Many consumers stay with a brand because of its product. But the most successful companies can retain customers and increase their overall lifetime value through an established customer success program.
Customer success KPIs and metrics measure how well a company meets customers' needs and expectations. As a department, customer success can heavily influence customer loyalty outside of products and services. To measure the effectiveness of their customer success teams, organizations can use metrics to identify where they excel and potential areas of improvement.
As the digital age changed the way organizations deliver customer service, customer success teams can use data and technology to aid how they offer and measure CX. If companies track customer success metrics, they can better understand customers' needs and behaviors. They can also make informed decisions about how to improve their products, services and relationships with their primary constituents.
Explore 10 important customer success KPIs and metrics for customer success teams to track.
1. Customer lifetime value
Customer lifetime value (CLV) is one of the most fundamental metrics customer success teams can measure. It predicts how much the average customer might spend on a company's products or services over the lifetime of the relationship between parties.
With this information, organizations can better understand their ideal customers as well as their value to the company. When CLV increases, the company can determine if its products and services contribute to customer success. Conversely, if CLV decreases, the customer success team should look for flaws in the overall CX.
Average purchase value × Average purchase frequency × Average customer lifetime = CLV
2. Net promoter score
The net promoter score (NPS) sheds light on the customer's feelings toward the brand and its products or services. This measure of customer satisfaction can determine how pleased customers are as they interact with a business. Customers with a higher, or happier, score are more likely to repeat purchases.
This single question survey asks customers: "How likely are you to recommend [Brand/Product/Service] to a friend or family?" To respond, customers use a 1-10 scale of how likely they are to recommend that business or its offerings:
- 0-6: These are detractors or unhappy customers who are most likely to discourage people they know from engaging with that brand, product or service.
- 7-8: These are the passive audience. They are satisfied with their experiences, but not so much that they would give high praise or promotion.
- 9-10: These are the promoters. These customers are the most loyal, enthusiastic about the products or services, and most likely to recommend the brand to others.
3. Churn rate
Customer success teams can use a customer churn rate to determine the percentage of customers who no longer use a product or service. Factors that affect churn rate include the following:
- canceled subscriptions
- closed accounts
- loss of recurring revenue
- loss of recurring business or contract.
Churn rate can measure each individual representative's success in the customer success team. Team members who maintain positive relationships with their contacts are less likely to have high churn or cancellation rates.
Depending on the type of business, customer success teams may struggle to know if or when a customer churns. Often, organizations determine a customer has churned after a certain period with no new purchases. Overall, the metric highlights how many customers ended their relationship. Teams can calculate churn with the following formula.
Customer churn formula
# of churned customers ÷ # of existing customers = Churn rate percentage
4. Customer effort score
The customer effort score (CES) can show how easily a customer received help from the brand or how much effort they went through to get an issue resolved, make a purchase or get an answer to an inquiry.
To calculate this score, customer success teams should send a survey to clients that ask how easy it was to get the help they needed. Like NPS, CES surveys have a single question with a scale from 1-7 -- as seen in the table -- where 1 means customers strongly disagree and 7 means they strongly agree. This metric offers insight for improving customer service, and organizations with higher scores often see happier customers and an increase across several other KPIs.
# of customers who scored 5,6,7 ÷ Total number of customers who responded = CES
5. First contact resolution rate
After CES, customer success teams should look at the first contact resolution rate for customer service teams. Customers want their problems addressed quickly, and having to wait for customer service or support teams to respond can increase friction between the parties.
The first contact resolution rate is the percentage of customers whose service cases or inquiries were addressed during the first interaction. The higher the percentage, the more indicative of a healthy relationship between company and customer.
6. Customer health score
The customer health score reveals if a customer sees value in the organization's product or service and if they actively use it. This metric -- primarily used by SaaS companies -- scores customers based on their likelihood to stay and grow with the brand or churn.
These scores vary from company to company. But customer success teams should regularly discuss customers' health, look at other KPIs, potentially send out frequent longform surveys and arrange focus groups. Often, customer success teams don't know which customers need attention. They should understand the types of indicators to pay attention to, such as how long a customer uses the product for, how many different users engage with it and how many features they use.
7. Customer satisfaction score
Customer satisfaction scores are similar to NPS, but CSAT has one major difference. While NPS asks how likely customers are to recommend the business or product, CSAT only asks them to rate their overall experience with the company. This score helps businesses gauge how customers feel about them after completing an action like a purchase or support resolution.
This score is also set up to measure the customer's immediate reaction to a single experience. It should not be representative of that customer's overall perception of the brand.
(# of positive scores ÷ # of total scores) × 100 = CSAT percentage
8. Customer retention rate
Customer success teams can use customer retention rates to determine the percentage of existing customers who remain customers after a period of time. This rate helps teams better understand what keeps customers loyal to the company and could signal where to improve customer service.
This metric is like churn rate, but it focuses on the rate at which a company keeps customers rather than the rate at which they lose them.
Customer retention rate
# of customers at the end of a period ÷ # of customers at the start of the period = Customer retention rate
9. Monthly recurring revenue
Most organizations view monthly recurring revenue (MRR) as a KPI of how much the customer base, or their spending, has grown over time. The advent of SaaS companies with monthly service fees, rather than one-time license fees, has made MRR a financial resource to measure cash flow.
MRR shows how much the customer base spends on products or services in each month, which can benefit companies that offer subscription services. Customer success teams can compare this value over time to see growth or shrinkage in MRR.
# of active customers × Average revenue per user = MRR
10. Renewal rate
The customer base's renewal rate is another financial metric. Many organizations, especially SaaS companies, view this as one of the most important metrics to track.
Many organizations see high activation rates if their product or service is attractive enough to the market. But the true measure of customer satisfaction lies in the renewal rate. A high renewal rate indicates that the company or product successfully provided customer success. A low renewal rate likely means customers don't see the success they expected at their initial purchase.
This metric presents opportunities to take advantage of what works, what changes to make, or what surveys to deploy to gain more insight on making customers happier.