What are the best metrics to track customer success outcomes and impact?

In my experience, working at a growing SaaS company, our customer success team faced challenges in quantifying the impact of our efforts and aligning them with the company's goals. We decided to measure customer success ROI by identifying the benefits and costs of our initiatives and using the formula (Benefits - Costs) / Costs. This approach not only helped justify our budget and resources but also enabled us to set performance benchmarks and improve our strategies. Ultimately, focusing on customer success ROI allowed our team to better align with the company's overall growth and retention objectives.

Le retour sur investissement CS est une mesure très précieuse pour gérer une équipe CS. Vous devez utiliser la formule suivante : Bénéfices-Co?ts/Co?ts Les avantages peuvent être : - Fidélisation accrue de la clientèle - Croissance du chiffre d’affaires par client - Acquisition de nouveaux clients par le biais de recommandations de clients Les co?ts peuvent inclure : - Salaires de l’équipe CS - Tous les outils utilisés par votre équipe - Frais de formation et de recrutement Le CS ROI vous aidera à justifier le budget alloué à votre équipe et la valeur de leur travail en quantifiant la valeur générée par rapport aux dépenses.

We have been working with SaaS Companies for 3 years now, we have clients who have been with us since day one. Customer Satisfaction (CSAT) Score: Definition: A metric that measures customer satisfaction with your product or service on a scale. Importance: CSAT scores provide a quick snapshot of customer happiness and can be used to identify specific areas for improvement. Customer Lifetime Value (CLV): Definition: The total revenue a business expects to earn from a customer throughout their entire relationship. Importance: CLV helps in understanding the long-term value of your customers and justifying customer success investments

One thing to keep in mind is that the ask here is for customer success ROI and not Customer Success Managers' ROI. Each CS team (Success, Service, Support, ICX, etc.) has its own set of operational KPIs that help them keep a pulse check on their team's performance and make business decisions. I believe there are 4 high-level CS metrics - Financial, health, usage and team performance metrics.

With over 9 years of managing the CSM Team, tracking customer success outcomes and impact can vary on the nature of the business and its goals. Customer Satisfaction (CSAT) Score: Measures customer happiness with your product or service. Net Promoter Score (NPS): Measures customer loyalty and likelihood to recommend. Churn Rate: Measures the percentage of customers who stop using your product or service. Customer Retention Rate: Measures the percentage of customers you keep over time. Customer Lifetime Value (CLTV): Measures the total value a customer brings to your business. These metrics provide insights into customer satisfaction, loyalty, and the overall health of your customer relationships.

I like to think about outcome-based metrics as a pyramid, where there would be more leading than lagging metrics built for the team. Atip for this would be to weight them depending on your portfolio segments and objectives. One of my personal favorites for High Touch Customer Success is the strategic calls you're having with a customer when your product is part of the core business for your customer. If your product is a vitamin (or nice to have) instead of a pain killer it shouldn't be as relevant as it's harder for CSMs to connect, in those cases adoption-based metrics should be prioritized and they don't depend exclusively on the CS org.

As a lagging metric, Net revenue retention (NRR) is top-tier in SaaS. Company valuation usually has a direct correlation with NRR, so the higher the better. There may be some difficulty quantifying NRR and it could be calculated differently depending on the company, so take a few pretzels worth of salt with that. Referrals (Earned New Customers) are REALLY top-tier as a lagging metric because it's low Customer Acquisition Cost (CAC)! Earned Growth Rate (NRR+ENC-100%) may be one of the trending lagging metrics to come, as companies are investing more in data sophistication and AI.

Not enough focus is spent on leading indicators. These signals help to prevent negative outcomes such as churn. Figure out what the leading indicators are of the outcomes that the CSM is expected to deliver and regularly measure and share them across the organization.

This a recurring question. How to measure the success of your Customer Success team? It all ends up to the value you are creating for your company and your customers. Customers will share their view on the value through leading indicators (not only surveys, but also maturity and health), while your Company would check the lagging ones (NRR, Earned Value and Growth). It is important to measure the tendency of these indicators. Are they growing according to the strategy of your company? Are they aligned with the trends in the market? Taking a look to the evolution over time will let you know if your CS strategy is working or not.

Outcome-based metrics are crucial for CS teams because they focus on the tangible results of customer interactions, driving meaningful improvements. These metrics align the team’s efforts with the overall business goals, ensuring that activities directly contribute to customer satisfaction, retention, and revenue growth. By measuring outcomes such as customer health scores, renewal rates, and upsell success, CSM teams can clearly demonstrate their value to the organization. Outcome-based metrics also help identify what strategies are working and which ones need adjustment, allowing for continuous optimization of customer success efforts. This approach is key to fostering long-term customer relationships and sustaining business growth.

The Customer Success strategy MUST be a company-wide strategy. In other words, any effort done to achieve the success of your customers needs to follow the strategy of your company. How to achieve so? It may sound complicated the fact of aligning other companies success (your customers) with your own success. But that is the secret sauce of a well defined CS strategy. Start by identifying the strategic KPis (it could be revenue growth, brand awareness, market share,…), then use data (Customer Scores, NPS results, renewal rates,…), and align those data points with your KPIs. It is highly recommended to review these KPIs at least once per quarter.

To effectively align your metrics with your company's business objectives, you first need to identify the levers you have at your disposal to influence the desired direction. For example, to evolve the product: - You can collect feedback - Look for what generates dissatisfaction - Engage with your customers to understand their needs Depending on the levers you choose, you must adapt the metrics you will follow.

The only way established company and department OKRs will work is if they are informed directly by the KPIs and other metrics the ICs in that department are reporting on. Without a clear tie in to specific larger goals like "how this will influence growth" or "the direct impact specific KPIs have on calculating retention" your larger OKRs are meaningless.

Understand what your business is trying to achieve and how CS can contribute to that. A lot of times companies will give CS targets that are nothing to do with the overall strategy which can result in no real impact. Once you have an understanding and set the targets, understand and create a strategy around how CS can achieve those.

Definitely agree, this is quite important- metrics are sometimes seen as anti pattern in agile but that wouldn’t be in case where they are aligned with business goals. In my experience, our measurable goal was to gain more work from our customers and our activities like training, POCs ..others were towards demonstrating our capabilities, the trust building over period of 6months and time to time measurement in increase of value work was visible. This not only was an achievement but a motivation factor for entire team to do more , while they benefited parallel with their upskilling and knowledge broadening. That’s for me , a true win win with metrics !

Before you start tracking your KPIs, you need to define how frequently you will monitor them. Will it be weekly? Monthly? After that, you can move on to long-term tracking of these metrics. Rely on data that you can collect, filter, and analyze on a regular basis. KPIs will enable you to identify areas of concern for specific groups and adjust your CS strategy according to their needs. It's a way to highlight the difference between your company's value proposition and the expectations of your clients. Remember, we work with and for human beings. The data you collect through your indicators must be contextualized. Do not forget to engage with your clients when you notice irregularities in your KPIs.

When using KPIs we need to track them during a period of time. Of we are trying to check how our CS strategy aligns with our corporate strategy, it is even more important that we check (and update) them every quarter. It is recommended to build dashboards that all senior stakeholders can check and understand, so actions can be taken to steer the overall CS strategy.

CS is a journey. As pointed out, tracking outcome-based metrics over time is pivotal to grasping the true ROI of your customer success initiatives. But here's where many organizations falter: they forget the 'human touch'. While dashboards, reports, and analytics provide invaluable insights, they often miss the nuances of individual customer experiences. By segmenting metrics, not just by tangible attributes like industry or size but also by understanding the unique challenges and aspirations of each segment, you lend a human perspective to raw data. This approach ensures that as you refine your strategies, you're not just reacting to numbers, but to real-world customer experiences, which is the essence of genuine customer success.

Tracking metrics over time provides insights into trends, performance, and strategy effectiveness. It enables goal progress assessment, identifies areas for improvement, and informs data-driven decisions for sustained success. With mobile apps, digital and SaaS products, real-time metrics capture immediate customer feedback, facilitating agile decision-making. This empowers businesses to respond swiftly, stay competitive, and enhance customer satisfaction.

It's important to be able to track metrics in both, shorter and longer periods of time. While most teams mainly track metrics quarterly, and some prefer comparing bi-annual or yearly results since some quarters can be worse than others, tracking metrics monthly won't harm. You will be able to see if something might be wrong and what you can do about that early on.

It's a delicate exercise to objectively position oneself in comparison to the competition. Especially in terms of CS (Customer Success), each company has its own recipe and objectives. However, you can still go through several paths to try to construct a valid perspective. I'm partly thinking of: Consulting feedback from their former clients Looking at their NPS (Net Promoter Score) & CSAT (Customer Satisfaction Score) Thoroughly visiting their website and help center The holy grail would be to interview one of your customers who has worked with them in the past. With these various feedbacks, you will be able to measure yourself against the competition and evolve your metrics in the right direction.

One of the very first things every new CS leader should do when they take on a new role is to capture current internal benchmarks across as many metrics as they can capture. Too often this is a forgotten step, and then it is difficult to demonstrate specific progress and attributed impact.

Let’s be honest. Customer Success strategies have not being around for ages, so finding an industry standard or a benchmark is like looking for an unicorn. With that said, it is possible to check how your competitors are doing in your market. You can consider that as a benchmark to measure your success. Needless to say, the KPIs defined to align CS strategy with your corporate strategy must show you the trend you are following, so you can steer based on informed decisions.

Industry benchmarks: Research average churn rates, NPS scores, and CLV for your industry to understand your relative performance. A/B testing: Test different customer success strategies (e.g., onboarding processes) and measure the impact on chosen metrics.

Another way to benchmark and optimize metrics is to create a series of value cases. Use customized data from a set of customers to define the value add (cost savings, time to value, etc.) and create concrete examples of how these customers realized value. Compare these cases and segment your customers according to your tracking needs ie. industry, region, business size, to better understand the value add in various areas of the market and set benchmarks for your solution set.

When working with and for your clients as a CS, you need to showcase the value of your work. What do you achieve tangibly? What additional value does your work provide? You have very specific KPIs, but do they offer insights that align with the strategic needs of the company? Have you spent a considerable amount of time with a client? Explain what this has brought you and what the benefits are. For you, as well as for your colleagues or clients, communicating the value you create is advantageous and aids in gaining perspective.

One of my biggest pieces of advice for young or new customer success managers is this: show your work. The same can be said of demonstrating ROI. You cannot simply expect stakeholders to notice that you are providing value and a ROI. You need to have clear communication about what metrics you and your company are being judged on, and then effectively show whether you are improving, stagnant, or in trouble. Communication here goes both ways. Have the difficult conversations when ROI is not what you expect it to be, and communicate your plan to turn it around.

This is the real thing. You can work on very good KPIs to measure your CS strategy, but you MUST extract the value out of them. The question is: who is going to evaluate that value? Make sure you create a set of KPIs that not only align with your corporate strategy, but also are meaningful to your senior execs. Sometimes the value needed tends to be more economically related, but there are other areas of value creation (like Customer Communities) that are not so linked to the revenue numbers. Either way, make sure to show this value in a consistent and regular way, always liked with your company’s needs, and make it meaningful for the audience that will consume it.

To showcase the impact of customer success efforts, it's crucial to communicate results internally and externally. Using platforms like Microsoft Power BI or Looker to create comprehensive reports can illustrate how customer success initiatives contribute to overall business success. Sharing success stories and testimonials with stakeholders and customers using tools like LinkedIn or email marketing platforms such as Mailchimp reinforces the value of ongoing support efforts and fosters customer trust and loyalty.

Value that isn't communicated effectively will likely go unnoticed. Moreover, in SaaS businesses, there's a trend where revenue-growth metrics often overshadow other metrics like retention, product usage, or NPS. Customer Success team efforts and achievements (especially if the team isn't involved in expansion efforts) might easily go unnoticed, so it's one of the CS team leader's responsibilities to communicate and highlight all the achievements of the Customer Success team and translate those achievements into revenue growth or money saved.