September 9, 2021

    Selecting the Right Customer Success Metrics

    How do you know what your customers think about your product?

    Do you rely on a gut feeling that leads you to make assumptions whether or not your users will sign on when renewal rolls around?

    Or do you have data-driven intelligence backing every decision you make?

    When teams have access to the right customer success metrics, there’s no guesswork involved. Understanding what drives customer outcomes and responding with the best plan of action becomes a foolproof science. 

    Optimize your customer success strategy through data

    We’ve all heard that the definition of insanity is doing the same thing over and over again and expecting different results. 

    For a customer success leader, it’s no different.

    If a customer churns and you repeat the same exact process with the next one, you can probably guess where that account is heading. 

    Customer success metrics put an end to this by helping your team understand why a customer behaved a certain way — and exactly what you can do to prevent or repeat the outcome in the future. Think of them as the key performance indicators that reveal where your strategy is hitting the mark when and improving your customer retention rate, adoption and customer loyalty.

    When you take the guesswork out of the user experience and instead apply a more proactive approach, your customer success team can transform itself into the revenue driver it’s meant to be. Just some of the benefits of a data-driven approach to customer success include:

    • Reduced manual reporting: While monitoring and reporting on account health is an essential piece of customer success, it’s highly time-consuming. Leveraging a data solution can help to minimize this time and free up your team for more valuable tasks.
    • Measurable changes: With data on your side, there’s no mystery as to how X changed Y. As you adjust your success strategy to better support users, you’ll have clear insight exactly how the customer experience has changed. This will also make it a lot easier to point to your team’s wins when it comes time to have conversations and check-ins with your company’s top leaders.
    • Proactive approach to customer success: Today’s consumers expect real-time, personalized customer support. While you can’t literally be everywhere at once, data will empower your team and help you get ahead of any customer issues before they negatively impact your business. 

    As a customer success manager, your job is equal parts art and science. By measuring data over time and getting a better understanding of your overall user experience, you’ll be able to intervene in the future and apply those learnings to improve customer outcomes. 

    The most useful customer experience metrics

    Bad news: There’s no perfect customer success metric. 

    Good news: You can pick and choose the ones that matter most to understand your unique customers.

    When it comes to understanding your users, you’ll need to gather several different data points to get the whole story. Once you’re able to compile both your leading and lagging indicators, you’ll be well on your way to a proactive customer success strategy. 

    Leading indicators

    A leading indicator is a predictive SaaS metric that indicates a specific customer outcome is likely to happen down the road. While a user having a low log-in frequency doesn’t always end in customer churn, it’s a fairly strong indicator that something is quite right. 

    Although your data strategy will need to reflect the unique needs of your users as well as the pain points specific to your customer life cycle, there are some SaaS metrics shared across the industry that you’ll want to pay attention to:

    • A drop in usage: Specific usage indicators will vary depending on the type of solution you offer. This may include metrics such as total users, time spent in the app and log-in frequency. No matter which is most relevant to your product, if you notice that a customer’s usage pattern has noticeably dropped, churn is often the next step
    • Organizational changes: While you can’t influence this variable, it’s one that your CS team can plan and prepare for. Change is inevitable — people switch roles or leave companies all the time. While you can’t control it, you can set your team up for success by growing your sphere of influence and fostering deeper relationships at the customer’s company.
    • Customer feedback: If you regularly collect customer feedback through a multichannel approach, and customer satisfaction has been trending downward, your CS team should intervene immediately.

    You could spend time measuring just about every single customer behavior, but that isn’t the best use of your time or your customers’. Instead, single out the variables that are most important to your unique product or customer journey. Ask yourself: 

    • Does this specific metric predict renewal or correlate with your customer churn rate? 
    • Is the factor too subjective or can it be quantitatively defined? 
    • Is there a data point that should be weighed more heavily than others?

    For example, if you operate using a product-led onboarding process and your time to adoption isn’t all but instant, something’s wrong. On the flip side, more sophisticated products will likely have a longer adoption period, but should have higher levels of customer engagement.

    Lagging indicators

    It’s important to track granular data like the examples above so you can start to put together the complete story of your users’ behavior. That being said, you should apply more high-level metrics that give you a larger picture of your wins over time: 

    • Customer Health Score: As a holistic representation of the entire customer relationship with, a health score is the sum of every interaction. If an account's score drastically drops or falls below what you consider healthy, it’s time to sound the alarms.

      Many teams struggle to leverage data due to a lack of accessibility. However, the right health scoring system will break that barrier down. As a data visualization tool, the technology gives everyone on your team a clear understanding of the status of each account. 

    • Customer Lifetime Value (CLV): What is the average revenue generated from each account? This customer success KPI represents the total worth of a customer to your business across the entire relationship.

      Although customer acquisition is essential to the long-term profitability of your SaaS company, active customers represent an even greater value. As Kaiser Mulla-Feroze, a long-time SaaS executive, explained, “The key to running any subscription or recurring revenue business is successfully making the shift in mindset from acquiring a new customer to retaining, nurturing and growing existing customers.”

      Tracking your CLV overtime will help your team ensure that you’re doing just as much for every existing customer as you are your new ones. 
    • Net Promoter Score: Are your users happy with what they’re paying for? A net promoter score answers this by asking whether they would recommend your brand to peers. 

      To make the most out of an NPS survey, follow it with an open-ended question that gets at the “why” behind the score. A follow-up question like “What is the primary reason for your score?” is one way to get context for the score your customer gave and gives you a place to start in assessing their feedback.

      There’s one important caveat to this metric: Your NPS rating won’t help to uncover specific customer behaviors. Think of instead as a compass that helps you know when things are going right versus when you may need a change in direction.

    By measuring both lagging and leading indicators, you’ll be able to gather all of the information you need to start refining your customer success strategy. 

    Where your customer success team should start

    As you begin collecting all of this data, you’ll quickly realize that there is a lot. Each and every customer interaction adds to a never-ending catalogue of digital information.

    The more time you spend trying to make your way through data, the less time you’ll have for your customers. Instead of getting lost in the back end of data collection, we recommend simplifying the process by following these tips: 

    • Set clear goals: For each piece of data you measure, be sure there's a clear connection to at least one of your stakeholders and their unique interests. By aligning your data strategy with your organization-wide goals, it’ll be easier to generate support from the top of your company.
    • Create a single-source of truth: The customer journey doesn't just involve your success team. Data points from sales, marketing and any social channels users interact with should all end up in the same accessible and central location. Depending on your digital maturity, you may need to first with validating and cleansing any of your existing data.
    • Make sure it's actionable: Data is only as useful as the insights and action it generates. Regardless of which metrics you’re monitoring, it’s important to have a clear next step associated with specific changes. If something such as login frequency is low, what does that mean your team should do? 

    As you start measuring your customer success metrics over time, it’s important to keep in mind that you won’t be able to make changes right away. Instead, collect two to three months worth of information to benchmark your month-to-month performance and reduce the impact of any outliers. From there, you can start to make gradual adjustments to your customer success strategy. 

    Applying data to the customer journey: Putting insights to action

    Long story short: Data can and should be your best friend. The right customer success metrics will provide clear insight into exactly why a customer behaved the way they did and how you can repeat or prevent the outcome in the future.

    However, when put to the test, this isn’t always the case for every SaaS business.

    Of the two-thirds of companies with a formalized customer success initiative, only 32% believe their use of data is helping them capture a competitive advantage and improve customer health, as found by business research group Business Over Broadway.

    After everything we’ve discussed, how can that be?

    The study found that there are two major obstacles when it comes to leveraging customer success metrics. Let’s tackle each to ensure you can turn data into your competitive advantage:

    Turning data into actionable insights

    OK, you’ve found the data points most relevant to your customer journey, you’ve been collecting them over the past views and now … what happens next?

    If data is just sitting in a back-end system somewhere, it isn’t doing anything for you or for your customers.

    The challenge is finding the sweet spot between automation and that human touch to ensure data is simplifying manual processes while also inspiring actionable change. There’s no shortage of customer success software that can help you to achieve this balance for your SaaS company. Just some of your options include:

    • Health scoring tools: Rather than manually collecting and calculating your health score, a software can automate the process for you and alert your team to any significant changes.
    • Playbooks: As your company grows, so do the challenges. Playbooks help ensure your processes are scalable and successful no matter where your team is dispersed or how large your customer base gets. They lay out the specific actions to follow if certain customer behaviors are flagged. Simply put: If X happens, do Y.
    • User sentiment tools: While collecting feedback during check-ins with your customers is helpful, it won’t give you the full story. Try experimenting with a variety of automated Voice-of-Customer tools including in-app surveys to gather feedback that can directly be translated into actionable steps for your team to take.

    Data is a critical component of effective customer success management. It will provide your team with the objective knowledge needed to improve your end-to-end customer service, retain users, leverage opportunities for extension and more.

    By taking customer success metrics and transforming them into actionable insights, you can better allocate your team’s resources and generate positive customer outcomes.

    Generating enough top-down support 

    As a comparatively new field, customer success analysis doesn’t always receive the same credit as more established departments such as sales, marketing or product development. 

    That being said, your users should be at the front of everyone’s mind. Existing customers represent the most significant value to your entire organization, both in the form of recurring revenue as well as their power as potential brand advocates.

    If customers aren’t the foundation of your organizational strategy, you’ll be doomed to lose them — and miss out on expansion revenue.

    As you work to communicate this to your C-Suite, leveraging reporting and analytics tools will help you to demonstrate the direct connection between your organization's revenue stream and your customer retention rate.

    Perfecting your customer success data strategy

    Remember: You won’t see immediate results. But don’t let that discourage you. By establishing a long-term commitment to data and a customer-first culture, you’ll be on your way to transforming your success team into a revenue driving machine. 

    Looking for a holistic solution when it comes to understanding customers and finding the right customer success metrics? Learn more about UserIQ.

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