers coming back again and again.
Keeping churn to a minimum will be instrumental to your success. We wrote an Ultimate Guide to Customer Effort Score which will equip you with the knowledge you need to nail customer retention.
3. NPS forecasts renewals and upsell potential
If you’re starting up a Software-as-a-Service (SaaS) business then you want to get a indication of renewals and/or upsell potential. Why? Upselling an existing customer is 50% more likely to succeed than selling to a new prospect. Upsells will be anchored around key customer lifecycle stages like renewals.
Enter NPS. With Net Promoter Score you’re dividing your customers into 3 bases: detractors, passives and promoters. It’ll give you a great forecast of how you’re renewals will play out. There’s plenty of research indicating detractors (scorers 0-6) are way more likely to churn than more loyal customers.
Individual feedback responses from your customers will give insight into their product usage. Maybe they’ll be complaining about missing a certain feature, or want to add more volume of some kind to their plan or license. Leverage this information: when it comes to renewal time it’s handy to know what you can upsell on. Feedback can also give great insights into what features you should develop next. You’ll then be able to retain and upsell based on those as well. You get the idea.
Be structured with feedback in the earliest stages of your startup. When you’re helping solve people’s problems and adding real value with your product or service you’ll have people’s attention when your reach out for feedback.
Let’s recap. You’ll want to map customer feedback onto these three key stages:
- Product/market fit.
Loyal users and customers at this early stage sends VCs a positive message that you’re a good investment.
- Improving onboarding.
Feedback from customers on how well you’re onboarding them is a vital tool in preventing issues from scaling that will lead to churn.
- Plan your expansion strategy.
Fix issues early and identify upsell possibilities by being proactive with NPS.
Are you starting up and want to discuss how feedback plays into growth strategy? Reach out! I’d love to help.