Many organizations judge the health of their business by the number of new business deals closed. How many calls does sales make with potential new customers? And how many opportunities does sales manage to convert into new deals?
Fair is fair: for sales managers, these are statistics that help determine whether or not their sales staff is doing a good job. Less focus, however, is on the existing customers who simultaneously leave the building through the back door because they are not satisfied with the support they received. What if we focused on customer success the same way we do on new business?
However, the "old" customer success playbook is no longer enough to keep customers satisfied and coming back. A whole new way of customer success is emerging. Namely, one in which the focus is much more on developing, maintaining and strengthening relationships with customers.
And that means that what is measured is also changing. In this blog, you'll find 8 customer success KPIs that are going to matter more and more within organizations - this year and for years to come.
This may seem like an obvious one, yet the Customer Health Score is still often approached incorrectly. This is because with the CHS it is important to look at the big picture: do customers actually see the value of the product or service they purchase from you?
How often do customers use the product? How successful are they after purchasing the product? What impact does it have on the company?
Customer support has long since ceased to be about handling as many phone calls or as many emails as possible. Instead, customer success reps must ensure that customers flourish with the help of the product you provided them. They should follow up with the customer, offer help with problems and actively help strategize for the future.
A Customer Health Score helps you capture that success in a KPI. You do that by zooming in deeper on your customers. For example, what do your customers' finances look like? How many customers do they have? Try to get a handle on the health of your customers' business and find out how your product contributes to it. Catch this in a metric and regularly report on this metric to determine the extent to which your customers are successful with your product.
Customer satisfaction is not just about the experience the customer had with respect to the support person, but also about how the customer feels about the brand and the product itself. It should come as no surprise that customers who are happy with the experience they have had are more likely to return.
While customer satisfaction can be measured in a variety of ways, one of the easiest ways to do so is by measuring the Net Promoter Score. Through a Net Promoter Score (NPS) questionnaire, you ask whether your customers would recommend the company to someone else. The support person - and particularly their relationship with the customer - plays a big role in this assessment.
The advantage of an NPS is that it provides both quantitative and qualitative data about your customers. Not only are participants asked to rate their experience on a numerical scale, but they are also asked to provide an explanation for their score. That way, you can analyze customer feedback based on the score and further investigate that feedback when you encounter negative results.
Another important KPI that you should definitely not forget is your customers' feedback. What do they say about you and the service you provide? What do they like about their connection with the company, and what do they dislike?
Customers need to feel like they have a voice. Giving them the opportunity to provide feedback is a great way to build a long-term relationship together.
Customer success managers can then use qualitative feedback - such as survey or questionnaire responses - to determine how well their reps are meeting customer needs. Of course, it can be unpleasant to hear where your onboarding or customer service process is failing, but having the opportunity to correct a mistake before a customer leaves is invaluable.
Customer churn is incredibly important to measure. It is particularly interesting to see how these numbers vary by customer support rep. A customer support rep who maintains a good relationship with each of their customers is likely to have a lower churn or cancellation rate. Again, customer support is about relationships, and building a relationship makes a big difference.
The "monthly recurring revenue," or MRR, is a good KPI to determine how much the number of customers - or their spending - has grown since the start of the business. This KPI indicates how much money customers spend on your products and services each month. You can compare this value over time to determine whether or not your customers are succeeding with your products. This is particularly useful for SaaS companies that work with a subscription model.
An additional MRR KPI that can be calculated is the "expansion MRR." The expansion MRR shows how much additional revenue you generate from customers beyond their monthly subscriptions. This gives you a good idea of how effective upgrades and customer loyalty programs are.
Customer lifetime value (CLV) is one of the most fundamental customer KPIs you can measure. It shows the total revenue you can expect from a single customer over the course of his or her relationship with the company.
Companies can use CLV to determine the value of their customers over time. If their value increases, then you know as a company that your products and services are contributing to your customers' success. If their value decreases, then your company may need to reevaluate its offerings and look for shortcomings in the customer experience.
While it's great to know that your customers are achieving success with the products or services you provide, that tells you nothing about how cost-effective your customer success team's efforts are in retaining those customers. The cost of customer retention, or CRC, outlines the total cost of your customer success program and compares it to your total number of customers. Thus, the CRC shows how much money you spend on each customer to retain them.
CRC helps companies invest in their customer success programs. While you may not be able to wait to roll out new initiatives yourself, you want to make sure you're spending the money in a cost-effective way. By measuring CRC, your company can have smart investment conversations by comparing the potential cost of retaining customers with the potential revenue you generate from a new feature or service.
For customers, "time" is the most important thing. Customers want their issues resolved quickly so they can get back to pursuing their goals. If they constantly have to wait for your support team, it adds a lot of friction to the customer experience.
With this in mind, it's important to measure your first contact resolution rate. This is the percentage of customer service cases that are resolved within the first interaction. If this number is high, it means that your team is not only responding to customers, but also addressing their needs quickly. And this is important because research shows that 67% of churn can be avoided if the service question is resolved during the first interaction.