When your customers succeed, your business succeeds.
As a SaaS company, your ultimate goal is to help customers solve their problems with your product—not go viral on social media for posting the spiciest takes on ChatGPT (although, we’re tempted).
The more comfortable and confident your customers are hiring your product to solve their problems, the better. The opposite is also true, though—when confidence falls, you run the risk of churning customers to competitors.
That’s why the mandate of any customer success professional is helping customers succeed with your product. Easy enough, right?
Not really.
“As much as we’re representing the business to the customer, we also represent the customer to the business,” says Okello Carter, Director of Customer Success at Appcues. “We help make sure we’re building a product for our customers and we’re not steering away from that.”
That’s a lot of responsibility to balance on the shoulders of the CS department.
CS professionals come with limited resources, just like the rest of us, and what that looks like can differ drastically from company to company. That’s why one of the key jobs of CS departments is ensuring they’re investing in the right blend of human capital and self-help resources to make sure CSMs are spending their precious hours every day working on the right problems—and improving the customer experience of as many customers as possible.
It’s impossible to accurately gauge the success and growth of your customer success team without diving into the metrics. We’ve gone ahead and identified the ones you’ll want to keep track of.
1. Net Promoter Score (NPS)
Net Promoter Score (NPS) is an incredibly valuable metrics for CS professionals—and one of the most well-known. NPS helps measure customer satisfaction at any given time and collects optional feedback.
Measured on a scale from 1 to 10, customers fill out the single-question survey based on how likely they are to recommend your product to colleagues and other industry connections.
If you’re looking to identify customers on the extremes—those in love with your product and those that don’t—NPS is a great metric to tap into. It’s most powerful when used in combination with some of the other metrics in this article, but we’d be remiss not to mention it first.
How to calculate Net Promoter Score
Organize your results into the following groups based on the rating they give the product:
- Promoters: 9-10
- Passives: 7-8
- Detractors: 0-6
To calculate your NPS, subtract the percentage of detractors from the number of promoters.
% Promoters - % Detractors = NPS
2. Customer Lifetime Value (CLV)
Customer Lifetime Value (CLV or LTV) is exactly what it sounds like—the total value or revenue a customer generates while their account is active. This is a correlated metric, i.e., the longer you retain the customer, the higher their CLV grows—and it’s one of the most important yardsticks for measuring your customer success efforts.
CLV is a valuable metric if you want insight into how long a business remains a customer on average and how much they spend on average. By monitoring CLV, CS teams can get ahead of any retention issues; if CLV is lower than you’d like because of a low average lifespan, consider beefing up your customer education or your aha moments.
How to calculate Customer Lifetime Value
Customer Value ($) x Average Customer Lifespan (Month/Year) = CLV
3. Repeat Purchase Rate (RPR)
We love when our customers come back for more—and we want to make sure they love it, too. Repeat purchase rate (RPR) is just the metric you’re looking for to measure the frequency of repeat purchases. It measures the balance of customers who can’t get enough over all of your customers combined.
By measuring RPR, you can get a sense for how many of your customers are one timers, and how many are repeat customers. Customers that love you are more likely to factor into your RPR—and that’s exactly what your CS team aims to do.
If your RPR is lower than you’d like, focus on increasing the number of those repeat customers. If it’s a healthy number, you can spend more time acquiring new ones.
How to calculate Repeat Purchase Rate
# Repeat Customers / # Total Customer Base = RPR
RPR is normally calculated over a year, or 365 days, but can be adjusted for different time frames if you want to look at your RPR monthly or quarterly, if relevant to your business.
4. Product Adoption Score
When you create a new product and offer it to your existing customers, your goal is for as many of those customers to use it as possible. You want it to be a great fit for them—one that makes them drop whatever they were using before and choose your solution instead.
Product adoption is that exact moment where your product becomes the preferred solution. Thus, the Product Adoption Score or rate measures how many of your customers make that switch over those that don’t. CS teams use this metric to determine how successful a product is, and if it’s low, it helps identify why—perhaps the new product isn’t very intuitive, there isn’t enough education around why it’s important, or customers are having a hard time fitting it into their existing workflow.
How to calculate Product Adoption Score
# Customers using the product / # Total customers with access = Product Adoption Score
5. Retention Rate
How many customers did you acquire, and how many customers did you keep? If CS teams had a dollar for every time they answered that question… Well, let’s just say they would be living a good life.
And they should answer that question often—it’s a cornerstone of a successful business. The goal is to consistently earn customers and keep them, but the reality is a bit different than that. Enter: Retention Rate. There are a lot of retention metrics to keep in mind, but at its core, the retention rate looks at the number of customers at the end of a given time frame compared to the number of customers from the same cohort at the beginning of the same time frame.
So, is renewal rate the same thing as retention rate? It depends who you ask. Some businesses might use a form of cohort analysis to measure specific variables and shared characteristics among active customers. Others use retention and renewal interchangeably. Our advice: pick one north-star definition for your business and stick to it.
How to calculate Retention Rate
(# Customers at end of time period - # New Customers) / # Customers at beginning of time period = Retention Rate
6. Customer Churn
Just like you want to know how many customers you’re retaining, you need to know how many customers are churning, too. It’s essentially the opposite of the retention rate you just calculated.
There are myriad reasons why customers churn, and some are out of CS control. But by calculating and monitoring your churn rate, you can take a look at some of the reasons why they might be churning that are possible to change. User adoption strategies, pricing structures, education support, and so on are all things that you can tinker with to try and decrease your churn rate.
How to calculate Customer Churn
# Churned Customers / # Total Customers = Customer Churn Rate
7. Point of Contact (POC) Churn
Sometimes it’s not necessarily the customer that churns—it’s your point of contact. When you onboard and work with a new customer, you typically work with a single point of contact who heads up the effort on their side. Your CS team works with them and trains them, and in the best of cases they’re essentially the champion of your product for their company.
“Maybe they [the point of contact] didn’t get the team there. They didn’t get the buy-in, and then they leave. We’re basically left at ground zero and reimplementing,” says Kaylee Plaut, VP of Customer Ops at Machine Metrics.
POC churn can be one of the biggest indicators of potential customer churn. Every time your POC leaves, you have to go back to the drawing board—and a lot of times, that’s too high of a barrier for companies to want to overcome.
How to calculate POC Churn
If interested in POC churn specifically, you measure this churn rate in the same way you measure customer churn:
# Churned POCs / # Total POCs = POC Churn Rate
8. Customer Satisfaction Score (CSAT)
Just like NPS, customer satisfaction scores (CSAT) is another way to measure how much a customer likes your product or would recommend your product to someone else. Instead of NPS, which is measured from 1 to 10, CSAT is measured from 1 to 5.
For some, CSAT is viewed as a better metric for measuring customer satisfaction with a product, but it’s all in how you use the results. CSAT tends to be viewed as a short-term happiness measurement, while NPS tends to be viewed as a long-term happiness measurement.
How to calculate Customer Satisfaction
Organize your results into the following groups based on the rating they give the product:
- Positive/Satisfied: 4-5
- Neutral: 3
- Negative/Unsatisfied: 1-2
To calculate your CSAT, divide the number of positive responses by the number of total responses.
(# Positive Responses / # Total Responses) x 100 = CSAT %
9. Onboarding Activation Rate
So far we’ve covered how to measure customer happiness and retention—but what about time to the “aha” moments? What about onboarding new customers correctly?
For some companies, the responsibility of onboarding new customers falls under the CS department. CS owning onboarding is “how it should be,” according to Jessica Haas, VP of CX at Appcues. “A customer who’s not onboarded correctly is a problem that CSMs have to deal with for weeks, months, and years later on. So there’s natural collaboration on the customer and CS side to make sure it’s done really well the first time.”
That’s where the onboarding activation rate comes in. In order to increase overall adoption and satisfaction with the product, you have to motivate users in the beginning and educate them appropriately—and making onboarding simple, collaborative, and rewarding is a great way to do that.
How to calculate Onboarding Activation Rate
# Users that Reach Activation Event / # Total Users = Activation Rate
10. Health Score
No, we’re not talking about going to the doctor—we’re talking about customer health score. Are your customers healthy, or are they at-risk? In other words: Are they enjoying your product and company, or are they starting to wane or distance themselves?
A health score is a great way to measure the likelihood of a customer to either continue to grow, remain where they are, or churn and go to a competitor.
How to calculate Health Score
Calculating customer health score is actually not as simple as one equation. It differs from company to company, and is dependent on which factors or actions are most important to you and your business outcomes.
We recommend creating a scale between 1 and 100. For each important factor, assign a total number of points and then measure that factor based on performance. Combine the totals from each factor and you’ve got your health score.
Simple and quick ideas for improving CS outcomes
Especially if you’re dealing with high retention and low activation, overcoming those challenges can be overwhelming. When you feel the need to go, go, go… it’s easy to forget about some of the simpler options to help improve your CS metrics.
Here are a couple of our favorite quick ideas to improve your CS outcomes and turn your customers’ frowns upside down.
Build a resource center
Everyone loves a resource center, and if you’ve already built out a blog, you’re part of the way there. What a resource center looks like differs, but some of the things you can include are:
- Blog
- Ebooks and Webinars
- Education Academy
- Whitepapers
- Infographics
- Case Studies
Basically, anything that helps your customers learn something new, answer a burning question, or find real examples belongs in a resource center.
Create help documentation
No product is complete without detailed help documentation. Your help center should cover the basics—how to perform specific tasks within your product, what the purpose of the product is and what the different options are, and so on—but you should also identify common confusing topics or more difficult concepts to add, as well.
When customers go to your help center, they want help. Make sure you provide an answer for anything and everything they might need help with.
Offer regular office hours
Sometimes, all a customer wants is a quick answer—something a little faster than an email or even a chat message. By offering regular office hours, you show your customers that you’re always available to assist and want to make sure they’re set up for success.
Since these office hours often come with an “open door” policy, try and establish a queue for attendees so they know when their question will be answered. Especially during more popular sessions, this can be tricky, so it’s best to have at least two CS professionals hosting each office hour. Whether or not customers have mic, camera, or screen share access is up to you.
Host group workshops and trainings
Group workshops are all the rage these days. Many people learn from example and practice, so hosting a group workshop or training is the perfect way to tap into that behavior.
Workshops run best when they’re limited to a smaller group of people in a collaborative space. Consider creating a series of workshops around a specific topic and build in time both for education and for experimentation.
Customer success metrics FAQ
How do customer support team goals impact customer success?
Generally, customer success works proactively to help customers succeed, whereas customer support helps customers reactively, i.e., as problems arise.
Ultimately, while the KPIs for these 2 teams may differ, there’s undeniable overlap. The better your support team is able to impact customer loyalty by quickly solving their problems, the stronger the customer relationship will be over time—something that creates bang-on effects for customer lifecycle goals across your business.
How are individual CSMs measured?
Several of the above performance indicators—especially NPS and customer satisfaction scores—are usually considered among the most important metrics for customer success leadership to track. That also goes for evaluating the performance of individual CSMs.
But expansion revenue is also one of the most important customer success KPIs for individual CSMs. In other words, how are CSMs impacting monthly recurring revenue, or MRR, for their assigned accounts over a period of time?
If you’re a SaaS business selling marketing software, for example, CSMs can help drive profitability by focusing on tactics like:
- Cross-sells
- Feature add-ons
- Upsells
- Customer retention rate
SaaS customer success is a relationship game
Ultimately, software companies can best drive success for their customers when they help them unlock new sources of value throughout the customer journey.
New to tracking customer success at your business? Don’t forget to take customer feedback to heart. At the end of the day, you can benchmark all the stats you want related to customer engagement and revenue churn—but the best companies make themselves active participants in their customers’ goals. There’s arguably no one better equipped to do just that than your customer success managers.
