17 Customer Success Metrics Your Company Should Track

What Are Customer Success Metrics?

Back in the day, companies were trying to make as many calls as possible and close as many tickets as they could. However, this model is no longer enforced by successful businesses. Customer success metrics and KPIs show you how well your methods work and how happy your customers are with your services. When you track KPIs for customer support effectively, you improve customer lifetime value and maximize your revenue. You also identify areas for improvement, like decreased engagement, churn rates, poor support, and product complaints. Data shows that 82% of companies employing over 500 people choose customer success platforms, emphasizing how important client satisfaction is.

The first step in this process is knowing which metrics to track and why. For SaaS businesses in particular, onboarding success is necessary to measure. During this period, customers start using your software, and their experience might result in them purchasing a subscription. You must know the drop-off point so you can improve your methods. Also, SaaS metrics like free-to-paid conversion rates show you how many customers upgrade their plans.

Let’s see which CSM metrics are crucial to measure.

In This Guide, You Will Find…

17 Customer Success Metrics You Should Measure

1. Net Promoter Score (NPS)

To maintain a successful brand image, you must ensure that your customers have an overall positive image of your company, products, and sales reps. Customer success metrics like NPS help you understand how likely it is for clients to repurchase and recommend your brand to their peers. Both are instrumental to great online reputation management, as happy customers are more likely to leave positive reviews and help you create case studies. When you measure this SaaS success metric, ask people to quantify on a numerical scale, usually from 1 to 10, offering the option to explain their answer.

When you receive ratings of 0–6, it means that you have detractors. These are people who are likely to discourage others from purchasing your solution. 7–8 are happy customers who are not impressed and wouldn’t necessarily recommend you to their peers. Those who grade you 9–10 are your promoters. It’s those who would gladly promote your business to their circles and help you get more customers.

2. Customer Lifetime Value (CLV)

CLV is one of the most crucial SaaS customer success metrics. It shows you how much money you can expect from each customer or account during the entire course of your business relationship. Let’s say you are a content provider selling online courses, and your average purchase per client is $1,000 while your average purchase frequency is six months. Multiply these two rates and then multiply the result by your average customer lifespan. This should give you a clear estimation of how long each account stays with your business.

If this success KPI increases over time, it means that your overall brand image and product value are improving. However, if this metric is decreasing, you need to address the reasons. Maybe you need to take a look at the most successful B2B customer service examples to identify weaknesses and turn them into strengths.

3. Churn Rate

We can’t be talking about customer success metrics and not mention churn. It refers to how successful each sales representative is at maintaining their clientele and renewing contracts. After all, customer success teams try to build strong and loyal relationships with clients. The more cancellations they avoid and new contracts they sign, the lower the churn rates they have. Usually, companies check when and how a client churned to identify what went wrong. For example, if someone didn’t renew their engagement software after one year of usage, they were probably not happy with the overall experience. If, however, they abruptly ended their freemium or 30-day trial, maybe they had an unpleasant onboarding experience. When you measure this SaaS metric, make sure to exclude the new accounts you secured during your customer acquisition strategy. You will measure their churn on your next assessment.

4. Monthly Recurring Revenue (MRR)

A SaaS sales strategy isn’t complete if you don’t measure your MRR. It’s basically your monthly revenue that derives from your loyal customer base. This KPI is pivotal for SaaS companies that rely on monthly subscription renewals. But why is it so important to measure it? Apart from keeping track of your income, your MRR helps you forecast future revenue and make investments. Ideally, you want this customer success metric to grow as months and years go by. When you know exactly how much money you should expect to make in the coming months, you can plan your expenses wisely and make informed decisions. To calculate this success metric, take your monthly average revenue per user and multiply it by the total number of active users.

5. Average Revenue Per User (ARPU)

ARPU is one of the top customer success metrics, especially for SaaS, social media, and telecommunications companies. As the name suggests, you measure how much money every customer generates within a certain period. This way, you understand the profit capabilities for every account and their preferences and can forecast their future spending. For example, if someone is fully happy with your payroll software, they may also be interested in your time-tracking software. Therefore, HR tech marketers can craft a plan to promote this new service to them with highly personalized messages. ARPU also helps you identify your best-selling products or services. So, you can lean on your strengths while making an effort to improve services that haven’t reached their potential.

6. Customer Effort Score (CES)

Have you ever contacted a company’s customer service and later received a message or email asking you about your experience? This is what CES is. You basically ask your clients how easy or difficult it was for them to solve their issue or get an answer to their query. Additionally, it shows you how long it takes your customer service agents and sales reps to take care of every ticket. This metric impacts your customer success score and shows you what you need to improve. Measuring this KPI is very easy. All you need to do is create a survey asking people their opinion on a scale from 1 to 7. One usually refers to “strongly disagree” and seven to “strongly agree.” You may take a look at successful email drip campaign examples to automate the process without having to manually send messages after every interaction.

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7. First Contact Resolution Rate

Another customer satisfaction KPI for customer service teams is first contact resolution. For SaaS growth strategies to work, your customer care should be quick in resolving people’s problems. Customers can’t wait for ages until someone answers back. Therefore, this metric shows you how effective your team is at handling each case successfully on the first interaction. Whether it’s via email, chat, or live calls, your customer service should be prompt. The higher your first contact resolution rate is, the better it means they are handling customer issues. To measure this SaaS metric, you need to divide the number of cases that were closed during the first interaction by the total number of queries. Multiply that by 100, and you get your percentage.

8. Net Dollar Retention

Many B2B businesses search for viable growth hacking strategies that will catapult them to new heights. Yet, you won’t be able to do that unless you know how much revenue each customer or account brings in. This is undoubtedly one of the most crucial customer success metrics, as you measure the revenue change for each customer. Upgrades, downgrades, added features, churn, and expansion alter the revenue you receive. It’s important to know whether you gained or lost money from every customer. It shows you what went wrong and which services or features satisfied people. For example, someone may have cancelled the analytics and reporting feature from your employee onboarding software due to inaccuracies. At the same time, they may have added the performance feedback feature. These are indications that some features don’t work as well as you would wish.

9. Qualitative Customer Feedback

At the epicenter of every business lies customer feedback, whether positive or negative. What do your clients think about you? Are they happy with the services you provide and the way your sales reps treat them? To identify potential tragedies and address mistakes, you should always ask for feedback during various stages in every customer’s lifetime. You may send them emails asking them to rate you on a scale from 1 to 10 and explain their reasoning. With high-value accounts, you should arrange one-on-one interviews so you can discuss potential issues. However, this customer success SaaS KPI means nothing if you don’t pay attention to the feedback and act on it. People need to see that you understand their issues and value their viewpoints. Acting swiftly to fix your mistakes proves that you accept the criticism and accelerates business growth.

10. Customer Retention Cost

Like you want to know why and when your customers churn, you also want to discover how much money you’re spending to retain your clientele. Customer service support, chatbot training, account management, and loyalty programs are a few of the measures you take to ensure everyone is happy with your brand. Additionally, SaaS companies should account for personalized emails, gifts to loyal customers, and early access to new features. All this accounts for this customer service KPI. Basically, you want to ensure that you are not spending exorbitant amounts just to maintain a few clients. Compare how much money you spend on keeping your current customers with the potential revenue from rolling out new features to attract new leads. Maybe the latter has stronger potential. The goal of customer retention cost is to show you whether your growth strategy is sustainable.

11. Customer Health Score

This is one of the most talked-about customer success metrics that acts proactively in understanding which clients are likely to churn. It gives you an indication of who is actively using your services and is fully happy with them and who is disengaged and will likely abandon you. However, customer health score isn’t the only KPI you should look at when it comes to customer loyalty. Check out others, including NPS, CES, and CSAT, to understand who is at a bigger risk of dropping you. What can you do to avoid that, though? Send long surveys and arrange interviews and focus groups. In-depth conversations allow customer care pros to understand which clients need more attention. For example, a company may have bought your LMS but use only a fraction of your features. Or they may be using your service rarely, which is an indication that they are not fully happy with its usability.

12. Renewal Rate

If you ask a SaaS startup or an established SaaS company what KPIs are most important, renewal and repeat purchase rates will come up. That’s because this business model relies on subscription renewals, whether monthly or annually. When customers renew or repurchase their product or service, it means that they see value in it. On the other hand, when they buy once and then churn, it proves that they don’t see any benefits in using your solution. Another key reason renewal rates are crucial is that repeat customers spend an average of 67% more than new clients. This is absolutely natural, as they’ve formed a positive perception regarding your brand and are willing to expand their investment. To calculate the repeat purchase rate, you should divide the number of customers that have made a repeat purchase by the total number of customers.

13. Customer Satisfaction Score (CSAT)

This may sound very similar to CES, but they have one core difference. Customer effort score measures how satisfied clients are after each interaction with your company. On the other hand, CSAT wants to know how happy people are with your brand and product or service. When this customer success statistic is high, it means that you’ve gained people’s loyalty, and they are more than likely to repurchase from you. A study showed that 83% of consumers consider top-notch customer service the most important criterion before purchasing a solution. Therefore, knowing your weaknesses allows you to improve and address issues caused by bad customer interactions. That’s why it’s best to contact customers who want to end your collaboration and make it your mission to prove why you can do things right.

14. SaaS Product Usage Rate

This may seem very similar to customer health score. However, that focuses more on predicting churn, while usage rate cares more about how much your clients use your software, the duration of the usage, and the features utilized the most. Customer retention KPIs like this one should increase as time goes by, as you want people to use your software as frequently as possible. You can measure this metric by setting a daily, weekly, or monthly interval and comparing annual statistics. Account for seasonal slumps that don’t tell the whole story. For example, if you’re an authoring tool provider, you may notice that during holidays and summertime, your usage rate drops because many product users are on vacation. During the rest of the time, measure how many company employees access the software, how long they stay on it, and which features they use.

15. Conversion Rate

Are there really any companies out there that are not tracking this success metric? It is undoubtedly one of the most vital customer success metrics, as it shows you how many people completed the desired action. It could be buying a subscription to your software, starting a free trial, registering for your email list, upgrading their plan, or submitting a form. When the results aren’t optimal, your customer success agents should perform conversion rate optimization to check why prospects aren’t moving forward with your solutions. For example, you may not be using the best email marketing practices and instead investing in poor CTAs and misleading subject lines. As a result, users not only don’t buy your solution but also unsubscribe from your newsletter. In even worse cases, they send your emails to their spam folder.

16. Free Trial Conversion Rate

A SaaS marketing strategy can focus heavily on freemiums and free trials, trying to lure customers into using a product or service without strings attached. What happens, though, after someone clicks on your lead magnet idea and begins their free trial? Knowing how many of your free users upgrade to paid options is important to identify holes in your non-paid plans. This customer success KPI is very easy to measure. You simply divide the number of customers who converted to a paid plan by the number of people using your free option. You can do this measurement weekly, monthly, or annually. For example, if 100 people are using the free version of your payroll software and 30 of them have upgraded their plan, this gives you a 30% free trial conversion rate.

17. Average Time On Platform Or In Application

Customer success benchmarks are important for SaaS businesses to understand how long the average customer stays on their platform. This metric tells you a story regarding how much your solution has integrated into your clients’ day-to-day activities. You can also check which sections or tools are more popular and which ones are rarely used. Many social media platforms even send push notifications to users when new features and updates are released to remind them to check them out. Once you set your ideal benchmark, you can use similar notifications to encourage less active users to enter your software more often. And, when nothing works, you should take a closer look at your solution to see why people aren’t spending that much time in it.

What To Include In A Customer Success Scoreboard

Most companies use their success metrics dashboard to check their efforts in real time. A scoreboard is a bit different. Phil Portman explains the difference in the most accurate way: “The dashboard is like your car’s dashboard: it gives you real-time information on how things are performing right now. Your success scorecard is like the car’s navigation: Where do you want to go, what are your goals, and how close are you?” Customer retention rate, net promoter score, product usage rate, feature adoption, and effort score are some of the most important metrics to include in your scoreboard.

But why should you even use this scoreboard for success metrics? Consider it as part of your overall software sales strategy since you are using it to understand your customers’ satisfaction rates and improve their experiences. KPIs for customer success managers allow them to use the extracted data to personalize customer interactions, address any issues, and identify trends. Therefore, clients value your company and remain with you in the long run.

Key Takeaway

Your marketing results may be amazing, bringing in many leads and website clicks. However, your customer success metrics may tell a completely different story. When your customers churn and don’t convert from their free to a paid plan, it’s a good indication that something doesn’t work very well with your software. That’s why you should keep measuring as many success KPIs as possible to identify issues along the way. Customer health, customer effort, and feedback show you the possibility of someone churning and provide you with criticism. Your net promoter score lets you identify how many customers aren’t just happy with your solution but would also gladly recommend you to their peers. But that’s not all. You also need to measure metrics concerning your revenue.

Customer lifetime value offers you a projection of how much money each account will offer you in the entire duration of your business relationship. On the other hand, the monthly recurring revenue shows how much money you’re making on a monthly basis, while customer retention cost gives you a view of your spending to retain customers. Lastly, a market penetration strategy in the SaaS world must utilize customer metrics like product usage rate, free trial conversion rate, and average time on the platform.