4 Critical Customer Success KPIs For Your Organization

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Measuring Success in SaaS

Analytics monitoring is frequently addressed in marketing, but it is also vital in determining the value that your consumers receive from your product. By concentrating on the most important key performance indicators (KPIs) for assessing customer success, you can more intensively put your efforts into guiding your consumers through their experience and maximizing your product’s value for them. Here are six customer success KPIs you need to track.

1. Monthly Recurring Revenue

This is a standardized measurement of your company’s predictable monthly revenue. It is an important indicator for organizations that are subscription-based or provide Software-as-a-Service (SaaS). It is tracked by SaaS organizations for financial planning and forecasting, as well as to measure growth and momentum. Investors ask about the metric and your customer team should track and act on this metric closely.

2. Customer Churn Rate

This KPI is used to determine the proportion of clients who no longer utilize your service or product. For instance:

  • Closed accounts
  • Canceled subscriptions
  • Loss of a recurrent contract or business
  • Loss of recurrent value
  • Customer churn rate is an essential KPI since it will help you evaluate your customer success strategy.
  • Average Revenue Per Unit

This is the mean revenue per customer over a certain period. It is a popular measure among SaaS, social media, digital media, and telecoms firms. This KPI enables you to have a better insight into:

  • Understanding customers
  • Profit generation capability
  • Comparison to competitors
  • Financial forecasting
  • Net Promoter Score

These factors refer to a metric used to assess customer happiness and loyalty. It is calculated using survey responses that ask consumers how likely they are to endorse your product or service.

Respondents in NPS polls are asked to explain why they voted the way they did. This enables you to investigate the fundamental causes of poor customer service. It also gives companies insightful customer input and aids in measuring qualitative and quantitative data for improvement. Gathering this metric is only helpful if companies take the time to understand why the clients gave them a particular score and then act on improving the customer experience.

3. Customer Lifetime Value

This is the net profit or total revenue that you can expect a single client to bring to your firm throughout the course of the customer’s engagement with you. By measuring customer lifetime value (CLTV) across different segments (by size, spend, location for example), companies are able to understand where to invest future dollars consumers are more likely to add value to business growth. By comparing CLTV to new customer acquisition costs, companies can estimate a future client’s profitability and the company’s long-term growth potential.

4. Net Dollar Retention

This KPI computes the revenue difference created by current customers over a set time frame. It is used to represent how recurring income fluctuates over time as a result of churn, downgrades, and upgrades. To put it another way, it calculates how much revenue you’ve made or lost from current clients.

It might be challenging to identify the underlying causes of higher churn and client loss. However, when analyzed thoroughly, the above KPIs reveal your company’s, product’s, or service’s strengths and faults.

These four metrics are gold standards in measuring recurring revenue health. Your teams across the company should understand them, review them as teams at least quarterly, and determine how their work is impacting the metric. What can they learn from the data gathered and improve the product and customer experience?

Emilia D'Anzica
Emilia M. D’Anzica has developed a passion for SaaS products, women in tech, and customer success starting her career in Silicon Valley. She has cultivated rich experience and knowledge after leading teams at global companies, including Jobvite, WalkMe, and BrightEdge. Emilia has also obtained an MBA from Saint Mary's College of California focusing on Global Competition and Strategy. She founded Growth Molecules, an emerging management consulting firm, helping companies simplify customer success and become more profitable.

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