Customer Success Metrics: How to know if your Customer Success Strategy is working!

Customer Success can be the key to the longevity of your business.

The relationships you form with your clients via your Customer Success strategies will likely translate to long-lasting recurring revenue. After all, there’s no better customer than a loyal customer.

But how do you keep track of your Customer Success efforts? How would you know if your strategies are actually making a positive impact on your customers?

Today, we’ll discuss key customer success metrics you should be tracking and how they might indicate the success of your business.

What is customer success?

First, a quick refresher on customer success and what it is.

Customer Success refers to a set of practices and procedures that seek to help your customers achieve their own success. This success might or might not be related to your own product or service.

The goal is to grow and strengthen the relationship between you and your customer as they become more successful.

For example, while a bank might not be directly concerned with the personal finances of its customers, it will still run educational campaigns based around personal finance to help its customers get into more stable financial positions.

Customers with more stable financial positions will, in turn, be more likely to inquire about financing, lending and investing offerings from the bank.

Your customer success is also your business’ success.

Want to learn more about customer success? Read our guide on Customer Success, what it is, and how it can help your business.

Customer Succes Metrics to Implement at your business

Now it’s time to talk about some metrics to keep track of.

However, remember that not all of these metrics will fit your strategy or business model. Do not see this list as a rule but as guidance. Pick and choose the metrics that best adjust your business and your customers.

Without further ado, here are some customer success metrics to implement at your business.

Churn Rate

Probably one of the most important metrics to keep track of. Churn Rate looks at the number of customers that leave your company every month compared to the number of total customers.

The higher this percentage, the more pressing your efforts must be at lowering it.

After all, acquiring new customers is more expensive than retaining existing customers.

Calculating customer churn is quite easy, the formula is a simple division:

Number of customers lost this month / Number of Total Customer by the end of the last month

You can take it a step further and replace the number of customers with revenue from those customers to also see your revenue churn, which might paint a more accurate picture.

Want to learn more about churn? Read our guide on Customer Churn, what it is, how to reduce it, and how to retain more customers.

Customer Retention Rate

Customer Retention Rates look at the percentage of customers that have stayed with your company in a given period of time.

We will not spend too much time on Customer Retention Rates. Not because they are not important, but because they are just the reverse of Churn Rates.

So, if your company’s monthly Churn Rate is 10%, then that means your Customer Retention Rate is 90%.

Simple as that!

Expansion Revenue Growth

One metric that will indicate that your customer success strategy is working is growth in your expansion revenue.

Expansion revenue refers to new revenue coming from upsells, cross-sales, and subscription upgrades from existing customers. Basically, new additional revenue coming from existing customers.

This metric will shine a light on how your Customer Success strategies might be affecting revenue growth in your company.

Calculating expansion revenue growth is easy, the formula is a simple division:

Revenue from upsells, cross-sales, etc. from this month / Total revenue from the previous month

Net Promoter Score (NPS)

We are big fans of Net Promoter Score as a metric to gauge the loyalty levels of your customers.

After all, your most loyal customers will be happy advocates of your business. That is exactly what NPS measures.

NPS is measured by asking your customers a simple question:

On a scale from 1-10, how likely are you to recommend our business to a friend or colleague?

Once you receive your customers’ answers, you will categorize them as such:

0-6 are detractors (most likely to have a negative image of your business)

7-8 are passive (have a rather neutral image of your business)

9-10 are promoters (love your business and will actively promote it to others)

You will then take your total numbers of each category and calculate your NPS like this:

(Total Number of Promoters - Total Number of Detractors) / Total Number of Responses

A higher NPS score usually indicates high levels of customer loyalty and satisfaction.

As your Customer Sucess strategies take place, this number should see growth accordingly.

Customer Satisfaction Score

Customer Satisfaction Score (or CSAT) might be the simplest metric on this list and the most self-explanatory too.

It measures… well… Customer Satisfaction.

You can measure your CSAT by asking your customer to rate their experiences with your business from 1 to 5 or as binary choices (Satisfied or Dissatisfied).

The survey results can then be averaged in order to find your average CSAT score.

Renewal Rate

This metric is HIGHLY IMPORTANT for businesses that work off of recurring revenue from subscription models.

Your Renewal Rate looks at the rate at which customers are renewing their subscriptions once their terms are up or a renewal is due.

Calculating your Renewal Rate is pretty easy. Here is the formula:

Number of customers who renewed their subscription / total number of customers up for renewal

A higher renewal rate will indicate that your customers are actively finding value in your subscription offering and will happily renew their subscription.

A low renewal rate will indicate that your customers are having trouble justifying their purchase and are not finding value in your product or service. Your Customer Success strategies will have to target these value issues with your customers in order to have them renew their subscription.

Customer Lifetime Value

Customer Lifetime Value is such an important metric that we actually wrote an entire article about it.

After all, there’s a lot to be drawn from this metric, and calculating it takes a few more steps than the other metrics we’ve discussed here.

In short, Customer Lifetime Value refers to the expected revenue a customer might generate with your business before they churn.

Want to learn more? Read our in-depth guide on Customer Lifetime Value and how to calculate it.

Closing Thoughts

Customer Success strategies come in many different shapes and sizes. After all, it all depends on what your customers define as their own success and how those goals align with your business.

If you don’t know where to start, we recommend you read our guide on 4 types of Customer Success strategies to implement at your business.