Top 5 Metrics You Should Master in Customer Success And Avoid Getting Lost
Top 5 Metrics You Should Master in Customer Success And Avoid Getting Lost
Customer Success in SaaS is easy.
You just need to understand NRR, ARR, MAU, DAU, NPS, CSAT, TAM, LTV, CAC, GTM, OKR, KPI, SEM, SEO, YOY, YTD, B2B, B2C, IPO, and of course CS, CCO, CSM, CS Ops! !!
:-))
But there is a lot more!
What if there was a full list somewhere out there with all the relevant metrics to help everyone get a broader picture?
This is the question I was asking myself while writing my book and it didn’t take me long before I understood there was …none! !!
So in today’s edition, we’ll explore a few of them in detail and list all the other metrics which I believe are equally important for anyone working in Customer Success!!
Well, it all started a few months ago when I brought this topic to my Linkedin network.
I’ve asked a simple and direct question: “what else would you add to the list”?
To my greatest surprise, my post received 50+ comments with suggestions and a total of 24k+ views in just 2 weeks! !!
Screenshot of my post on Linkedin
This clearly meant there was a need to centralize these topics so everyone could benefit and learn with a quick and single overview!
Based on my research and the crazy amount of feedback received on the post, I’ve then compiled, curated, and published the entire list into my book as a full SaaS glossary and reference guide.
While all these metrics might appear intimidating at first, there are a few fundamentals that always stand out in most conversations around measuring the success of CS strategies.
And here are the 5 simple Customer Success metrics you should primarily know about:
1/ NRR: Net Revenue Retention (in %)
The percentage of recurring revenue retained from existing customers in a defined time period, including:
expansion revenue (upsell & cross-sell)
downgrades
cancellations (churn)
NRR > 100% => growth
And the higher the NRR, the better: ideally over 120%.
In this category, the all-time record comes from Snowflake with an NRR of …162% ! !!
Source: Gainsight / Bessemer Venture Partners Cloud Index
2/ MRR: monthly recurring revenue
Revenue earned from subscriptions in a month.
One of the most important metrics, helping identify trends and forecasting future revenue.
Affected by upgrades, downgrades, and churn.
If MRR goes down =>warning.
The same goes for ARR: annual recurring revenue.
Source: chargebee.com
3/ CLV: Customer Lifetime Value
Total revenue you can expect from a single customer throughout the business relationship.
Helps identify the most valuable customer segments.
The longer a customer continues to purchase from your company, the greater their lifetime value is.
Source: Kissmetrics
4/ CES: customer engagement score
A single number measuring how engaged your customers are with your products or services and represents the total of your customer’s health, success, and engagement.
The higher CES, the better.
Helps identify
trial customers ready to purchase,
customers that need help or are about to churn,
customers for up-sell or cross-sell opportunities.
Calculated by combining inputs from frequency and depth of usage, specific actions, and information along the customer journey.
The key benefit is to get one single number only instead of many different data entries and measure a customer’s level of interactions with your company immediately.
5/ Net Promoter Score (NPS)
A controversial, sentiment-based metric to measure how likely a customer is to recommend your products or services on a scale of 1 to 10.
Not enough alone to assess the bigger picture but yet a way to quantify customer loyalty to some extent.
To have a great NPS, you need more Promoters, fewer Detractors.
And that’s it!
These were just 5 Customer Success metrics that matter in SaaS:
1/ NRR
2/ MRR
3/ CLV
4/ CES
5/ NPS
But there are many more you should be at least aware of and I’m happy to share these with you today as an entire glossary based on my research including the inputs I’ve got from the CS and SaaS communities!
Feel free to bookmark this email and link to my newsletter for future reference!
Hakan's Saas Glossary
A
ARR: Annual Recurring Revenue
B
B2B: Business to Business
B2C: Business to Consumer
C
CAB: Customer Advocacy Board
CAC: Customer Acquisition Cost
CAGR: Compound Annual Growth Rate
CCO: Chief Customer Officer
CEM: Customer Education Manager
CES: Customer Engagement/or Effort Score
CHS: Customer Health Score
CLM: Contract Lifecycle Management
CLV: Customer Lifetime Value
CO: Customer Outcomes
CRM: Customer Relationship Management
CS Ops: Customer Success Operations
CSAT: Customer Satisfaction Score
CSE: Customer Success Executive
CSM: Customer Success Manager
CSS: Customer Success Strategy
D
DAU: Daily Active User
E
EBITDA: earnings before interest, taxes, depreciation, and amortization
EBR: Executive Business Review
ELO: Enabling Learning Objectives
G
GM: Gross Margin
GTM: Go to Market strategy
I
IPO: Initial Public Offering
K
KB: Knowledge base
KPI: Key Performance Indicator
L
LTV: Life Time Value
M
MAU: Monthly Active User
MRR: Monthly Recurring Revenue
MVM: Minimum Viable Model
MVP: Minimum Viable Product
N
NPS: Net Promoter Score
NRR: Net Revenue Retention
O
OKR: Objectives and Key Results
P
PSM: Partner Success Manager
Q
QBR: Quarterly Business Review
R
ROI: Return On Investment
S
SAM: Serviceable Addressable Market
SEM: Search Engine Marketing
SEO: Search Engine Optimization
SLA: Service Level Agreements
SOM: Serviceable Obtainable Market
T
TAM: Total Addressable Market
TT: Tech Touch
TTV: Time To Value
V
VoC: Voice of Customer
Y
YOY: Year Over Year
YTD: Year To Date
While this list is subject to evolve over the years, I believe it already provides you with the top fundamentals you can refer to in your day-to-day conversations at all levels.
And to finish today’s edition on a funny note, I’ve even come across some creative metrics like:
“WOW: that’s amazing”
or the one that got stuck in my mind: “BRR = it’s cold outside” :-) which was twitted by Dharmesh Shah, co-founder, and CTO of HubSpot some time ago:
Screenshot of Dharmesh's tweet
Well, that’s all from me for today!
Thanks for subscribing and welcome to our 76 newcomers to my newsletter this week! !!
Yesterday, we’ve just crossed the 300 subscribers mark and I can’t thank you enough for your trust, confidence, and support!
As of the time I’m sending out this edition, you are 306 professionals eager to explore and learn more about Customer Success and the number keeps growing every day!
Again, I am very happy to share and partner with you on this incredible journey!
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Let’s learn from each other and grow, together!
Have a wonderful Sunday and a great & productive week ahead!
Can’t wait to meet with you next Sunday at our Customer Success Café again!
Hakan.
PS: if you have any suggestions or feedback, please feel free to reach out directly!
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