They say “if you can’t measure it, you can’t improve it”, and nowhere is that clearer than the art and science of customer success metrics. Since the turn of the century, there has been a notable shift in company cultures all over the world. Where previously companies might have measured their teams on calls made, leads acquired, and emails sent, the focus now is on how a customer reacts, rather than what your sales agents do — you can think of it as a quality over quantity approach.
1. Customer health score
We’re starting our list with the customer health score as it is arguably the most innovative metric compared to traditional mindsets. This method looks at whether your customers see value in your product, and can draw on how often they use the product or service, how much their bottom line has changed, and whether they are using it to its full potential. Generating a customer health score implicates a lot of work behind the scenes as well as frequent interaction with your customer’s business.
Start off by identifying which metrics relate to your service, for example, if you offer lead generation, you would prioritize the increase or decrease in your customer’s database, among others. Your customer health score is essentially the grade a customer achieves on an index based on your top metrics. Your customer success team can then check in every now and then to see how well they are progressing and offer solutions to any pain points.
2. Net promoter score
A Net Promoter Score (NPS) is among the most common customer success metrics for companies. Using a feedback form, you give your customers a chance to rate your service with a written explanation to go with it. Keep it short and sweet with a “how likely are you to recommend our service” and you can get an accurate idea of your reach. Your Net Promoter Score lets you quickly and easily analyze your customers’ experience with you and identify areas for improvement.
Boosting your NPS is more than just providing a solution or removing a pain point. To really get people talking, your sales agents need a close working relationship with their clients with an attitude that is worth recommending.
3. Customer satisfaction score
Something that can be used in conjunction with your net promoter score is your customer satisfaction score (CSAT). It works in much the same way, with each user filling in a form to provide a rating. The only difference is that rather than rating how likely they would be to recommend your company, they only focus on their own experience with you. You can collect your data without much effort by including forms in your sales workflows.
This way, you’ll never skip the step and all your results will be compiled in your CRM. The calculations are pretty simple here. Set a metric for a positive score, and divide those scores by the total number of form submissions. Then you just need to multiply that number by 100 to get your percentage. For example, if you have 35 positive scores from a total of 50, your CSAT is 70% (35/50 = .70 x 100 = 70%).
4. Qualitative customer feedback
One of the most detailed client success metrics, qualitative customer feedback, helps you get a deep understanding of each customer’s own experience. You can customize your forms to focus on exactly what your company needs. For example, if you’ve recently launched a new call center, you can get opinions on how friendly the service is or how easy it is to use. When you ask customers for their feedback, you’re doing more than simply improving your service.
Everybody wants to feel heard and by giving clients the opportunity to voice their opinions, you can improve your relationship with them while you tweak your strategy for the future. Qualitative customer feedback needs to go into the fine details, so you can even set up in-person meetings or events with your customers to get a clear picture of their feelings. Remember not just to focus on your product and service, but cover as many aspects of your company as possible — you might have turned a blind eye to the one thing holding you back.
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5. Customer churn rate
Converting your customers in is one thing, but if you quickly lose them, all that effort was for nothing. A customer churn rate refers to how many contacts begin or cancel their communication with you over a period of time that you select. A low churn rate is a sign of healthy business relationships and a product that lives up to the hype, while a high rate suggests customers often become disillusioned with your service.
To measure your churn rate, you’ll need a good customer relationship management tool with analytics. Set a timeline that you want to analyze, then divide the number of contacts you’ve added to or lost from your database (churned) by the number at the start of your timeframe and multiply it by 100. For example, if you have 1000 customers on January 1 and you’ve added 300 by December 31, your churn rate is 30% (300/1000 = 0.3 X 100 = 30%. Tools like Bitrix24 let you analyze even further. You can segregate your data by sales agent to pinpoint where you need to improve.
6. Monthly recurring revenue
It’s great to have an idea of how many customers you have per month, but that doesn’t necessarily tell you whether they have a positive impact on your business or not. Using monthly recurring revenue (MMR) as one of your customer success metrics, you can measure how much your users are spending at your business. Perfect for SaaS businesses, or anything subscription-based, you can analyze your success on how many of your clients choose your premium packages for their subscription.
However, you can also take things further by calculating your expansion MMR, which identifies how much your customers spend outside of their recurring subscription. A few extras can bring in a great amount of revenue, but be careful — too many additional costs can be off-putting. To get your MMR figures, head to your CRM and multiply your number of users by their average monthly spend. For your expansion MMR, simply add up all your revenue from extras and multiply it by the number of your customers.
7. Customer lifetime value
By calculating your average customer lifetime value (CLV), you can plan for the future based on data-driven predictions. Working out your CLV is pretty simple: 1. Identify your average purchase value and multiply it by how often a purchase is made. 2. Multiply the previous result by your average customer lifespan. For example, if your average purchase value is $100 and that is made on a monthly basis for 5 years, your CLV is $6000 ($100 X 5 X 12).
Once you have run your calculations, you can compare the changes in your expected CLV year on year or month on month to evaluate whether your techniques are working. If your CLV is decreasing, combine it with other customer success metrics like your qualitative customer feedback to identify and improve your weak points. As a reliable revenue forecast, you can also use your CLV to make predictions for your shareholders.
8. Customer retention cost
As a business, your bottom line doesn’t just depend on the revenue you bring in. There are all kinds of extra expenses and overheads that you need to take into account to run a tight ship. Customer retention cost (CRC) is one of the most important customer success metrics in this regard as you can really see whether your customer success efforts are profitable.
To calculate your CRC, first you need to add up everything you incur in attracting and retaining customers, from your payroll and CRM and communications software to engagement events and training. Then take that grand total and divide it by the number of customers on your database. If your average customer retention cost is higher than your monthly recurring revenue, you’re making a loss, so it’s time to make a change.
9. First contact resolution rate
With quick, reliable customer service high on the list of priorities for most clients, your first contact resolution rate is one of the most effective customer success metrics. Your users want to know that when they reach out to you, they can have any issues fixed quickly and reliably so they can get back to what is important to them. Measure your first contact resolution rate by dividing the number of tickets closed after one interaction by the entire number of tickets received.
To get these numbers, you’ll need an efficient ticketing system to work in tandem with your helpdesk. Here you’ll be able to sort and store incoming requests and analyze the outcomes of each ticket. Effective responses are not only beneficial for your customers. By keeping your backlog of tasks under control, you’ll lower stress on your team and provide a better service to your customers.
10. Renewal rate
In an ideal world, you’d be able to create one subscription model that would keep every customer happy for a lifetime. Unfortunately, no such system has yet been found, and one of the best customer success metrics to measure how long your clients are willing to stick it out with you is your renewal rate. You can get this number by dividing the number of customers who renewed their subscription by those who had the option to, then multiply that number by 100.
In figures, if you have 75 active customers, but only 24 renew, you’ve got a renewal rate of 32% (75/24 = .32 X 100 = 32%). If 32% seems too low, something is wrong with your customer success approach. A poor rate will affect other metrics, such as your customer lifetime value, so work on what is causing customers to drop off and strengthen that area.
Improving your performance with customer success metrics
It’s no surprise that companies are creating customer success teams at a rapid rate. As we said before, with this approach, your customer’s success is your own success. Client success metrics give you a bird’s-eye view of your customer’s and your team’s performance, but when you need to take action, you have to have the right tools to succeed.
With a good customer relationship at the heart of every team, a professional and capable communications suite is essential, while a powerful CRM helps with your record keeping. Ready to take control and improve your client relationships? Register your free Bitrix24 account today.
What does customer success mean?
Customer success refers to how well a product or service has helped the purchaser reach their goals. Dedicated to providing service that leads to repeat purchases or ongoing subscriptions at stake, the progression of your customers is directly linked to your own progression as a company. The benefits of focusing on customer success rather than traditional sales metrics also helps you improve your brand reputation and get it out into the world.
What does a customer success manager do?
A customer success manager oversees a customer success team and must have a clear understanding of their departments strengths and weaknesses. They are in charge of assigning resources to where they will be most effective and setting tasks that combine to achieve KPIs. A customer success manager will often schedule training sessions to improve their team’s performance, and will need to analyze different sources of data to measure customer success.