Companies often speak of and implement various initiatives to improve their customer commitment and deliver customer value. As a board member and advisor to both public and private venture backed companies, I have had the opportunity to witness and assist organizations on these goals across a range of corporate cultures and customer success strategies.
As one example, as a member of their Board of Directors, I have an especially close view of Workspot and their approach on delivering value for our customers. Workspot, a leading provider of enterprise-scale Cloud PCs, has known for a while that it has incredibly loyal and passionate customers. There are many reasons for that. But to me, it starts with Workspot CEO Amitabh Sinha and his specific strategy for building high value products. On top of the core product management, development and release processes which are top notch, Amitabh brings a core tenant to customer product requests which ring very true to me. Essentially when there is a customer feature request, or the inevitable bug, Amitabh’s directive is “Fix it in the product if at all possible. Don’t work around the need with people and services.” As a result, the development team is ultra-customer responsive, and the product has an extremely intuitive user experience and capabilities that drive high value for customers.
So, this all feels good. But what are a few ways to measure the success of a company’s customer success initiatives?
Net Retention Rate (NRR)
One critical indicator of a SaaS company’s customer satisfaction and loyalty is its Net Retention Rate. In summary, NRR is the percentage of recurring revenue retained and expanded from existing customers over a period of time. NRR has been cited by many benchmarking firms, as well as in venture capital firm research such as by Tomasz Tunguz, Managing Director at Redpoint Ventures, as the #1 correlated factor to post-money valuations for SaaS companies1. At a minimum, if a company’s NRR is more than 100%, then that company’s business is expanding from its current install base, an indicator that the company is doing well and customers are loyal.
NRR is particularly meaningful because when strong, NRR tells a company that it is delivering significant value to its customers, helping to make them even more successful. It is not only an indicator of how well the product works, but it also tells us about the overall effectiveness of the way a company engages and communicate with its customers, and whether it is easy to do business with. Workspot’s NRR is not a publicly released financial figure, but I can disclose that it is well within the upper quartile of SaaS companies. Industry benchmarks for SaaS vendor NRR are shown on page 25 of this KeyBanc Capital Markets survey, who annually performs one of the most comprehensive research studies on SaaS vendor business metrics2. Workspot’s NRR figure is even more impressive due to its relatively high annual recurring revenue (ARR), which means the renewal base denominator is large, thereby making the amount required to achieve renewal and expansion revenue even greater to be best in class.
Measuring Customer Sentiment for Workspot Cloud PCs
Net Promoter Score (NPS)
Even while Workspot’s customer relationships felt good based on the everyday customer conversations and its strong NRR, as a data-driven organization Workspot wanted to more surgically measure its customer sentiment by communicating directly with their Cloud PC and IT administrators. The approach used for gaining this feedback was through its first ever Net Promoter Score (NPS) Survey launched in April 2022.
The NPS survey is a widely used tool that provides instant insight into how customers feel about the business. In an NPS survey, users are asked one important question: Would you recommend Workspot to a friend, family, or colleague? In response, the survey participant provides a rating between 0 and 10. Ratings of 1-6 indicate “detractors,” those with a rating of 7-8 are considered “passives,” and those who rate 9-10 are “promoters” of the company.
Calculating an NPS score is as simple as tallying up your responses and subtracting the percentage of detractors from the percentage of promoters. A score that is above 0 is considered favorable. Above 20 is very good and above 50 is excellent. Workspot is in the SaaS business, so looking to the scores of other SaaS companies is an important comparison. These scores are typically around 30-40 depending on who you ask.
Workspot achieved an NPS of 76 – off the charts and far ahead of its competitors and the SaaS pack in general. Not only does this validate what Workspot already believed about the health of its customer relationships, but the NPS process also serves to open new lines of customer communication, reinforces the value placed in customer relationships, and helps obtain valuable customer feedback to drive continuous improvement.
Customer Support Surveys
Workspot also uses a second approach to capture and analyze user sentiment through regular Customer Support satisfaction surveys. Every time a support ticket is closed, a brief satisfaction survey is sent by the CS team to the customer. In these surveys, feedback regarding support and technical resolution is provided when the customer interaction with Workspot is still fresh in their mind. There are three options for customers to respond – “Dissatisfied, or “Satisfied,” and/or they can add comments.
For Workspot’s recent Customer Support surveys in 2021, 100% of the responders indicated they were “Satisfied” with their support experience. e.g.,
- “Super quick turnaround time. Done correctly the first time. Could not ask for better support.”
- “You guys are the best. Thank you for helping us. Truly, thank you.”
- “The Workspot team are very proactive and helpful, as always.”
- “Support was quick and knowledgeable.”
Clearly, Workspot’s “product-first” strategy I described earlier in this writeup combined with a highly customer-centric culture, as well as a focus on continuous product and support process improvement is paying off for Workspot – whether measured by NRR, NPS or its regular Customer Support Surveys.
1 http://tomtunguz.com/leading-predictor-saas-series-a-valuation/
2 https://www.forentrepreneurs.com/wp-content/uploads/2021/10/2021-KBCM-SaaS-Survey.pdf
