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Finding new customers is challenging, but making them stick is the real problem SaaS businesses are facing today. In a recent Gartner webinar, Gartner experts pointed out how “Retention is becoming the New Acquisition”. Upselling and cross-selling are now seen as the modern revenue-growing channels, both responsibilities of the modern Customer Success Manager. It’s no surprise that CS KPIs have also evolved.
Customer success KPIs help businesses track retention performance, analyze churn rates, and understand how they are utilizing new growth opportunities. These metrics help adopt a proactive approach that can help CS leaders create better data-driven strategies that are based on unbiased insights created with the help of multiple data sources, including multiplying communication channels..
The modern post-sales lifecycle needs to be robust and accurate for best results. Traditional metrics like customer lifetime value (CLV) and net dollar retention (NDR) have been in use for more than a decade, but you now need to be more hands-on with your analysis. The metrics need to be less responsive in nature to help CS teams respond faster to churn risks and tweak their playbooks as needed.
Use cases are multiplying. Market trends are becoming harder to predict. Businesses are scaling up (and down) faster. To make matters more tricky, customer accounts are also constantly fluctuating with changing relationship dynamics and sentiment changes. All of these factors mean that CS leaders and teams need to adopt a more data-driven (product, customer, and BI) to achieve sustainable growth.
Adopting, tracking, and optimizing the right metrics can help you:
The aforementioned benefits can be achieved by picking the right metrics for the specific business. Having too many KPIs to track can prove to be counterproductive. We have shortlisted the top 7 customer success KPIs you need to track in 2023.
Related: Customer Success Strategy: Identifying the Blind Spots
Over the last decade, CSMs have been trying to move the needle with traditional metrics and direct feedback collection. While still useful in many cases, the old KPIs are no longer enough to measure the fluctuations and changes in today’s dynamic SaaS space. Customer Success has evolved and so have the metrics that need to be tracked and monitored on an ongoing basis.
Here are 7 key metrics that need to be a part of your CS strategy today:
The NRR metric allows you to calculate the total revenue (including upsells) during a predetermined period of time, minus the revenue churn that has been experienced. When this key KPI is above the 100% mark, it means that the business is healthy and is actually growing even without onboarding new customers. The NRR metric needs to be calculated carefully and as frequently as possible.
Also known as customer turnover, Customer Churn Rate is one of the most important CS KPIs today, as it tracks the rate of customers leaving the service. It’s calculated quite simply – Lost Customers divided by Total Customers (at the start of the relevant time period), multiplied by 100. Besides detecting churn fluctuations, CSMs also need to understand why it’s happening. If it’s the user experience, the product team should be involved as soon as possible.
Customer Churn Rate should not be confused with Revenue Churn Rate (RCR), another important metric you should be tracking.
Calculating NRR and Churn rate, Staircase.ai
The North Star Metric aims to help companies align teams on a key metric that measures the delivered value as an indicator for growth. With Sales, Product, Marketing, Support, IT, and Customer Success teams all focused on their own sub-metrics and sub-goals, the North Star acts as a Single Source of Truth to align the whole company with the common goals and boost cross-department visibility.
A good NSM should be able to:
North Star calculations vary from one company to another. For example, take Dropbox. When it was a growing company, the North Star Metric was monthly active users. But now that the company has grown, the NSM revolves around paid accounts, rather than Freemium ones.
Courtesy of Grow with Ward
A relatively new arrival on the scene, The Customer Relationship Score have become an essential part of all CS strategies, especially when it comes to big and strategic accounts. The relationship score helps companies identify relationship-based risks and opportunities, taking into account multiple stakeholder relationships engaging with your company.
Once your relationships are mapped, you need to rate how strong your relationship with the customer is. As human estimations can be biased, you ideally want to use a Relationship Intelligence solution to provide unbiased feedback.
Creating strong relationships with key influential stakeholders will not only help you retain more customers, but will also boost your upselling and cross-selling efforts. These relationships also create strong brand advocates.
As the name suggests, the Customer Health Score helps determine the likelihood of retaining customers by measuring their current level of engagement. This churn management KPI can be calculated in many ways with a varying number of parameters. Most CSMs factor in indicators like product usage, relationship strength, unresolved tickets, and other subjective metrics to calculate their CHS.
For example, it’s common to see the CHS being calculated with the time users spend on using the product and the adoption rate or how many features are actually being used, along with the amount of active users in the specific account.
Related: 5 SaaS Customer Success Pro Tips
The NPS is a commonly used metric in CS circles. It’s a measurement that basically helps evaluate how satisfied customer are and also helps understand where their loyalty levels stand. These scores are determined via surveys, where participants also need to explain their scoring (usually -100 to 100). This helps businesses determine where they stand with their customers and deteck underlying issues.
A common question ased in NPS surveys is “how likely are you to recommend our offering on a scale of 1-10”. Customers answering 0-6 are classified as “detractors”, while scored of 9-10 are your “promoters”. 7-3 raters are considered “passive”.
Customer sentiment is a dynamic and fluid notion that involves the actual experience (the opinion), along with an emotion propted judgement (the predilection). Accurately tracking customer sentiment help you track trends to create an up-to-date CS strategy. It also helps connect the sentiment to the product in real-time and understand what’s triggering the changes.
But as you can imagine, calculating sentiment is not easy. There’s no real formula to calculate this metric and every vendor has it’s own proprietary formula. But an accurate customer sentiment score has to be calculated with human signals, product engagement data and unbiased insights from the various communication channels – emails, support tickers, chats, video calls, social media, and more.
Establishing and tracking KPIs is great, but they simply cannot tell the whole story due to the dynamic and unpredictable nature of today’s SaaS consumption. You really need to understand and break down the relationships, hierarchies, and dependencies in your key account to get real visibility into the risks and opportunities. Besides that, here are two factors you need to consider while devising your CS strategy.
The modern Customer Success Manager has to strike the balance between customer satisfaction and elevated business revenue. Unfortunately, every customer is different and sticking solely to Customer Success KPIs can turn out to be counterproductive. This is why understanding relationships and hierarchies in key accounts is key.
With Staircase’s AI-driven Customer Relationship Intelligence solution, you can get deep insights on customer relationships on the go, monitor sentiment and engagement trends, and create actionable insights that just dry metrics simply can’t give you anymore.
How will Relationship Scoring help me?
Relationship scoring is a unique CS metric that helps uncover NRR blind spots by providing bi-directional visibility into teams and customers. You can track stakeholder changes, churn risks, and sentiment trends for a proactive approach.
How can I boost my NRR?
Besides tracking relationships and performing sentiment analysis in real-time, you can boost your NRR with good in-app/in-service communications, which should get you actionable customer insights and help you get rid of account blind spots.
Is One Metric That Matters (OMTM) the same as North Star Metric?
While both seem the same, they are quite different. The OMTM is more of a short term goal (few months at a time) that specific teams adopt to achieve quick wins. The North Star Metric is more of a long-term company-wide pointer.
How can the Customer Sentiment Score help my business?
Besides the obvious churn reduction, risk flagging, and improved retention rates, you can target neutral customers and turn them into advocates. This helps improve brand performance and organic growth in your specific industry.
What is eNPS?
With more and more businesses scaling up fast, there’s a huge influx of in-house and remote pros. Employee New Promoter Scores help determine employee sentiment and understand how like they are to recommend your business as a workplace.
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Together with our content partners, we have authored in-depth guides on several other topics that can also be useful as you explore the world of ai technology.
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