- On this blog post, you'll learn:
- The essential CS metrics ;
- Why and how to follow them;
SaaS companies need clients. That's true for any business, right? And to have clients, you need three things: a good product, to make people want to use your software and to make them happy to use it. We can't help you on the "good product" part, and we have talked about making people want to use your product: lead nurturing, remember? Our last few blog posts have been about the happy part. In marketing language, that means customer retention.
By now, you know you need to work on retaining your customers, which is cheaper to do then getting new ones. Churn is a great danger to SaaS companies because it can bring down ROI and ruin their reputation. After all, who wants to pay for something that people give up so easily? But how can you tell there is a problem?
Most of the time, the Customer Success team will already have an idea of what is making customers unhappy, and to listen to them might be of great value. That's why, in this content, we'll show you what metrics to look for, how to extract knowledge from your data and how to build the ultimate Customer Success report.
Customer Success metrics: everything you need to understand and follow
First of all, you'll need to have a customer success platform, and ideally it will be inserted in a marketing automation platform. This will make all your data collecting easier and much more precise. With a tool like BI, you can extract all the information you need easily, selecting periods and creating easy to understand reports and graphics.You can learn more about it here. Once you have that, you'll need to look at these metrics:
Churn: I know, you can't stand to read about churn anymore. This will be quick, promise. Here are some formulas so you can calculate Churn easily.
The simple way to calculate churn is by dividing the number of churn clients over a period of time by the number of clients at the beginning of that time (monthly, for example).
A second option for a more precise data is to take into account the variation of clients in that period of time:
There are other options, but these are the most used ones. Ideally, you want your rate to be zero or negative, but something around 3-5% monthly is acceptable for small and medium businesses. Annually, it should be less than 10%. For big enterprises with high ticket offers, it should be less than 1%.
Remember: a low churn rate means a high client retention rate!
Monthly Recurring Revenue and Expansion: MRR is the the revenue that will come monthly from clients paying for a subscription service, cross-sell and upsell. A MRR Expansion is the MRR from you current month divided by the MRR from the previous month, in percentage.
This will show you how much your business is actually earning from clients, excluding the new ones.
Customer Lifetime Value: we have talked about this here. It will help you identify how much you can spend to get a new client, as well as identifying your best customers and what is your average profit.
*ARPA stands for Average Revenue per Account
- New leads: a good Customer Success report needs to indicate how many new leads are being attracted during a period of time, where are they coming from (preferably with graphic) and what content has made them enter you funnel (what is working for your company?).
- Conversion rate: even though conversion is not exactly a CS metric, it can help you understand how many new clients you are getting, and what is their behavior after onboarding. It's the starting point for Customer Success tracking.
- Campaign success: we are not talking about lead nurturing, but client nurturing. The focus here is either upsell or client retention, and to know whether or not your clients are opening and clicking your emails might give you an indication of possible churn candidates. After all, the first sign of churn danger is inactiveness.
- Trial request for SQL: how many leads have moved from MQL to SQL? Basically, how many of them have requested a trial? This is a simple data that doesn't request any formulas.
Why is Data Crossing important for Customer Success?
Ok, you have extracted all of the data from the marketing automation platform but your work is not done. The next step is to cross this data and understand clients and trial SQL (once a person shows interest in your software, the CS team is responsible for setup and contact them, until the sales team is ready to make the approach). If you can see a high trial rate but a low conversion rate from leads to clients, something is going wrong between setup and onboarding, and the sales contact.
Crossing different data will allow you to make plans and improve your Customer Success strategies, your onboarding, overall client experience and result in a better client retention rate.
A personalized dashboard can help your daily work
Having a marketing automation platform with a CRM that allows you to personalize the dashboard to attend the CS professional's needs is the dream, right? Well, that's possible on Pipz. You can setup the reports you want to be created automatically. So you can follow the metrics that you need to check daily, or even a new SQL that need help with onboarding.
Why you need to be objective when presenting your report
When making a report, you need to go straight to the point. Your information needs to be quick and easy to digest, so you can present it to your CEO and he can understand it easily. In some cases, you'll need to translate this metric into something he'll understand. "We are losing money" is a better way to get attention than "our CAC is too high and our conversion rate is too low".
Another tip is to make a presentation, easy and simple, with only interesting data. This will guarantee that people outside of the CS team listen to you and take actions to change things.
We have reached the end of our content. It was very practical, right? You learn a bunch of important metrics and formulas to build your ultimate Customer Success report. And more, we also gave tips of how you can talk to non-CS people about it!
If you liked this content, why don't you share it with your colleagues? They might be forever grateful to you.