Remember those good old days when it was easy to know you did well because you earned a gold star on a homework paper?
Unfortunately, as we move from the classroom to the boardroom, tracking success can become a little more complicated.
However, if you incorporate the right metrics into your tracking dashboard, you can create a holistic view of your business and its potential for success. We’ve compiled a few customer success metrics you can use to determine how successful your efforts are, how well you’re serving your customers, and how likely you are to retain their business and loyalty.
Portfolio growth is a pretty basic catch-all metric; you should, generally, see that your portfolio of clients is growing quarter over quarter and year over year. While you may see momentary reverses, keeping the number moving upward should be the goal.
As a means of ensuring portfolio growth, set your sights on four different types of sales opportunities and track your success in each of these areas:
- Repurchase: Clients who are renewing their services with you
- Replacement: Clients using a similar tool from another provider who are willing to switch to your service instead
- Expansion: Clients who haven’t yet used a product in your specific sector, but who are interested because of a need created by growth in their own business
- Innovation: Working with existing clients to determine needs and build new solutions together
Churn is the number of customers who leave you or stop using your product/service within a set period of time. To calculate churn, select a time period (a week, month, quarter, or year), and complete the following calculation using data from that time period:
Number of customers churned / Number of customers acquired X 100 = Churn rate
A low churn rate means that your customers are using your product and choosing to stay with you, while a higher churn rate indicates you need to make changes in your business to ensure people stay.
#3 - Customer Satisfaction/Net Promoter
Knowing your company’s Net Promoter Score can give you a good benchmark to compare your performance over time.
The Net Promoter Score asks a simple question: “How likely is it that you would recommend [brand] to a friend or colleague?” Respondents answer with a 0-10 score and are then ranked in three key segments:
- Promoters: These customers are your company’s most dedicated supporters and the ones most likely to recommend you to others. They score your company a 9 or 10 on the Net Promoter survey.
- Passives: These customers are satisfied with your company’s offerings but are not particularly inclined to be loyal and may be easily swayed/poached by competitors.
- Detractors: Detractors are unhappy with your business. Their negative interactions can impact your brand’s reputation, and the fact that they’re willing to give you a low score indicates areas that require additional attention.
To calculate your Net Promoter Score, you subtract your percentage of detractors from your percentage of promoters. Your score can range from -100 to 100.
While everyone would probably love to earn a 10 on this particular ranking, it makes sense to compare your Net Promoter Score against others in your particular industry. For example, tablet computer companies’ industry NPS average is 4.7, while Apple’s individual NPS is 8.9.
To take action on your NPS scores, communicate with both your promoters and detractors; get feedback from both on what you’re doing well and what you could improve to continue to retain their loyalty.
#4 - Customer Success
Getting customers onboard is just the first step in building a relationship. To really understand how the relationship is progressing, pay attention to customer success.
The big question is – how are your customers using your product and what are the tangible benefits they’re receiving?
Some of this information may be easily trackable on your side, through analytics review or online sales data. You may also schedule regular check-ins to discuss success and/or desired areas for improvement.
In a best-case scenario, you should be able to attribute their successes, whether increased revenue, higher efficiency, or lower expenses, directly back to your product. By calling attention to these successes, you secure their loyalty and, at the same time, generate fodder for case studies and testimonials you can use to attract additional clients in the future.
#5 - Customer Experience/Effort Score
Net Promoter tells you how happy a client is, and potentially how likely they are to refer you. When it comes to how likely they are to stick with your company, customer effort scores can give you deeper insight into what’s going well or poorly with your customers, which specific pain points are affecting them, and what’s most likely to be attractive to them if offered by a competitor.
Happy, satisfied customers will not only stay loyal to you, they’re also the most likely to share the solutions you’ve provided them, giving you an opportunity to win additional business.
#6 - Monthly recurring Revenue
Monthly Recurring Revenue (MRR) tracks your predictable monthly income. There are two ways to calculate this metric: either by adding up all revenue, or by multiplying the number of customers you have by the average of their monthly fees.
MRR can help you see how much your company is growing, forecast growth rates, and motivate your sales team to seek clients with potential for higher MRR totals.
Expansion revenue tracks the additional revenue you generate with existing clients over and above your regularly scheduled rates. To calculate expansion revenue, subtract the MRR at the beginning of the month from the MRR at the end of the month, then multiply by 100.
Generating expansion revenue means that clients are getting good use from your product, willing to expand their relationship with you, and eager to use the services you provide. When determining successful expansion revenue numbers, shoot for generating enough to offset your churn.
This metric won’t apply to every business, but if you have a free version of your product available, you should track the number of customers who upgrade from the free version to a paid version each month.
If they’re not upgrading on a regular basis, you can determine what’s keeping them from taking that step, then determine whether to make changes.
Reaching out to those who decided not to take the jump from free to paid can give you valuable insight as well. If willing, they can share whether they chose not to upgrade because of price, product quality, regulatory concerns, or other issues.
The faster you can complete the onboarding process, the more satisfied your customer will likely be. Why?
When clients get a new service running quickly, they can more easily begin to generate revenue from that service. Quickly creating success stories from a new product/service is a success story everyone wants to tell their managers and higher-ups.
Tracking how quickly you’re getting new teams up and running can give you an idea of the experience you’re providing as well.
If businesses are often taking much longer than the time period you’ve estimated, take a close look at your processes. You may find that there’s opportunity to implement things differently or to clear up ambiguity for customers as they work through the implementation phase.
Hitting sales numbers is the first part of the process. After that, retaining clients and strengthening relationships are critical to your business’s growth. Taking a look at these metrics is a good start. From there, you can build or partner with a team that helps you focus on creating and maintaining customer success.
What metrics do you think are most important to track when it comes to customer success? Feel free to share in the comments below:
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