Customer success is a business imperative. As such, it’s important to not only measure the progress you’re making toward growing customer retention and satisfaction but also track your performance against industry benchmarks. This can be tricky because there’s no standard definition for what constitutes a “good” customer success metric. However, working at large enterprise companies that serve both small businesses as well as Fortune 500 clients with complex needs, these four metrics matter:
Customer health scores
Customer health scores are a new way to measure the overall health of your customer base that’s better than churn rate: they give you a clearer picture of whether or not your customers are happy with what they have and whether or not they plan on sticking around. They can also help predict when customers will leave and offer insight into what kind of interactions help keep them engaged.
Customer health scores can be used over time to track how well your business is doing at keeping its customers healthy—and even take steps toward improving customer satisfaction if it’s slipping away from optimum levels.
Annual recurring revenue
Annual recurring revenue is the total amount of money a customer spends with your company in a given year. It’s a good indicator of how much value they get from using your product, and it can be used to predict future revenue. It can also help you understand how much you should charge for your product by giving you insight into how much value customers are getting from it.
Net promoter score
Net promoter score (NPS) is a measure of customer loyalty, satisfaction, and willingness to refer. It’s also a pretty simple way to tell if your customers are happy with what you’re doing. The NPS model is based on the idea that every company has two kinds of customers: promoters and detractors. Promoters are loyal enthusiasts who will keep buying from you, refer others to do the same, and spread positive word-of-mouth about the brand or product. Detractors are unhappy people who can damage your reputation by sharing negative stories about their experiences with your brand or product—not exactly what you want for the business.
Net renewal rate
Net renewal rate is the percentage of customers who renew their subscriptions. It’s a good indicator of customer satisfaction, and it’s also a good metric to track over time. You can break down net renewal rate into more granular metrics for each segment as well. For example, if you have separate plans for enterprise customers and small business owners, you might want to track net renewal rate by segment—with an eye on whether your enterprise customers are renewing at higher rates than your small business owners.
It’s important to look at all of them together so that you can be sure each one is working in unison. If one metric is off, it could be a sign of trouble for several other metrics as well.
Conclusion
There are lots of metrics you can use to measure your customer success team’s efficacy. But when it comes right down to it, the four that we highlighted here will generally tell you the most about your company’s health and the progress that your CSM is making. At the end of the day, there’s nothing more important than knowing that the customer adoption cycle is progressing as expected.