Between NPS, CAC, LTV, ARPU, and countless more, customer success metrics can feel like a confusing bowl of alphabet soup.
But CS metrics act as a guidepost to ensure teams are moving in the right direction and delivering results for their customers and company. Prioritizing the right metrics that tell the whole CS story can transform a company’s CS efforts.
Measure What Matters
Unlike other departments that can track their success with hard quotas, customer success is relatively ambiguous.
But that doesn’t mean that CS efforts aren’t crucial to a company’s success. In fact, companies that prioritize customers bring in 5.7x more revenue than their laggard competitors.
Proving the value of CS requires tracking metrics. Measurement also pinpoints areas of improvement for CSMs, which improves customer relationships and helps customers see the full value of the product.
There are countless potential CS metrics, each with its own validity and reasoning. But let’s dive into the four top metrics for CS teams.
As the frontline to customers, CSMs have valuable insights into a customer’s engagement and path to success. One of the most straightforward and robust metrics to track is CSM sentiment — how well do CSMs think the account is performing? Are customers engaged and responsive? These answers provide qualitative backing to CS metrics.
Tracking CSM sentiment means giving CSMs regular opportunities to measure the health of the account, such as rating its potential for renewal after every interaction or regularly scoring the account on a red to green scale. To be its most effective, CSM sentiment needs to be tracked religiously so CS teams can see patterns and changes over time. If CSM sentiment drops, CSMs can step in to strengthen and repair the relationship prior to churn.
It’s important to note that CSM sentiment is subjective. And while it’s a powerful tool that empowers CSMs and adds a human element to tracking metrics, sentiment is most effective when combined with quantitative measures.
Product Adoption Milestones
How a customer uses the product can indicate their engagement with the brand. What three to five actions do customers need to reach to be successful? These specific milestones vary by company but should be decided by the CS team to define a successful account.
To determine the more critical product usage metrics, look at what long-term customers do well or how the company wants customers to use the product. It’s important to understand the benchmarks of product adoption to allow you to truly understand what shows success in the tool and what shows intervention is needed. These metrics can include anything from tracking how many internal users a customer adds to their account or how many documents it uploads to a system.
Tracking these critical product usage components keeps customers on the path to integrating your product in an operational way. If a CSM notices a customer has stalled out on reaching one of these benchmarks, they can intervene to help the customer stay on their journey to full value and contract renewal.
Executive Business Engagement
Successful CS teams regularly meet with customers and involve executives to check status reports. These executive business reviews are a powerful gauge of a customer’s engagement and path towards full value.
The cadence of the meetings varies depending on the type of client and bandwidth of the CS team. But no matter the frequency, EBRs are an ideal time to discuss strategy with the customer, showcase the improvements the product has made to their business, and sell additional features if necessary.
Simply tracking if these meetings are happening can indicate a customer’s engagement level. Getting CSM and executive feedback after the meeting with a simple thumbs up or down can chart a customer’s strength and signal if they are headed in the right direction.
Outcomes Met Equal Value
And then there are the business outcomes. These metrics tie CS efforts to the bottom line and indisputably show their value. Although outcome metrics are lagging, they are relatively easy to track and monitor that customers and the business are moving in the right direction.
Money matters, especially when trying to prove the impact of CS. Mikael Blaisdell put it this way: “The true goal of Customer Success is getting the decision-makers at both the customers and our company to acknowledge and confirm receipt of the tangible value that we deliver. It’s about money. That’s the proof of value that counts.”
Tracking outcomes also pinpoints areas for improvement within the CS team and is a reliable quantitative measure of success.
There are a variety of outcome metrics CS teams can consider, but the most important fall into three categories:
- Gross Renewal Rate, or the percentage of recurring revenue retained from existing customers over a set period without including upgrades or expansions.
- Net Revenue Retention, or Net Dollar Retention, is the percentage of recurring revenue retained from existing customers, including customers upgrading or purchasing new products.
- Renewal, or the percentage of customers who renew their contract. The more customers renew, typically the higher the company’s revenue. Strong renewal scores also indicate that the CS team is moving customers to full value.
Adjust Metrics to Match CS Strategy
Just like every customer is unique, so too is every company. The specific KPIs may vary depending on the size and resources of your CS team, the number of customers, type and complexity of the product, executive buy-in, strategic vision, and myriad other factors.
These four top CS metrics can be customized to meet your company’s exact needs. Don’t do something just because other companies are doing it. Find what works for your organization and tailor the approach to create a measurement strategy that proves the value of CS and improves customer relationships.