Customer Success KPIs

Most relevant for customer success & experience teams in SaaS space.

Methodology & Scoring

Customer success professionals use a variety of scores to get deeper insights into customers and product use.
Here are few methodologies to deduce these scores.
Data collected from different sources can as well be categorized in certain ways based on quality of inputs, lagging & leading metrics.
Presented here are references in these areas. You can look into given articles to dig deeper into the subject.

Account or Customer Health Score

There are various ways to calculate and parameters to include in deriving at customer health score.
Scoring scheme primarily depends on the nature of the product, company, business model and the industry.
Two main methodologies in practice are
1. Health scoring by parameter weights 
2. Formula based health score

Example calculations in both these methods are outlined here:
Bloom playbook for Health Score calculation

PES - Product Engagement Score

A quantitative metric to describe how your product is performing. It is composed of primarily three items
1. Product adoption by customers,
2. User stickiness (returning users) and
3. Usage growth 
Data gathered through application logs, segment, mixpanel or other tools.

Lagging indicators & KPIs

Metrics used to measure past performance, revenue and customer activity.

Churn, ARR, GRR, NDR, and other metrics that are measure a past occurrence, event and reported.
Just recognize that they are inherently lagging to assess current state of business, customer.

Leading indicators & KPIs

These are metrics used as a predictive measure of future performance, customer behavior.
It involves defining activities that need to be done to achieve a business goal and a bit of effort to quantify, arrive at these indicators. 

For example, leading indicators of both customer churn and revenue expansion can be centered around user adoption.
When customers start using the product to accomplish their goals, increased adoption offers predictive insight into the health of your accounts. 

Another example in customer experience side,
Analyzing NPS, CSAT surveys to arrive at customer sentiment and predict likelihood to account expansion, renewal.

A good practice is to use a combination of leading and lagging indicators.
Looking at leading indicators on an ongoing basis and making changes to help improve achieve your set goals.
Using leading indicators that complement your lagging indicators and help you measure progress more quickly.

Glossary
  • ACV - Annual Contract Value
  • ARR - Annual Recurring Revenue
    = (Overall Subscription Cost Per Year + Recurring Revenue From Add-ons or Upgrades) - Revenue Lost from Cancellations
  • ARPU - Average Revenue per User (For the period)  
      = Total Revenue  / Average # of users
  • CAC - Customer Acquisition Cost
      = (Cost of Sales + Cost of marketing) / New customers acquired
  • CES - Customer Effort Score
    Measures how difficult it is and how long it takes for a customer to perform a certain action with your product or with your company
    Version 1.) “How much effort did you personally have to put forth to handle your request?”   
    Version 2.) a disagreement/agreement rating question “The organization made it easy for me to handle my issue”
  • Conversion Rates 
    = (Conversions / Total Number of Visitors) * 100%
    = (Conversions / Total Number of Leads) * 100%
  • CRC - Customer Retention Cost
    = (Total cost of customer success + retention activities ) / number of active customers
  • CRR - Customer Retention Rate
    = 1 - (Customer lost in the period/ Customer at start of the period)
  • CSAT Customer Satisfaction Score
    = (Number of satisfied customers / Total number of responders) * 100 
  • CSQL - Customer Success Qualified Lead
  • Customer churn rate = The total number of churned customers / total number of all customers
  • FCR - First Contact Resolution Rate
    Whether your customer support inquiries can be resolved on the first contact with the customer. More a Customer support metrics, but useful for CS in the bigger picture.
  • GRR - Gross Revenue Retention
    Monthly GRR = Starting MRR - customer churn - contraction
  • LTV or CLV - Customer Life Time Value
    = (Customer Value * Average Customer Lifespan)
    where

    Customer Value = Average Purchase Value * Average Number of Purchases
    Average Purchase Value = Total Revenue / Number of Orders
    Average Customer Lifespan = the number of years a customer continues purchasing from your company.
  • MRR - Monthly Recurring Revenue
    = (Overall Subscription Cost Per month + Recurring Revenue From Add-ons or Upgrades) - Revenue Lost from Cancellations
    = Monthly Average Revenue per User (ARPU) * Total Number of Monthly Users 
  • NDR - Net Dollar Retention 
    = (Starting MRR  + expansion – contraction – customer churn) / Starting MRR
  • NRR - Net Revenue Retention
    = MRR at start of the month + expansion - customer churn - contraction 
  • NPS - Net Promoter Score   
    = The percentage of promoters – percentage of detractors
    0-6 are classified as detractors. 9-10 are classified as promoters.
  • OTE - On-Target Earnings    
    For variable CSM compensation. Base + variable split which is usually tied to CS org KPIs.

Further reading & references:

1. The 15 Customer Success Metrics That Actually Matter
2. 4 Customer Success KPIs every High Touch SaaS Company should Track
3. Top-five-metrics-track-your-customer-success-dashboard
4. customer-success-metrics/
5. ultimate-guide-customer-feedback/