AYX NPS

In the last conference call AYX stated this:

Our customers not only continue to buy more of our platform, they are recommending it to others as evidenced by our recently completed Net Promoter Score survey where Alteryx customers adorned us with the highest NPS in our history. The advocacy from these customers benefits us in many ways.

In my report on AYX I stated that I sent an email to AYX. Here is the email. The names have been changed to protect the innocent.

Hello,
My name is Andy and I am a small retail investor in Alteryx. On your last conference call you stated “where Alteryx’s customers adorned us with the highest NPS in our history.” I have never seen what that number is. Would you mind giving me your historical and current NPS percentage numbers that you have? Is this something you track quarter to quarter?

Thank you,
Andy

Here is their response:

Andy,

Thanks for the message.

We do not disclose our specific NPS score externally but it is something we monitor as maintaining strong customer relationships is very important to Alteryx.

Best regards,
AYX

The more I think about this the more it bugs me. Why even tell anyone about your NPS score if you are not going to state the number? If it is important to Alteryx then it should be important to investors. What are they trying to hide?

Andy

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Is NPS something unique to Alteryx, or do other companies use it, too?

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Is NPS something unique to Alteryx, or do other companies use it, too?

Hi Ed,

A lot of companies track it. It stands for Net Promoter Score.

Here is some information on it.

https://www.medallia.com/net-promoter-score/

Andy

Is NPS something unique to Alteryx, or do other companies use it, too?

NPS or Net Promoter Score is a simple question that has found some traction in the business world.

Here’s what Wikipedia has to say about it:
"Net Promoter or Net Promoter Score (NPS) is a management tool that can be used to gauge the loyalty of a firm’s customer relationships. It serves as an alternative to traditional customer satisfaction research and claims to be correlated with revenue growth. NPS has been widely adopted with more than two thirds of Fortune 1000 companies using the metric. The tool aims to measure the loyalty that exists between a provider and a consumer. The provider can be a company, employer or any other entity. The provider is the entity that is asking the questions on the NPS survey. The consumer is the customer, employee, or respondent to an NPS survey. An NPS can be as low as -100 (every respondent is a “detractor”) or as high as +100 (every respondent is a “promoter”). A positive NPS (i.e., one that is higher than zero) is generally deemed good, and an NPS of +50 is generally deemed excellent.

The Net Promoter Score is calculated based on responses to a single question: How likely is it that you would recommend our company/product/service to a friend or colleague? The scoring for this answer is most often based on a 0 to 10 scale.

Those who respond with a score of 9 to 10 are called Promoters, and are considered likely to exhibit value-creating behaviors, such as buying more, remaining customers for longer, and making more positive referrals to other potential customers. Those who respond with a score of 0 to 6 are labeled Detractors, and they are believed to be less likely to exhibit the value-creating behaviors. Responses of 7 and 8 are labeled Passives, and their behavior falls between Promoters and Detractors. The Net Promoter Score is calculated by subtracting the percentage of customers who are Detractors from the percentage of customers who are Promoters. For purposes of calculating a Net Promoter Score, Passives count toward the total number of respondents, thus decreasing the percentage of detractors and promoters and pushing the net score toward 0."

I personally take the score itself for overrated. It only becomes helpful if you find out why some folks love you and others not, then do sthg about it. Without such action, the score itself is nice to have but not necessarily a data point that I would pay too much attention to. Part of the reason is that the 11-point scale makes the results quite a hairball. Imagine 10% of customers rate you 8 instead of 9 while 50% of customers jump from 0 to 6. Clearly you have improved overall but your NPS score is down (you lost 10% promoters without a change in detractors). There are plenty such examples how the score can be quetsionable. I also doubt that the link between the scores and future behaviour is nearly as strong as the authors suggest.

It remains a datapoint for which I have a casual interest. I recently heard of a company with an NPS score >90. (Was that NTNX?). That is a seriously strong result that has to mean sthg (and maybe it only meant that they got the tabulation wrong :wink:

But I wouldn’t expect comapnies to share their scores. They zig-zag big time and as a company you don’t want to get hung up on discussing why your score fell by 5% in the last quarter.

Best

LNS

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The more I think about this the more it bugs me. Why even tell anyone about your NPS score if you are not going to state the number? If it is important to Alteryx then it should be important to investors. What are they trying to hide?

Hi Andy, I think you are overthinking this. LNS gave a clear description of the NPS. It’s something that companies generally use internally as a measure of how well they are pleasing their customers, but it’s a pretty informal index and I don’t know any company that reports it regularly. I think what happened here was that Alteryx’s NPS had normally bounced around, let’s say between 72 and 86, but this time it hit 90, so they were excited and told everyone they got their highest ever, but they are not going to give out a number because then next time everyone will ask what was your latest number. I’d say their Dollar Based Net Retention Rate is a more objective indicator of how well they are pleasing their customers, and that is certainly a very strong number. I was just pleased to hear that their NPS score was highest ever as that probably means their good numbers will continue, at least for now.
Saul

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Hi Saul,

Hi Andy, I think you are overthinking this.

Your probably right but I also think if a company is going to refer to something they are tracking that they should give the numbers out that they are tracking, otherwise they should just keep it to themselves.

Happy Thanksgiving and I hope you are doing well.

Andy

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