The Customer Success KPIs You Need to Know Now

It’s hard to define success. There isn’t any single metric that can comprehensively tell you whether your business is succeeding or failing. However, you can select a combination of relevant metrics that will help you piece together an accurate picture of your business’s health.

In order to know the best types of KPIs to use, you have to know your organization and its goals. There is no “right” or “wrong” KPIs. Every KPI can give you valuable information, and it’s up to each individual business to determine which metrics are most relevant. Relevant KPIs are metrics that indicate how close your organization is to meeting its goals, whatever those specific goals may be. Customer success teams can benefit from tracking KPIs like customer churn rate, net promoter score, monthly recurring revenue, first contact resolution rate, and more.

Once you’ve decided which KPIs to look at, you need a way to measure those KPIs.

There are a few popular ways businesses do this:

• In app tracking - tracking user behavior directly within your app is usually a reliable way to collect data about how features are being received and how good the user experience is.
• Software platforms - Customer success platforms (CSPs) and customer relationship management platforms (CRMs) are specifically built for collecting and analyzing data about your customer base.
• Feedback forms - Customer feedback forms are a great avenue of qualitative feedback that comes directly from the source.

What Are Customer Success Metrics?

Customer success KPIs (key performance indicators) are quantifiable measurements customer success teams can use to gauge their success. We often use the terms KPI and metric interchangeably. What are customer success metrics and how are they different from KPIs? Metrics and KPIs are very similar, but they aren’t exactly the same.

Metrics are quantifiable measurements that customer success teams use to define success. Metrics like churn, revenue, net promoter score, and more provide customer success teams with data about business operations or customer behaviors.

KPIs are metrics that are linked to a specific business goal. For example, if a business wants to reduce customer churn, they might use churn rate, first contact resolution rate, customer effort score, and qualitative customer feedback as KPIs. These metrics are KPIs because the customer success team is using them to inform efforts to achieve a specific goal (reducing churn). 

How To Measure Customer Success

Here are some of the best customer success metrics & KPIs you can use to track progress toward business outcomes:

1. Customer Churn Rate

Churn rate is the rate at which your business loses customers, expressed as a percentage of total customers lost over a period of time. To calculate the churn rate, choose a period of time (like one month) and divide the number of customers you lost during that time period by the total number of customers you had at the start of the time period. The resulting number is your churn rate for that time period.

2. Monthly Recurring Revenue

Monthly recurring revenue is the amount of money customers spend on your products or services on a monthly basis. This metric is especially important for SaaS companies that charge users based on a subscription model. MRR is a good metric to track if you want to answer questions about your business’s growth rate.

3. Net Promoter Score

Net promoter score (NPS) is one of the most effective ways to measure customer satisfaction. Net promoter score represents how likely your customers are to recommend your brand to other people. To determine your business’s net promoter score, you can create a short survey for your customers that asks them to rate their likelihood of recommending your brand on a scale of one to ten.

4. Customer Lifetime Value

Customer lifetime value (CLV or LTV) indicates the total amount of revenue you can expect a customer to generate for your business over the course of their entire time as a customer. To calculate average customer lifetime value for your business, multiply average purchase value by average purchase frequency rate and average customer lifespan. Fluctuations in average customer lifetime value can indicate how different actions taken by the customer success team affect customer behavior.

5. Conversion Rate

Conversion rate is a metric that tells you how many customers are taking the desired action your funnel leads them toward. Conversion rate is important because it indicates what you can do to optimize your customer experience to encourage conversions. To calculate conversion rate, choose a period of time and divide the number of conversions during that time period by the total number of site visitors during the time period.

6. Customer Retention Cost

Customer retention cost represents the amount of financial resources required to retain one existing customer. Knowing your business’s customer retention cost can help you budget effectively for customer retention. Prioritizing customer retention is important because it’s very expensive and ineffective to have a high churn rate and rely on constantly acquiring new customers.

7. Customer Feedback

There are few better ways to learn how to measure customer success than to ask your customers directly what they care about. Asking your customers to provide feedback via a survey can not only give you valuable quantitative data, but it can also give you deeper insights into why customers feel the way they do about your brand. Qualitative feedback can sometimes give you the context you need to make sense of quantitative data points.

8. First Contact Resolution Rate

First contact resolution rate measures what percentage of customer service tickets are resolved in a single interaction. A common reason customers churn is that they’re dissatisfied with the quality of customer service they receive. If a customer has a problem and is able to get it resolved quickly, the issue may not continue any further. If the customer has to wait around on your customer support team and ultimately loses a lot of time because of the problem, the situation could escalate to a churn risk.

9. Customer Effort Score

Customer effort score (CES) measures how difficult it is for your customers to get assistance when they have a problem with your products or services. You can calculate customer effort score for your business by asking customers to rate how easy it was for them to get help after each customer service interaction. Customer effort score can help you predict customer loyalty and determine if customer service inefficiencies are contributing to churn.

10. Customer Satisfaction Score

Customer satisfaction score (CSAT) indicates how customers feel about the experiences they’ve had with your company. You can measure it the same way you measure net promoter score or customer effort score. Simply ask customers to rate how they feel about the experience they had after each interaction with your company. The number of positive ratings your business gets over a period of time divided by the total number of ratings over the same period of time multiplied by 100 will give you your customer satisfaction score as a percentage.

11. Renewal Rate

Renewal rate is the percentage of customers that renew their subscription after it runs out. Renewal rate is an important metric for many SaaS companies. To calculate renewal rate, choose a period of time and divide the number of customers who renewed during the time period by the number of customers who were eligible for renewal during that time period and multiply by 100. Non-SaaS companies can calculate a similar metric by tracking how many customers replace their products at the end of the products’ expected lifespans.

12. Average Revenue Per User

The average revenue per user (ARPU) is a metric that measures the average amount of revenue for your company that one user generates over a certain period of time. This is a good KPI for projecting growth or profitability. To determine your business’s average revenue per user, divide your company’s total revenue during the chosen time period by the total number of users during that time period. The result is your average revenue per user.

13. Expansion Revenue

Expansion revenue is primarily a SaaS metric that represents all the money customers spend on purchases that are not part of their regular subscriptions. Subscription add-ons, cross-sells, and upsells are all examples of expansion revenue sources. Expansion revenue is a good KPI for determining how much value customers are getting from your brand because customers who add on to their existing product or subscription likely feel confident in the value they’re getting from your product or service, while customers who don’t make additional purchases may doubt they’ll be worth the price.

Customer success KPIs provide customer success teams with the information they need to make effective strategic decisions. Without relevant KPIs to help teams evaluate customer experiences and customer sentiment, it would be very difficult to make the right adjustments for improvement. 

There is no perfect roadmap to the correct KPIs for your business. The KPIs in our list are some of the best KPIs for measuring customer success, but you should select the ones that are most suitable for your specific goals. 

Choosing the right KPIs is simply a matter of considering your customer success objectives and identifying the metrics that are most useful for tracking progress toward those objectives. The best KPIs provide actionable insights that can inform relevant decisions and create measurable improvement.