Analytics tracking is often discussed in terms of marketing, but they are just as important at gauging the value that your customers are getting from your product. Maximizing value for your customers is the best way to reduce churn and improve retention. There are plenty of posts out there telling you which KPIs will help you improve your sales, but in this post, we'll tell you which ones reveal the most about how happy your customers are with your product.
What are customer success KPIs?
Good analytics software will provide you with plenty of data to help you make informed decisions about your business practices. These data points are useful for many different aspects of your business. The key to making the best use of them is to understand which data points can help you with each business goal. The customer success KPIs listed in this blog post will give you information about your customers' journey with your product. By focusing on these metrics, you'll have happier customers that stick around longer.
Why subscription businesses need to pick the right customer success KPIs
It is in the best interest of every business to ensure that customers are happy. If their perceived value of your product does not match up with what you are charging, they won't be a customer for long. This is especially important for subscription businesses, who rely on customers sticking around in order to drive profits. Maximizing the value your customers get from your product, brings with it several benefits:
- Boost retention - When a customer struggles with your product, they won't stick around. In the SaaS business, happy customers are long-term customers who increase the key metrics that determine the health of your business.
- Rely less on acquisition - For a business with a high churn rate, acquisition becomes a necessary step to keeping the company healthy. But a company that is bleeding customers and constantly needing to replace them can never really be considered healthy. Increasing acquisition is an excellent strategy for growth, but relying on it to stay even is not a viable long-term strategy.
- More potential to upsell - When the value of your product meets, or even exceeds, the expectations of customers, it puts your business in the wonderful position of having customers who are going to be willing to give you even more money. By maximizing the value your customers receive, you'll also be maximizing the value you'll receive from them.
- Turn customers into advocates - In the beginning, we said that tracking analytics was about more than just marketing. However, every indicator of a healthy company can aid in your marketing efforts. In the case of happy customers, they become significantly more likely to recommend your product to others, giving you crucial word-of-mouth advertising.
The 7 best customer success KPIs
Although there are many KPIs that may give you information about your customer success, you'll want to focus on those that are going to provide the most meaningful and actionable data. With analytics, it is easy to get bogged down by the sheer number of statistics that can be thrown at you. When this happens, you'll often find that you miss the forest for the trees. By focusing on some of the most crucial metrics for measuring customer success, you can more intently focus your efforts on helping your customers through their journey and maximizing the value of your product for them.
You may be familiar with churn rate as a percentage of your customers that leave every month, but there is also another type of churn that is important to pay attention to. Losing a high-value customer or having them convert to a lower-priced tier is an indication that your higher-priced tiers are not delivering the value that your customers are expecting from them. This type of churn is called gross dollar churn.
When determining how your customers are perceiving the value of your product, you want to pay attention to both the customer churn and gross dollar churn. This will give you a better indication of which customers are leaving and point you in the right direction to rectify the problem.
Whereas the two churn rates mentioned above are a more detailed look at customer retention, watching your monthly recurring revenue can provide you with a nice overview of how your product is being perceived. Although different tiers can complicate the equation, generally speaking keeping this number growing rather than shrinking is a good indicator of your overall customer satisfaction rate. It is sometimes helpful to use these big picture metrics as a way of giving you an at-a-glance look at your company's health.
3. Customer LTV
Customer lifetime value stats are often used in a cost/benefit analysis with the price of user acquisition. However, that isn't the only use they are good for. If you can find ways to provide more value to your product, then you should see an increase in your customer LTV metric. This could be something as simple as making your higher-priced tiers more attractive to existing customers so it is easier to upsell them. If your upsells are more than just higher-priced tiers, such as a la carte add-ons, then finding more effective ways to make customers aware of them will likely cause an increase in upsells, as well. In both cases, you are providing customers with something that they value. By increasing your own customer LTV, you are increasing the satisfaction of your customers.
4. Net promoter score (NPS)
Your net promoter score is based on surveys of how likely your customers are to recommend your product to others. This makes your NPS, along with your customer satisfaction score, one of the most direct ways of gauging customer satisfaction. Because this metric is user-generated, it is also very actionable. Your survey should include a section where customers can tell you what they like and don't like about your product. You'll be able to use this information to determine where your customers are finding pain points with your software and resolve those issues. When you eliminate the reasons customers would not recommend your product, you'll inevitably increase their satisfaction.
5. Expansion revenue
In a way, expansion revenue is the opposite of churn. It measures how much of your new money is coming from existing customers. In other words, it measures how successful you are at upselling to your existing base. Getting this number up can be just as important as reducing churn for decreasing your reliance on acquisition. More importantly to the topic at hand, if your existing customer base is willing to spend more money on you, then you have a reasonable assurance that you're providing them with a value that meets their expectations.
6. Customer satisfaction score
Your customer satisfaction score is similar to your net promoter score in that it is based on a survey of actual customers. This time, instead of asking them how likely they are to recommend your product, you ask them how satisfied they are with the product. Although this and NPS are direct measures of customer satisfaction, they do not paint a whole picture. If two customers rate your product as equally satisfying, but one gets significantly more use out of it, the second one is more likely to stick around and potentially upgrade to a higher-priced tier.
7. Customer support tickets
Customers shouldn't struggle to use your product. Whether they contact support because your software is buggy or because they simply have a hard time finding their way around, customer support tickets are a sign of failure at some point in their journey. Your customer success team should strive to find the pain points that people frequently contact support for and take proactive steps to educate the user base on these problems so that they don't have to contact support.
Profitwell: the subscription growth specialists
Profitwell has the tools that SaaS companies need to see continued growth. In addition to our free Profitwell Metrics, we have solutions for retaining customers, optimizing pricing, and analyzing revenue. With Profitwell tools, your business will be able to:
- Track all the right metrics - Profitwell Metrics focuses on the KPIs that you need without cluttering your dashboard with data that cannot provide you with actionable insights.
- Improve retention - With Profitwell Metrics, you'll get a deeper understanding of why customer churn happens and what you can do to reduce it, keeping valuable subscriptions around longer and helping your business grow.
- Stop losing money to credit card failures - Using world-class algorithms that utilize millions of data points, Profitwell Retain will help you win back customers that you've lost to credit card failures.
- And more!
Quality metrics can help you improve your customer retention, increase customer satisfaction, and set yourself apart from your competition so that you can grow your SaaS business faster than ever before. We invite you to take a look at our free Profitwell Metrics and see how they can increase your product's subscriber base.