One of the questions frequently asked is what is the best Customer Success KPIs? In other words, how do you measure the effectiveness of your customer success practice?
Before we talk about the metrics, let’s get one thing clear. Success for one company might not be the best success metric for another company.
For example, if you are Slack, you would want to know how many messages did a user send, the number of channels created, the number of devices being used to log in, etc.
Or if you are a marketing automation company, you would look at the number of conversions per campaign for clients using your product.
10 Customer Success SaaS KPIs every company should track.
1. Portfolio Growth
The most recommended way to measure is the Portfolio Growth rate. No matter how you approach the topic, every CEO needs to justify every $1 investment as a $1+$X of growth. So if growth within existing customers said at X%. You want to see an improved growth rate within 3–6 months of the investment itself. (You might be surprised that many times current customer growth is negative when you don’t add new customers to the same pool.)
Absolute Portfolio growth in MRR terms = Expansions + Upgrades + Renewals – Downgrades – Contractions – Churn
2. MRR Retention Rate
This KPI is measured as % of $ MRR growth, without including the new accounts. The best of the breed have up to 129% Annual MRR retention rate, i.e., they will grow at 129% annually without acquiring new customers.
3. Account Retention Rate
It’s measured by the number of accounts retained in a customer success manager’s portfolio.
Pro tip: Gross Retention or Net retention which is better
4. Referrals
Another straightforward way of measuring Customer Success KPIs is an increase in word of mouth, referrals, and other advocacy activities such as reviews and case studies.
Customer advocacy goes hand in hand with success. Happy customers will readily refer people, give reviews and be part of those ‘always in demand’ case studies.
5. Increase in Product Adoption
Increase in product adoption, i.e. users are using more features and more frequently. Successfully onboarded customers (those who get to true product adoption to the point of reaching a key-value milestone) will not just use one feature many times. They will use the product in its entirety and will derive value out of multiple features. For example, such customers will not use CRM just to see account info. They will use it to record meeting notes, update price sheets, upload contracts, etc.
6. Lower number of Support Tickets
Well, onboarded users will know your product better and will require less ongoing support. So, a lower number of support tickets would mean that the customer success team is doing its job. However, it could also mean that the customer is not using the product enough (low product adoption). So, only this metric alone cannot measure true success. Combine it with product adoption to measure your team.
7. Faster On-boarding
Customers onboarded early will start to use the product faster, get to their desired outcome faster, and will be able to get to their ROI faster. You can measure the time taken to reach a certain “Milestone”, such as a customer adding 100 accounts to the CRM or updating the lead status of 500 prospects.
8. Number of Monthly Onboarding
It is measured by the number of customers successfully onboarded in a month (true product adoption to the point of reaching a key-value milestone).
9. Improved Customer Health Mix
Measure the percentage of Good/Average/Poor account health using customer success software. You would want to see a month-over-month improvement.
10. Improved Product Stickiness
Measured by people spending more time and using multiple features of your product, product stickiness is one of the key customer success KPIs.
Other KPIs to track!
1) Net Promoter Score
Net Promoter Score or NPS is fast gaining prominence and is one of the leading metrics to calculate Customer loyalty. The score can range from -100 to 100, the closer you are to 100 the better it is. It is calculated based on the response to a simple question-“How likely are you going to recommend the product?”. The rating is usually done on a scale of 0 to 10, with 0 being the least and 10 being the highest. The responses are segregated into 3 categories based on responses-
Promoters – People who score 9 or 10
Passives- People who score 7 or 8
Detractors-people who score between a range between 0 to 6
2) Customer Satisfaction Score (CSAT)
CSAT is a metric to see how satisfied your customers are with your product. The rating is done out of 5 with 4-5 scores meaning extremely satisfied scores and a score of 1 not satisfied at all.
The percentage of satisfied customers = {( total number of satisfied customers)/No of respondents}*100
Takeaway
We don’t believe in rewarding the effort, hence discouraging rewarding or incentivizing customer touchpoints such as number of calls, number of emails sent, etc. Although there is nothing wrong with tracking them.
Looking to hire a customer success team? Check out Ten Interview Questions for Customer Success Manager (CSM).
