How Does NPS Affect Market Penetration of Connected Products?

Published by Samantha Wheatley June 20, 2017

Making better products drives revenue.  It seems obvious, yet so many connected product companies make mistakes when it comes to launching a product.  Companies will throw dollars at marketing (I’m a marketer so I’ll take those dollars!), or on superfluous features that don’t add much value and forget about the reason that they are there - to create a great Wi-Fi product that customers will use and love.  It all starts and ends with the product.  

If you’re reading this, you might be rolling your eyes and saying, “We’d never do that,” “What kind of company doesn’t put their product first?”

Our CTO Barbara wrote a great post detailing the dilemma that product managers face when developing a product.  Companies will ask too much of the developers, do not give them enough time, prioritize the latest feature over a necessity like security and more.  “That doesn’t really happen.”  Sorry to say that it has happened in the past and unless we learn from those mistakes, it’s likely to happen again.  Ignoring vital product functions like security and onboarding can get you in hot water.

Net Promoter Score and Market Penetration

Net Promoter Score is an index ranging from -100 to 100 that measures the willingness of customers to recommend a company's products or services to others. It is used as a proxy for gauging the customer's overall satisfaction with a company's product or service and the customer's loyalty to the brand. via Medallia

If your product’s NPS is high, your customers are likely recommending it to their friends and in online reviews. They are so happy with the product that they have become advocates for it and the company that developed the device.  It’s like taking your marketing and sales team and multiplying them by 100 (without having to pay any salaries.)  Having a great connected product with a wonderful user experience pays off big time.

In the chart below, you can see the correlation between NPS and market penetration.  Keep in mind that some of these product categories have been around longer and thus have more adopters over time, but overall, the categories with higher net promoter score have higher market penetration.  

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via Marcio Avillez, Cirrent; Sources: Parks Associates, Gartner and Cirrent

The bottom line is that net promoter score and market penetration are inextricably linked. All other things being equal, the higher the NPS, the faster customers will buy and adopt the products. Customers who are successful with their products are happier.  If they’ve had a great experience when they unbox it, set up and use it, you’ve done a good job. (Remember that ease of use is the most important feature of a connected product.) 

Every day at Cirrent, we talk to different Wi-Fi product companies.  Most understand that setup and connectivity are two factors that they have to get right to have high customer satisfaction. In one case, a company mentioned that if they get WiFi onboarding wrong, they are risking a 50 point reduction in NPS.  It won’t be the same with every company, but it’s abundantly clear that investing in the user experience from the beginning is key for a high NPS and rapid consumer adoption.

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