How to Choose the Right Customer Success Metrics for Your Business
Customer Success Metrics
Customer success metrics can tell you everything from what stage in the customer lifecycle your users are to how far they’ve progressed through your user onboarding funnel. And while every business has different goals and different metrics that they can measure, there’s one universal truth when it comes to metrics: The most important ones are always the ones that measure what’s actually important to your company’s success. So how do you choose the right customer success metrics for your business? Let us help!
The customer’s journey customer churn customer lifetime value customer acquisition costs customer satisfaction scores
The customer’s journey
– Acquisition: When considering which customer success metrics matter, you’ll want to look at things like how many people visited your site and what percentage of those visitors converted into signups.
– Activation: You’ll want a mix of engagement and conversion metrics. Engagement metrics will tell you if your customers are happy with their purchases. Conversion metrics will tell you if they’re actively using it or not. It’s important to understand where customers are struggling so that when they do hit any issues, you’re there to help them out! Here are some other customer success metrics worth looking into.
– Retention: Calculate retention rates over time by dividing monthly active users (MAU) by monthly churned users (MTU). You can also use the Churn Rate metric in your analytics package to calculate this rate on an individual basis. The higher the number, the better.
– Referrals: Get referrals by implementing features that make it easy for customers to share their experience with friends and family via social media, email, and chat messages.
1. Define success 2. Gather data 3. Measure customer satisfaction and advocacy 4. Track acquisition and retention rates 5. Compare churn rates with other industries or competitors 6. What percentage of customers have renewed, lapsed, or been canceled 7. Track customer activation rates 8. What is your customer’s lifetime value? 9. Calculate customer lifetime value per customer 10. Analyze how your company measures up against competitors 11. Evaluate the Net Promoter Score (NPS) 12. Consider user experience metrics 13. Identify key drivers of revenue growth 14, Assess if a revenue can be attributed to a specific service 15, Are revenue drivers sustainable
Customer lifetime value
The lifetime value of a customer is one of the most important metrics because it evaluates how much money you can expect to make from a single customer. It’s calculated by summing all the revenue generated from that customer over their entire lifetime with your company. This can include purchases, upgrades, and referrals. Here are some ways you might calculate this metric:
- – Lifetime Value = Total Purchase Value / Number of Purchases
- – Lifetime Value = Total Revenue Generated – Cost of Acquisition
- – Lifetime Value = (Total Revenue Generated * Average Discount Rate) – Cost of Acquisition – Lifetime Value =
This metric measures the net profit made per individual customer. It represents how well your business does at generating profit from its customers. You’ll want to look at both gross margin and net margin as they’re two different measurements of profitability that have different influences on LTV. Net margin takes into account any discounts or rebates given while gross margin doesn’t consider these factors. Ideally, you’ll want both margins to be high in order to maximize LTV.
Customer acquisition costs
The cost of acquiring a new customer is important because it tells you whether or not your marketing efforts are working. But there’s a big difference between how much you’re spending on each customer and what that tells you about your business. For example, if you spend $10,000 and acquire 100 customers, that’s an average of $100 per customer acquisition. If you spent $1,000 and acquired 100 customers, that’s an average of $10 per customer acquisition—a very different story!
– Number of happy customers: In general, companies have no reason to exist unless their product satisfies their customers’ needs. Even worse than unhappy customers are those who don’t know what they want from your company. That’s why tracking the percentage of satisfied customers (along with satisfaction ratings) can be so critical in letting you know when it’s time to pivot away from a particular strategy. – Product quality: When you think about metrics like conversion rates, churn rates, and retention rates, remember that these factors all impact product quality; in other words, a low conversion rate may mean that users aren’t finding value in your product right off the bat.
Customer satisfaction scores
often. You may have heard about customer satisfaction scores and wondered what they are or why they’re important. Here is a quick overview of what customer satisfaction scores are and why they matter.
There’s no single metric that can accurately tell you if your business is successful, but customer satisfaction scores can give you a good indication of whether things are going well or not so well. When it comes to measuring customer satisfaction, it’s best to focus on qualitative feedback. Don’t ask questions such as Would you recommend our company? Instead, ask open-ended questions such as What do you think of our company? or What could we do better? Keep in mind that it takes time and effort to collect these responses and follow up with customers after they’ve given their feedback – but the rewards will come in increased engagement rates!