Do You Measure These Customer Success Metrics?

Performance metrics word graphic

Do You Measure These Customer Success Metrics?

As we’ve stated CSAT and NPS® are two often talked about (and argued about) metrics.  Let’s go deeper into a few more customer success metrics. The following KPIs help you plan your strategy and monitor your revenue and costs of customer success.

Customer Health Score (CHS)

No, this isn’t about how many steps your customer is getting in daily or their fiber consumption (unless you’re a wellness brand). It does, however, have to do with your customer’s pain points and whether or not your product is alleviating them (or adding to them). 

In our previous blog, “Customer Success Managers and Customer Service: Differences and Integration,” we talked about how customer success involves developing relationships with customers. A customer success manager (CSM) learns a customer’s goals, preferences and needs, keeping in touch with them as they evolve. This information is helpful to acquiring usable customer health scores which will be a blend of data dependent upon the type of product/service you provide. 

If you have a B2B company, you’re more likely to have a CSM, or multiple, as the selling, onboarding and managing are more complex. For customer health scores in B2B you can measure your customer’s company growth, profit and/or cost savings in regard to your product.

B2C companies often have a larger number of customers with shorter company relationships, and lower revenue. Here customer success management is likely to employ tech and automation. You can measure customer acquisition, churn and retention. Individually, length of customer history, upgrades, add-ons, referrals, positive sentiment (surveys, customer service interactions) create a customer health score profile.

Customer Churn Rate (CCR)

From customer health to company health. If you’re not solving your customers’ problems it will show in your customer churn (and burn) rate.

The broad picture is tracking how many customers you’re losing, and how fast you’re losing them. 

(27 lost customers/150 new customers) x 100 = 18% CCR

 *For clarity, don’t count new customers that joined during the measured time period unless they also churned during the same time period.  

That information is more useful when you dial down to the when, where and why:

  • Is there any correlation with a surge in customer churn and a product change? 
  • Can customers reach you easily?
  • Is your product up to date? 
  • What is your cost to value ratio (BC ratio = value/cost)?
  • Did you lose more customers in a specific region, group or timeframe?

Customer Retention Cost (CRC)

The basic calculation of CRC is total customer costs divided by total number of customers.  

For example:

Total costs/total # of customers = CRC

Total Cost= $40,000
# of Customers= 800
CRC= $50

You can dial in to specific sectors to understand where your investment is bringing the greatest return. For example, if your B2B tool serves more than one industry you can track the total income of each customer sector, the percentage of total income generated by each sector and compare that to the customer success cost of that sector. 

Continuing with our 800 customers example:

In the above example there is a breakdown of:

  • the number of customers for each of three industries served
  • the percentage of customer base from each industry
  • the total income per industry, and 
  • corresponding income percentage of 100% (for a month or whatever time frame). 

Take the average CRC, multiply it by the number of customers in the industry, then compare that to the total income of the industry.

If the average CRC is $50 and there are 400 customers in industry A and those customers bring in $125,000, revenue after costs for industry A is $105,000.

$125,000 – ($50 x 400) = $105,000 

As with the example figures in the table, you may have one sector with the same percentage of customers as another but that brings you a much higher revenue percentage. 

Other Considerations:

  • Time investment per customer may be individualized, especially with B2B businesses with high yields and long term customer relationships. 
  • Monitoring for high cost customers (cost more than the revenue they generate) is important to identifying revenue drains and evolving your customer success strategy. 

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