Customer success KPIs (key performance indicators) are quantitative metrics that show how customers are adopting and using a product, as well as their likelihood of recommending it to others.
These metrics can also indicate how well the customer success team is performing and how efficient the customer support channels are.
What is a success metric?
A success metric refers to a numerical measurement that managers use to determine the success of their business strategies.
These are more commonly known as key performance indicators (KPIs) in SaaS.
Why are success metrics important to track in SaaS?
How do success metrics help your SaaS business?
Letโs take a quick look:
Set specific goals
“Success metrics help you establish a connection between your teamโs objectives and company goals. This gives teams a clear picture, tells them what they are working to achieve, and allows them to prioritize their work.”
For example, if youโre trying to measure customer loyalty, you can design an NPS survey and calculate the NPS score. After understanding the current level of customer loyalty, you can develop strategies to increase it.
Make data-driven decisions
Secondly, success metrics help you make more informed decisions. For example:
Do you have a higher customer acquisition rate this year? If so, what strategies did you implement to set you apart from previous attempts? If your rate is low, what possible reasons could there be?
By using quantitative measurements, you can identify changes easily and solve problems before they become too complicated.
Key Customer Success KPIs to Monitor
1. Net Promoter Score (NPS): A popular metric for SaaS companies that measures customer experience and satisfaction.
2. Churn rate: An important KPI for SaaS companies that can indicate issues with customer retention, pricing, or user interface.
Churn rate = (Number Of Canceled Subscriptions / Number Of Customers At The Start Of The Year/Quarter/Month) x 100
3. Customer Satisfaction Score (CSAT): A popular KPI that asks customers how satisfied they are with a product or service on a scale of 1โ5.
4. Customer Effort Score (CES): A metric that shows how easy it is for customers to use a product, and can indicate a higher chance of customers making more purchases
6. Conversion rate: A vital KPI that measures the percentage of visitors who complete an action or go through a campaign funnel
7. Customer Lifetime Value (CLV): An essential KPI that evaluates the value of each new customer over time, and can be used to study retention rates and choose loyalty programs.
CLV = (Average Revenue Per Customer / Churn Rate)
8. Customer retention rate: A metric that measures how many customers are likely to stay with a product over time, rather than just making a one-time purchase
9. Renewal rate: An important KPI for SaaS companies with subscription models that suggest customers receive value from the product or service.
Best Practices for KPI Monitoring and Analysis
1. Set Clear Goals
It is crucial to set objectives that are quantifiable and coherent with the overall strategic map of the company before starting the process of monitoring KPIs.
This helps to make certain that the KPIs that are developed are useful, and prompt facts are acquired constantly.
2. Use a Centralized Dashboard
Introduce a centralized index showing all your customer success KPIs in a single interface.
It assists in tracking and analyzing the records with ease and thus enables one to locate the most sensitive issues quickly.
3. Regularly Review and Update KPIs
Customer success offers a lot of flexibility, meaning that the set KPIs should be revised from time to time based on current needs.
Modify your metrics as follows to ensure that they reflect the evolving conditions prevailing in your business environment and customer base.
4. Leverage Automation
Implement progressive and efficient analysis automation tools aimed at KPI data collection and further research.
Technology solutions can generate reports immediately and can relieve employees from doing routine reporting jobs.
5. Involve the Entire Team
Make it your responsibility to ensure that all the people in your organization know or are aware of the value of customer success KPIs and why they matter to the overall business. Foster teamwork among all stakeholders to champion a combined effort in making enhancements to customer satisfaction.
Data Insights on Customer Success KPIs
Retention Rates: As reported by Totango, companies that focus on customer success can achieve a retention rate growth of up to 20%.
Revenue Growth: McKinsey & Company indicates that organizations that effectively implement their customer success strategies are likely to see a 10-15% improvement in the growth rate of their revenues.
Churn Reduction: Proper implementation of customer success programs has the potential of negating churn by as much as 15%.
Leverage The Right Matrics
Tracking and assessing customer success KPIs isnโt merely a recommendation โ it is imperative for any SaaS company with its eyes set on sustainable revenue growth.
The right metrics when combined with clear goals and the ability to harness customer data to drive the Customer Success function become a major driver of retention and renewal revenue.
