16 Customer Success Metrics and KPIs to Track in 2021

I questioned success my whole life.

It was a very abstract term for me to define, and even harder to achieve. I always kept asking myself, “what defines success?”

Thankfully, I don’t need to ask the same unnecessarily philosophical questions doing my job. That’s because at some point some genius people decided to find metrics to measure success.

And today in this guide, I will cover the essential customer success metrics and the KPIs that you need to track for a better CS operation.

Let’s dive right in and start with the basics

What Are Customer Success Metrics?

What Are The 5 Most Important Metrics For Performance of The Products?

  • Product technical performance metrics such as defects, downtime, response time
  • Product business performance metrics such as monthly recurring revenue (MRR)
  • Customer engagement metrics such as NPS, average session time, and customer satisfaction score
  • Lead management metrics such as lead generation and sales funnel conversion.
  • Customer ROI (Return On Investment) such as Customer Acquisition Cost (CAC), Lifetime Value (LTV)

How Do You Measure Customer Success?

Within Customer Success and especially in SaaS customer success, there are several metrics and key performance indicators that you should track. The most significant ones include churn rate, Net Promoter Score (NPS), Average Revenue Per Customer, etc.

There are various methods to draw numbers and data for customer success KPIs and metrics. For example, SaaS companies, in particular, can achieve customer engagement data and measure customer success with several methods such as:

Onboarding

Using customer onboarding to see the drop-offs and who are more likely to convert into paid customers can be a valuable benchmark for early customer success.

Onboarding tools can help you build product guides with minimum effort, without any coding.

Free-to-Paid Conversion

16 Customer Success Metrics & KPIs You Need to Track

1- Customer Churn Rate

  • Canceled subscriptions
  • Closed accounts
  • Loss of recurring value
  • Loss of a recurring business or contract

All companies must measure customer churn rate simply because it’s a key performance indicator of your customer success strategy.

How To Calculate Churn Rate

The total number of churned customers / total number of all customers = Customer Churn Rate

Note that for all businesses, particularly for SaaS companies, keeping customers paying and reducing churn is crucial for growth.

2- Monthly Recurring Revenue (MRR)

MRR provides accurate, predictable, and largely consistent financial projections, helping companies estimate and plan their businesses accordingly. Also, MRR is a key indicator of growth for SaaS companies and is critical especially if backed by investors.

How To Calculate MRR

For MRR calculation, take your Average Revenue per User (ARPU) on a monthly basis and multiply it by the total number of active users on a given month.

3- Average Revenue Per User (ARPU)

  • Profit generation capability
  • Understanding customers
  • Financial forecasting
  • Comparison to competitors

How To Compute Average Revenue Per User

Total Revenue / Average Users = Average Revenue per User

4- Net Dollar Retention

To put it differently, Net Dollar Retention measures how much money you’ve gained or lost from existing customers. Examples for it include:

  • Upgrading an existing subscription plan,
  • Paying for additional features, storage, functionality,
  • Churning,
  • Downgrading.

How to Measure Net Dollar Retention

5- Net Promoter Score (NPS)

Participants of NPS surveys are expected to explain the reason for their scores. This allows businesses to analyze the underlying issues of negative customer experience. As a critical customer success KPI, Net Promoter Score provides valuable customer feedback and helps to measure quantitative and qualitative data to improve upon.

How To Measure Net Promoter Score

  • 0–6 are classified as detractors.
  • 7–8 are group as passives.
  • 9–10 falls under the name of promoters.

After the survey scores are grouped, you can calculate the NPS. The NPS calculation is done by subtracting the percentage of promoters from the percentage of detractors. The result gives your business’s Net Promoter Score.

The percentage of promoters — (minus) percentage of detractors = NPS

6- Customer Satisfaction Score (CSAT)

The main difference between the two is that the customer satisfaction score seeks to see how happy the customers are with your product or service, while the net promoter score’s main subjective is to show customer loyalty.

Another difference is the fact that the customer satisfaction score encompasses a short period of time while calculating the net promoter score can be more beneficial in the long run.

How to measure Customer Satisfaction Score

(Number of satisfied customers / Total number of responders) * 100 = CSAT

7- Conversion Rate

  • Making a purchase
  • Subscription to a paid plan, mailing list, etc
  • Registering on a site
  • Upgrading a service
  • Submitting a form

How to Calculate Conversion Rate

(Conversions / Total Number of Visitors) * 100% = Conversion Rate

(Conversions / Total Number of Leads) * 100% = Conversion Rate

8- Customer Health Score

When established, monitored, and responded correctly, a customer health score can help customer success managers and teams to identify the risks before they arise and unhappy customers. This way, they can minimize the churn rate.

How to Measure Customer Health Score

Frequency: How much time do users spend on your product?

Breadth: How many users in a specific account are using the product?

Depth: How many of your product’s or service’s key features are being used?

Apart from these, you can measure your customers’ growth as well.

9- Customer Lifetime Value (CLV)

In simpler terms, customer lifetime value is a metric that shows:

  • How much a customer is worth to your brand and their value
  • How much money you should be investing in customer retention
  • An insight into whether or not a customer is likely to become a repeat customer

Assessing CLV is crucial to invest in the right customers that are more likely to bring value to your brand.

How to Compute Customer Lifetime Value

10- Customer Retention Cost (CRC)

Therefore, a loyal customer base is a cornerstone for financial stability and your business’s long-term health. By measuring your CRC, you can make smart moves on how much you should spare for your marketing budget and keeping loyal customers.

How to Calculate Customer Retention Cost

Add these expenses into a sum. Divide that value by your total number of customers. The result will give you your business’s customer retention cost.

Customer Lifetime Value = (Customer Value * Average Customer Lifespan)

11- Qualitative Customer Feedback

  • Why has a customer given you a low NPS?
  • Why have they decided to abandon their shopping carts?, etc.

You can collect qualitative feedback using open fields in feedback forms. This way, your customers can explain why they have given a specific score. Once the qualitative customer feedback data is collected, it can be analyzed using text analytics.

12- First Contact Resolution Rate (FCR)

How to measure First Contact Resolution Rate

  • What defines a first contact resolution?
  • Is my support team established enough to resolve issues on first contact?
  • If a customer got in contact with another department or person from the company, does that count as first contact?
  • Do calls that were ended due to wait time count?

And other questions, depending on your workspace and company structure.

13- Customer Effort Score (CES)

  • How much effort goes into setting up your product?
  • How much effort goes into signing up to your platform?
  • How much effort goes into getting customer support?
  • How much effort goes into a purchase or a return?

Are all questions that the customer effort score metric can feed on.

However, although this metric seems to be a reliable one, business experts recommend using it in tandem with a net promoter score survey for more objective answers and results.

How to measure Customer Effort Score

Total sum of positive responses / Total number of responses = CES

14- SaaS Product Usage Rate

Depending on the nature of your product and the parts of it you especially want to check usage rates, the elements of product usage rate can be:

  • Usage frequency
  • Usage of specific tools and/or features
  • Usage duration

Although this is very similar to customer health score, the major difference is the fact that product usage rate has more to do with actual usage rate of a product than churn prediction that customer health score focuses on. One might say that product usage rate is a primitive version of the CHS that essentially has more potential of supporting other similar metrics.

How to measure Product Usage Rate

15- SaaS Average Session Duration

Average session duration or app is the type of metric that, as the name gives it away, looks into the amount of time your customers or users spend on your product. By looking into this metric, you can not only see how much time is spent on your platform but also which specific sections are viewed longer or shorter by your customers.

How to measure Average Session Duration

Total seconds of all sessions / Total number of sessions = Average Session Duration

16- SaaS Monthly/Daily Active Users (MAU/DAU)

It is also recommended to include daily active users (DAU) into your calculations. By creating a ratio between MAU and DAU you can see whether your users are actually interested in your product or just have sudden urges to check out your product and never show their face again.

How to measure Monthly/Daily Active Users

Your activity criteria can be but not limited to:

  • Vitising certain pages,
  • Sharing or liking content,
  • Completing a task,
  • Creating content, or even
  • Scrolling all the way to the bottom

The formula to find out your MAU/DAU ratio, on the other hand, is pretty simple:

Daily Active Users / Monthly Active Users = DAU/MAU Ratio

The higher the percentage, the better your platform/app/tool is performing. So work it up, people.

Conclusion

Trying to find the underlying issues behind increased churn rates and loss of customers can be challenging. However, when systematically evaluated, these metrics uncover the strengths and weaknesses of your company, product, or service.

Once you find out the underlying problems, customer success, and support teams, as well as the managers can better focus on developing effective strategies. Keep in mind that every improvement requires a vision, in this case, provided by CS metrics.

Frequently Asked Questions

What is the most important metric for customer success?

How can I measure the effectiveness of customer success?

What metrics are customer success responsible for?

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