The relationships you are building with your customers are important to your business ‘ success. But in the on-demand, subscription-service world of today, where customers have all the power, relationships are now easier to get out of than ever.
You can also predict the growth of your customers. After all, growth is the best sign of business success. Ask if the company is recruiting, taking on more clients, or raising the retention rates of customers for a qualitative understanding of how effective a customer is.
Why it’s important to Measure Customer Success Metrics
As it turns out, it is not only helpful to consumers to get satisfied with your service. It’s also great for your bottomline.
The other big advantage of investing in product success: it boosts new business through virality and word-of-mouth. Customers who see real results and are continually amazed at their brand (and employees) experiences will eventually tell other people about you in their industry. It’s the best kind of advertising that you can ask for.
Everyone has their own way of doing things. So it makes sense, because everyone has a different product — and various product-specific events and activities need to be measured. So measuring your customer success metrics has no better alternative.
Picturing your customers is a must. That picture should be a big picture- beyond individual tickets you close and emails you answer. Are they actually getting value from your product or services? What’s their satisfaction level?
Customer support is no longer about getting someone to sign on the dotted line, setting up a new service, or just responding to emails and calls. Reps must ensure that their consumers not only survive but prosper with their service instead. We need to follow up with clients, provide problem-solving support, and help them proactively plan for the future.
The number of customers dumping your product or service in a given time period: that’s your churn rate. Or at least that’s the churn rate of your client.
To measure the churn rate,first you must decide the timeline you will take into account when calculating your results. This can be a week, month, half, year, etc. Then calculate how many current customers there were at the start of this era as well as the number of customers churning over the same time frame. Then finally, divide the number of churned customers by the total number of existing customers to find your churn rate.
While calculating the churn rate, remember to exclude from your current total the new customers you received during the month. During the next review you perform, these customers will count against your existing customer number. However, make sure to include any new customers that have churned with your overall churn over the period of time.
While churn is concerned with what customers do (stick around? leave? upgrade? downgrade?), the metrics in this segment are more concerned with how customers feel about your company.
Although customer satisfaction can be calculated in several different ways, a Net Promoter Score is one way to measure it. A Net Promoter Score or NPS ® only asks if someone else is likely to recommend your service or product. In this score, the rep and its relationship with the customer plays a major role.
The advantage of an NPS is that it provides customers with both quantitative and qualitative data. Not only does it ask the customer to rate their experience on a numeric scale, but it also asks them to provide a reason for their score. That’s a great feedforward.
Monthly Recurring Revenue
Monthly recurring revenue, or MRR, it’s another metric of measuring how much your business has grown since the last time you’ve assessed your revenue. This measure details how much money the consumers spend per month on your products and services. Especially, this is valuable for SaaS companies operating on a system of subscription.
Customer Retention Cost
Customer Retention Cost or Expense is a measure that indicates the cost of maintaining the same customer. It’s difficult to calculate this metric and it depends on your company. It could include the expense of customer service team, education, product advertising, new feature adaptation, and many more.
To measure the CRC, all your customer satisfaction efforts along with expenditures will need to be audited. It covers expenses expended on salaries for your customer support and service staff, projects for communication and adoption, professional services and education, and marketing to customers.
Here’s an example:
If a firm spends $1 million on various retention costs during the year and it retained 10,000 customers, then it has spent an average of $100 per customer retention and up-selling during the year.
That is, $1m / 10,000 = $100 per customer
Customer Lifetime Value
Customer Lifetime Value or CLTV is the present value of future cash flows or the value of the company attributed to the customer during his or her relationship with the business.
CLV takes the revenue of a product and compares the amount to the expected lifespan of the customer. By dividing your average purchase price by your average rate of purchase, you can measure CLTV. So take the value and divide it by the average lifespan of your customer. This should leave you with the expected profit that will be spent on your company by one customer.
This metric helps to measure value added by your existing customers. When the CLT value increases, the organization will recognize that your products and services contribute to the satisfaction of your customers. If it declines, the company may need to re-evaluate its offerings and check for customer experience deficiencies.