Many organisations assess their company’s health based on the number of new business deals closed. How many phone calls does sales make to potential new customers? And how many opportunities is sales able to convert to new deals?
Let’s be honest: these statistics help sales managers determine whether or not their sales people are doing a good job. There’s less focus on existing customers who exit the building through the back door because they’re unhappy with the support received. What if we were to target customer success to the same degree as new business?
The ‘old-style’ customer success playbook is no longer enough, however, to keep customers happy and keep them coming back. A whole new approach to customer success is on the rise. One that puts far greater emphasis on developing, maintaining and strengthening relationships with customers.
As a result, what’s being measured is changing too. This blog sets out eight customer success KPIs that are becoming more and more relevant to organisations – this year and in years to come.
1. Customer health score
This may be stating the obvious, but the customer health score (CHS) is still frequently approached in the wrong way. The key point of the CHS is to get the big picture: do customers actually recognise the value of the product or service they buy from you?
How often does the customer use the product? How successful have they been since buying the product? What impact does it have on the company?
For a long time now, customer support hasn't been about taking as many phone calls as possible or handling as many emails as possible. The task for customer success reps is in fact to ensure customers flourish because of the product you supplied to them. Reps need to follow up with customers, offer support if problems occur and actively help define future strategy.
A customer health score helps you record such success in a KPI. Zoom in on your customers to get the detail. For example, what’s the state of your customers’ finances? How many customers do they have? Try to understand how healthy your customers’ companies are and discover the contribution your product is making. Capture this in a metric and report regularly on it, you can determine the level of success your product is bringing your customers.
2. Net promoter score
Customer satisfaction is not just about a customer’s experience with a support staff member. It’s also about how the customer feels about the brand and the product itself. It should be no surprise that customers whose experience makes them happy are more likely to return.
Although there are many ways to assess customer satisfaction, measuring the net promoter score (NPS) is one of the most straightforward. In an NPS survey, you ask customers whether they would recommend your company to someone else. The support staff member – and particularly their relationship with the customer – has a key role in this assessment.
The advantage of the NPS is that it provides both quantitative and qualitative data on your customers. Not only are participants asked to assess their experience on a numerical scale, they are also asked to explain their score. This enables you to analyse a score based on the customer’s feedback. You can also investigate the feedback more thoroughly if you encounter negative results.
3. Qualitative customer feedback
Another important KPI that must not be overlooked is customer feedback. What are they saying about you and the service you deliver? What do they like – and dislike – about their connection with the company?
Customers must feel they have a voice. Giving them a chance to offer feedback is a good way to build a long-term relationship together.
Customer success managers can then use qualitative feedback – such as survey or questionnaire responses – to assess how well their reps are meeting customers’ needs. Of course it’s uncomfortable to hear where your onboarding or customer service process has gone wrong. But the chance to fix a mistake before the customer leaves is of incalculable value.
4. Customer churn rate
It’s crucial that you measure customer churn. What’s interesting here is to see how churn rates vary between customer support reps. A customer service team member who maintains a good relationship with all their customers will probably have a lower churn or cancellation rate. Once again, customer support is about relationships – and building a good connection makes a big difference.
5. Monthly recurring revenue
Monthly recurring revenue (MRR) is a good KPI to determine growth in the number of customers – or the value of their expenditure – since the company began. This KPI shows how much money customers spend each month on your products and services. You can compare this value over time to determine whether or not your customers are benefiting from your products. This is particularly useful for SaaS companies working with a subscription model.
An additional MRR KPI you might measure is ‘expansion MRR’. Expansion MRR shows how much additional income is generated from customers over and above their monthly subscriptions. This is a good indication of how effective your upgrades and customer loyalty schemes are.
6. Customer lifetime value
Customer lifetime value (CLV) is one of the most fundamental customer KPIs you can measure. It shows the total revenue you can expect from a single customer over the course of his or her relationship with the company.
Companies can use CLV to calculate the value of customers over time. If this value is increasing, you know that your company's products and services are contributing to your customers’ success. If the value is decreasing, it may be that your company needs to re-evaluate its offerings and track down any shortcomings in the customer experience.
7. Customer retention cost
It’s great to know that your customers are achieving success with the products or services you are providing. However, this tells you nothing about the cost-effectiveness of your customer success team’s efforts to retain these customers. The customer retention cost, or CRC, outlines the total cost of your customer success programme and compares this to your total number of customers. The CRC therefore shows how much money you spend on retaining each individual customer.
CRC helps companies invest in their customer success programmes. Although you may be eager to start rolling out new initiatives, you do want to be certain you’re spending money cost-effectively. By measuring CRC, your company can discuss smart investments by comparing the potential costs of customer retention with the potential income generated by a new role or service.
8. First contact resolution rate
For customers, time is of the essence. Customers want their problems solved quickly, so they can get back to pursuing their goals. If they must constantly wait for your support team, a lot of friction enters into the customer experience.
With this in mind, it’s important to measure your first contact resolution rate. This is the percentage of customer service cases that are resolved during the first interaction. If this number is high, it means that your team is not only responsive to customers but also quick to meet their needs. And this is important, because research shows that 67% of churn can be avoided if service queries are resolved during the initial interaction.