In order to keep your customers happy and make sure you deliver value to them on a continual basis, customer success initiatives are essential.
However, how exactly can you know if all the hard work your customer success teams are doing, is worth it?
The best way, is to use customer success key performance indicators (KPIs). This enables you to make a general concept, such as customer success, quantifiable.
There are many different KPIs and one of the questions frequently asked, is what are the best customer success KPIs? Put differently, how do you measure the effectiveness of your customer success practice?
The KPIs you should track depends on your individual company and your unique users. Therefore, you should first examine your customers’ business model. Then the customer success strategies and KPIs you employ have to be customized to measure milestones that are in line with the business plans for your customers.
The next step is to look at your customers’ goals. Answer questions such as “what are they trying to achieve with your product?” and “what features and functionalities matter most to them?” Once you feel certain that you understand your users and their goals, it is time to choose the KPIs that will most effectively measure their progress.
Even though there are no specific KPIs that will be most useful for any business and their customers, there are some metrics that are commonly helpful in most situations. Below you will find a list of the 12 most crucial KPIs for your customer success team to track.
You need to keep a close eye on these metrics and ensure your team is focused on the right areas. Areas that will guide your users to success with your product.
If you want to make it all a little easier, you can apply customer success software. This will help you track the KPIs that best measure product and brand success through every stage of the customer journey.
12 Crucial Customer Success KPIs
Your customer churn rate is the percentage of consumers that do not renew or cancel their subscription plans. This can be measured through any given month, quarter, or year. Therefore, churn becomes the defining factor of a SaaS firm’s ability to retain customers. In other words, it is a central measure of the growth potential of a company.
This is where the effort of your customer success teams really matters. A great customer success team will not only be able to retain customers. Yet, they can also take the lead on account expansion (including upsells and cross-sells) and referrals. This can dramatically decrease inevitable churn and even reduce negative churn.
Customer sentiment is probably one of the most common and most standardized metric when it comes to customer success. It is a way of collecting and understanding the voice of your customers.
To measure customer sentiment you can conduct a quick NPS (Net Promoter Score) survey. When doing so, you should be asking customers how likely they are to recommend your product or service to others.
The response will be given on a scale from 0-10. A score of “0” means that the user is not at all likely to recommend the product. On the contrary, a score of “10” means that the user is extremely likely to recommend the product.
Following, the consumers are grouped into three categories, based on the responses they have given:
● A score of 0 – 6 = “detractors”
● A score of 7 or 8 = “passives”
● A score of 9 or 10 = “promoters”
Overall, the metrics helps measure customer satisfaction and loyalty. Furthermore, it will let your customer success teams know what they can do to improve their work and which users are prime for referrals.
Product usage is a reliable indicator of the value your customers are getting from your service or product. In addition, by using this KPI it can help to ensure the product you are building is actually being used – and used as intended.
Hence, you should start to get an understanding of factors such as how frequently your users are logging in to your platform and whether they are using all of its features.
There are three key factors to look at:
● Feature Usage measures what features of your software the customers are using.
● Depth of Usage measures the percentage of the product being used. This can also help to indicate whether a customer is getting the most out of your product/service. Overall, the more functionalities they are using from your software, the more value they are getting.
● The breadth of Usage measures how many users, from each customer account, have logged in on a regular basis.
Satisfaction is an emotion, which makes it hard to measure. However, it is still important to try, as the KPI will tell you how well your product meets customer expectations. If consumers were unhappy, they would not buy the product/service a second time.
You can do this, by sending out a survey, asking customers to rate their satisfaction with your product or service. By digging a bit deeper into your customer satisfaction surveys, you can also gain much more detailed information.
By taking the number of respondents who described themselves as “highly satisfied” and divide it by the total number of survey respondents, you will get the overall percentage of customers who are “highly satisfied.”
This number is vital, as it indicates how many users feel that your offering is delivering the promised value.
On the contrary, you should also use the same approach to measure the percentage of consumers who describe themselves as “dissatisfied”. Then you can proactively target this group and help them solve their issues.
To learn how your customers are viewing your product or service you need to collect the necessary information. This can be done by studying the support tickets your customers submit. Most of all, customers normally send support tickets if something has gone wrong with the product or if they are having difficulty using or fully adopting the product.
Examine the number of new tickets you get across a set time frame. Analyze how many of the tickets were solved, and note how long those resolutions took.
If your firm is offering multiple product lines, you need to analyze the tickets in order to learn which products received the highest levels of service tickets. Moreover, you can discover if there are more tickets during a specific period of time.
In this way, support ticket KPIs can help you recognize which products are giving customers problems and give insight into how to stop these from increasing.
How much effort is required of your users to do the things they want to do when utilizing your product/service?
Not sure? Then you can use the customer effort score (CES), which measures just that.
Throughout the consumer journey, your users will try to self-serve by attempting to register, activate, and solve product issues on their own.
But if you make it hard for your users to adopt and use your service, they tend to submit support tickets or drop self-service completely. Such circumstances can hurt your CES and even intimidate customers from renewing.
If your customers are not renewing their subscription with your firm, when it is renewal time, you need to examine where and why you lost them.
Ask questions such as “were those users’ interactions with support repeatedly high-effort?” “Was it difficult for those users to find useful content to help them?”
You need to examine your retention rate to identify the cause(s) of any obstacles in your customer journey.
The expansion revenue metric refers to the percentage of your new revenue that is coming from your existing consumers. If measured on a monthly basis, expansion revenue is known as expansion MRR.
Expansion revenue can be generated when customers start to pay for additional features and/or functionalities from your service or from customers who upgrade from lower-tier plans to higher-tier plans.
This KPI is measured as a percentage of $ MRR growth, without including the new accounts.
When calculating expansion MRR simply take all of your new revenue from upsells and cross-sells for a given month and divide it by the revenue you ended up with the month before.
The best performing firms have up to 129% annual MRR retention rates. That means that they will grow at 129% annually without acquiring new customers.
The account retention rate is measured by the number of accounts that have been retained in a customer success manager’s portfolio.
Get an understanding of whether this number is decreasing or increasing. If the latter is the case, then you should look further into how you can prevent the rate to progress in the future.
The name of this KPI is highly self-explanatory.
The KPI is measured by the number of customers who successfully onboarded in a month.
Portfolio growth can be calculated, using the following formula:
Absolute Portfolio growth in MRR terms = Expansions + Upgrades + Renewals – Downgrades – Contractions – Churn
In every firm, the CEO needs to be able to justify every $1 investment as a $1+$X of growth, where $X is generated from the growth within existing customer accounts.
You want to see an improved growth rate within three to six months of the investment itself. If not, you should be thinking about applying another strategy.
Another way of measuring customer success KPIs is by analyzing the increase in word of mouth, referrals and other advocacy activities. Such advocacy activities could also include reviews and case studies.
There is a close link between customer advocacy and business success.
Happy customers will immediately refer people to your company, give reviews and/or be part of any relevant case studies.
Customer success KPIs are found to be some of the most significant tools available for tracking the progress of your enterprise and your customers.
If you don’t use them, you may struggle to meet overall business performance or revenue goals. Furthermore, you might not be able to prevent customer churn, which can be a huge issue for your overall growth.
The impressive thing about the KPIs mentioned above, is that monitoring and acting upon the data can be beneficial in other aspects of your business as well.
Once you start to engage your customers and stay aware of this type of feedback, you will get a better picture of where you can continue to improve your product and overall customer experience. That will help you enhance customer success for your company.