The following is a guest post by Customer Success Consultant, Brooke Goodbary.
As Customer Success teams we’re constantly striving to help our customers achieve their goals and objectives- but how do we know if our efforts are having the desired effect? Are there metrics that indicate whether or not Customer Success has been, well, successful? Which Customer Success metrics matter?
What’s the difference between a metric and a KPI?
Customer Success teams should be tracking both KPIs and metrics, but it’s not always clear where one ends and the other begins. “Metrics are just numbers that measure some type of behavior. KPIs are metrics that reflect some objective or key result you’re trying to hit. So all KPIs are metrics, but not all metrics are KPIs,” — Tracy Rabold. Customer Success KPIs should be tied to broader company-wide goals and initiatives, and for this reason, KPIs vary drastically from company to company. Metrics are more general measurements used to make strategic decisions in the context of specific KPIs. As a result, Customer Success metrics are often shared across companies.
Revenue is a key ingredient in any healthy business, and Customer Success should add to your company’s bottom line. When Customer Success generates more money from retaining and expanding existing accounts than is lost from churn, they transition from a cost-center to a revenue generator.
Net churn is the most straightforward way to quantify the impact of your Customer Success team. Measuring net churn gives teams a quick pulse on all revenue coming in from existing customers. It’s simple to understand at a glance and is a good jumping off point for diving into more specific types of churn (customer, logo, etc.).
Retention rate is the percentage of customers who extended their contracts when they were up for renewal. Losing a renewal means your company has forfeited revenue you could previously depend on. Companies that operate on annual or multi-year contracts need to monitor their retention rate and renewal timelines to ensure they don’t get caught off guard by a low retention rate.
Expansion revenue is directly tied to the success of your customers- successful customers buy more from your company, unsuccessful customers buy less. This metric can provide insights into how much value you are delivering customers. Customer Success teams should view expansion as an extension of the value they deliver on a daily basis, and avoid pushing a hard sale.
Quite simply, customers are unlikely to receive value from your product if they’re not using it. Driving usage and deeper feature adoption will lead to customers receiving meaningful, long-term value.
Every product has unique usage patterns and behaviors that are known to result in successful customers. Customer Success encourages users to develop these behaviors by optimizing for supporting proxy metrics– such as key feature usage, installation of integrations, or volume of API calls.
User skill level
Are users only scratching the surface of what your product can do? If so, it’s unlikely they will be able to derive enough long-term value to stick around. Deepening their understanding of how your product can address the root causes of their problems makes your company more than just another tool in their toolkit. Skill level metrics include how many key features the user has used, usage frequency, and outcomes delivered.
Trying to measure how your customers feel about your product and company can be as hard as cracking a safe, but it’s important to try to measure if you are meeting customers’ expectations and creating advocates.
NPS is the most common method of measuring customer sentiment. NPS’ benefit — that it’s an all encompassing rating of user sentiment — is also its shortcoming. There is no systematic way to dive into a user’s NPS (short of reaching out and asking for additional feedback), which makes it hard to attribute the resulting score exclusively to your Customer Success team.
Volume of support tickets
Support tickets signal friction between users and products. While users reaching out to Support is not always a bad thing, high ticket volumes can signify a critical issue at the core of these requests. One of the distinctions between Customer Success and Support is that Customer Success is proactive in nature. A low volume of support requests can indicate that your Customer Success team is proactively addressing issues before users even have a chance to submit a support ticket.
Quality of relationships
Quantifying the quality and strength of your Customer Success team’s relationships can be challenging. We all know instinctively that relationships are crucial to success, and that 1:1 human interactions drive meaningful change. Creating a quantitative quality measurement of your customer relationships provides a powerful leading indicator of churn.
About the Author:
Brooke Goodbary is a customer success consultant, writer and expert. She shares her experience working at fast growing startups with her clients and on her blog at www.brooke.land/blog.
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