Customer Cross, a company based in Belgium, has published the results of a survey involving 265,000 companies on customer loyalty indicators. One of the main conclusions was that the NPS (Net Promoter Score) is a poor indicator of customer loyalty.
Customer Cross conducted this study in 2023, collecting data over a 10-year period from 265,000 companies in the United States and Europe. All these companies operated with a business model based on recurring revenue or subscription models, such as SaaS, telecoms, and data services.
"Our main objective was to identify which metrics are most correlated with the actions our customers are taking to improve customer loyalty and retention," says Tom Carnewal, founder and CCO of Customer Cross. "We wanted to determine which metrics help predict the risk of customer churn. This is a critical issue in the current economic downturn, which makes acquiring new customers more challenging."
“Traditionally, NPS has been seen as a useful measure for predicting churn risk,” says Nicolas Garmy, co-founder of Skalin. “The underlying idea is that a good NPS score signifies a satisfied customer, and satisfied customers tend to stay longer. However, the results obtained by Tom and his team are surprising.”
Tom adds, “When we analysed the data, we found no correlation between NPS and the risk of churn. In other words, there is no statistical evidence that customers with a high NPS—or other satisfaction scores like CSAT—will continue using your products or services for a longer period.”
Why does an indicator as closely scrutinised as NPS seem to have no value in predicting customer churn? “Firstly, most NPS surveys have very low response rates. This leads to statistically biased data sets that are unsuitable for drawing general conclusions. The few responses received tend to be either very positive or very negative, which poorly reflects reality.”
“Additionally, the NPS score given by a customer depends on who responded and when. Lastly, it’s important to remember that some of the most engaged customers are often the most demanding. These demanding users push your product or service to its limits and often have numerous questions or comments, which can result in a mediocre NPS. However, this doesn’t mean they will churn,” explains Tom.
"To be clear, we're not saying that NPS or CSAT aren't valuable indicators or that you shouldn't strive to keep your customers happy,” says Nicolas. “What we are pointing out is that there is no statistical evidence showing that customers with a poor NPS churn more quickly. NPS remains a valuable metric for marketing and product teams.”
Customer loyalty and retention have always been important, but they are even more critical in today's challenging economic climate. That's why Skalin and Customer Cross are excited to announce the signing of a partnership agreement!
“We help our clients increase their revenues by advising them on reducing churn and boosting customer loyalty. At their request, we also guide them in selecting SaaS platforms tailored to their needs for quicker revenue growth. With this agreement, we can now refer our clients to Skalin, a leading European player in this field. What I really like about Skalin is that it represents the new generation of Customer Success platforms: easy to implement, cost-effective, and equipped with the latest AI technologies,” says Tom.
Nicolas Garmy adds, “Tom and I have been collaborating for the past year. He is an expert in Customer Success and knows our platform inside and out. Our customers will now benefit from his expertise and experience. This agreement solidifies the strong relationship between our two companies.”
About Customer Cross
Customer Cross, based in Ghent, Belgium, is a customer success service company dedicated to helping B2B SaaS companies achieve rapid and sustainable growth in recurring revenues and to structure their customer success operations. They employ their proprietary Customer Cross methodology, which leverages research, customer data, and technology partnerships. For more information, visit customercross.com.
About Skalin
Skalin (Paris - France), the next-generation Customer Success platform, helps B2B SaaS companies track, engage and grow their customers over time with its 360° view, AI-powered health score and powerful automation capabilities. More information on skalin.io.