Have you ever found yourself driving on a pitch-black highway in the middle of the night? It can be pretty confusing, not knowing where to turn or which route is fastest. You can’t see the end of the road, and you can’t see any milestones that might tell you how far along you’ve gotten.
Is your destination around the next bend? Did you already pass it? Is it actually quite a long way off?
You feel sort of handicapped…
The same can be true for customer success teams. As a customer success manager, it's your job to direct your customer success team to success, even in an unpredictable sales environment.
That's where key performance indicators (KPIs) come in - they're the headlights that help make the path ahead less unpredictable, allow you to check that you’re on the right track, and guide your customer success team to victory.
Without clear KPIs (Key Performance Indicators) in place at each step of the journey, there’s no way of measuring progress or understanding how well any given process is performing.
The customer lifecycle can broadly be divided into five main areas: acquisition, activation, retention, referral, and revenue (AARRR).
Customer success metrics measure performance related to the activation and retention stages. Once you have people on board and they’re buying from you, how can you ensure they stay satisfied?
That’s where customer success KPIs come into play.
Picking the right customer success metrics is like choosing the perfect outfit for a specific event. You want something that's going to make you look and feel good but also serve a specific purpose. That neon dinner jacket may be a head-turner, but it's probably not the most practical choice for a business meeting. In the same way, tracking the right KPIs will help you make data-driven decisions that translate to more success for your sales team
More and more companies are expanding the use case of conversation intelligence to customer success teams because it automates tracking and insights.
Tracking your customer success metrics regularly also allows you to celebrate your wins, like when you finally hit that elusive "perfect outfit" KPI of 100% customer satisfaction.
The right customer success KPIs will:
- Boost retention by providing a clear picture of your retention strategy.
- Help you rely less on acquiring new customers and focus more on retaining and growing your existing customer base. Increasing the lifetime value of your customers will ultimately lead to more sustainable, long-term growth for your business.
- Improve product adoption by providing insight into how well your customers are using your products or services. The right KPIs will help your customer success team identify any barriers in the adoption process. They also help you to take action to improve adoption rates.
So what exactly are the right customer success metrics for your business?
Instead of simply listing out various important metrics that might or might not gel well with your specific business goals, we’ll take a different approach.
We’ll look at what you need to track, why, and the various KPIs you should consider for each bucket.
4 critical customer success KPI buckets
- Customer retention:
Customer retention KPIs measure how well your business is retaining customers over time. You can identify potential issues and take action to improve retention by tracking these customer retention metrics:
Customer retention rate - measures the percentage of customers who continue to use your product or service over time. A higher retention rate typically means happier customers who find value in what you offer and continue renewing their subscriptions year after year.
Customer retention cost (CRR) – measures the expenditure on retaining one single customer. An all-in-one KPI popularized by SaaS companies, this customer success metric helps track, optimize, and compare your churn rate (CRR is the inverse of the churn rate) with your expenditure.
Customer churn rate - measures the percentage of customers who stop using your product or service.
New user retention rate - measures the percentage of new users who continue to use your product or service after their first use. A high new user retention rate indicates that your onboarding process successfully engages and retains customers.
- Product usage
Product adoption KPIs include metrics that measure how well your customers are using your products or services, such as:
Feature adoption - measures which features of your product or service customers are using and to what extent. A high adoption rate for key features indicates that customers are able to use your product to its full potential.
This customer success metric is especially important for SaaS and companies that frequently update their features. You want your feature upgrades to be useful, otherwise they are a waste of capital.
User adoption rates - measures the number of users who've adopted a new product or feature divided by the total number of users. It shows a new feature's popularity or indicates possible issues with new launches.
For example, look at average sign-up times per user category plus adoption over time; are they sticking around longer now compared to six months ago?
Monitoring usage rates among different demographic groups also gives insight into where improvements need to be made in order to guarantee everyone has better outcomes regardless of background, experience level, etc.
- Customer experience
How well is your business meeting your customers' needs? This bucket of KPIs deals with the post-purchase experience. Selling a product once can be somewhat simple; building customer loyalty, and turning a prospect into a lifelong customer means actually having game. You can figure out areas for improvement and take action to enhance the overall customer experience by tracking these metrics:
Customer satisfaction score (CSAT) - The CSAT measures how happy your customers are with your product or service. The biggest and most popular customer success KPI there is. Kinda like what The Weeknd was in 2019 and 2020.
Net promoter score (NPS) - NPS tells you how likely they are to recommend your product or service to others. A high NPS means that your customers are happy and spreading the word, while a low NPS means that you’ve got a ton of work to do!
Customer effort score (CES) - The CES shows how hard or easy are you making it for your customers to interact with your business? A high score means your customers are doing your work for you, and you risk losing out on users mid-journey.
First contact resolution rate - measures the percentage of customer issues that are resolved during the first interaction with customer service. A high score indicates that your customer resolution process is strong and your customer support team is saving up resources on the resolution process.
- Profit & revenue
What are all your efforts amounting to? The be-all and end-all for any business, this bucket of KPIs measures the overall financial performance of your customer success efforts. You can identify areas for growth by tracking the following:
Revenue growth - measures how your sales are increasing or decreasing over time. If there’s a sudden change in any direction, it’s important to analyze what caused it so you can reverse the flow if the change is negative or keep it pumping if it's positive.
Customer lifetime value (CLV) - CLV is like a map for your customer's journey – it tells you how much value a customer has brought to your business over the course of their time with you.
Average revenue per user (ARPU) - evaluates the total revenue generated by each customer over a defined time. The ARPU is a great benchmark for industry-wide comparisons with your competitors.
Monthly recurring revenue (MRR) - the MRR is the total monthly recurring revenue generated by your business. The MRR is calculated by multiplying the number of customers by the average revenue per month. The MRR is a nuanced metric and can be used to segment customers and hone in on your customer success strategy. For example, a high MRR for new customers but a lower one for existing customers implies that you may need to focus on retaining and upselling to your existing customer base in order to improve overall MRR.
Help your sales efforts to take off with Wingman
Your Customer Success KPIs must be regularly tracked and reviewed to measure actual outcomes against desired outcomes. When used correctly, KPIs help your reps reach their customer success goals faster. KPI insights allow customer success teams to prioritize actions that will help your team meet sales quotas with ease.
Using Wingman, a conversational intelligence software, can be a game-changer for your customer success efforts. Just like how Maverick and Goose were the ultimate wingmen in "Top Gun," Wingman can provide valuable insights and support to help your business soar to new heights.
- Find out which strategies work: With Wingman’s insightful dashboards and powerful metrics - your customer success managers can more easily identify the strategies that move the needle long-term versus short-term.
- Ace real time coaching: Wingman helps you record and analyze calls in real time. This allows your managers to listen in on calls and provide real-time coaching and feedback to their team members, helping them to improve their performance and make your first contact resolution rate soar.
- Reduce admin load on sales: Wingman also integrates with other platforms, such as email, CRM systems, and meeting conferencing systems, to simplify your workflows. The same goes for Wingman's pre and post-call automation capabilities. Less time spent on admin chores = more selling!
With Wingman, you can track the right customer success KPIs in real-time with convenient dashboards and metrics. So why fly solo when you can have a reliable wingman by your side? With Wingman, you can take your customer success efforts to the next level and achieve lift-off into greatness. Don't forget the aviator sunglasses and catchy 80s soundtrack.