Can't we do better than NPS?

Why you should think of NPS as a thermometer, not a diagnostic tool

👋 Hi, I’m Kyle and welcome to my newsletter, Growth Unhinged. Every other week I take a closer look at what drives a SaaS company’s growth. Expect deep dive takes on SaaS pricing, product-led growth, public company benchmarks, and much more.

Investors look closely at retention rates as a signal of customer health, product stickiness, competitive differentiation and pricing power. Happy customers are the best long-term store of value at your disposal. They drive word-of-mouth adoption, demonstrate credibility with prospects in the sales cycle, and fuel continued innovation.

Retention rates—particularly net dollar retention—also strongly predict a SaaS company’s growth rate. The fastest growing SaaS companies see 89% annual logo retention and 109% net dollar retention (NDR) in their cohorts, according to data from OpenView’s SaaS benchmarking survey. That’s compared to 82% and 90%, respectively, among slower growing companies.

Somehow NPS has become synonymous with retention. These days …