SaaS is all about understanding and predicting customer behavior.
Much like their traditional software predecessors, SaaS companies must track KPIs to ensure they're on the right track.
But things are not that simple in the cloud. Decisions and calculations must be done quickly, and the data collected should provide insight into customer behavior.
It's not just about what happened. You must also answer why, how, and most importantly, what's next?
Below are 15 essential KPIs that will help you answer these questions, and more.
What Is a Customer Success Metric?
A customer success metric is an indicator of how your customers interact with your product.
These metrics reveal how successful your customers are, and where they may need additional support.
For example, monthly recurring usage (MRU) reveals how engaging your product is. MRU can help you determine whether customers are getting enough value.
Conversely, early cancelation rates (ECR) reveal your customers' level of dissatisfaction. High ECR can indicate that your service is not meeting customers' needs, or that your customers are not receiving enough support.
Customer success metrics can be classified into four groups:
These KPIs track how well customers adopt your service and help you assess how successful your onboarding process is. These metrics also tell you if a customer stands a chance of staying long-term.
MRU, for example, reveals how engaged a customer is.
Low MRU may indicate that the customer is not using your service enough to get a return on investment. To increase MRU, you may want to analyze what features customers aren't using and determine ways to encourage usage.
Maintenance metrics track how well your customers are getting value from your product after they have fully adopted it. These let you know if your customers are satisfied over time, and whether they are likely to stay with you.
Churn is an example of a maintenance metric.
A low churn rate tells you that your customers are satisfied with your service and that most of them are likely to continue using it. For this reason, it is crucial to determine the reasons behind high churn rates and address them before they snowball out of control.
These KPIs track how your customers behave post-cancellation and let you know if they tend to come back or move on. These metrics can help you determine how successful the churn-reduction strategy is, and whether you need to adjust.
Customer Lifetime Value (LTV) is one of these metrics. It calculates the revenue you generate from your customers over their entire relationship with you.
These KPIs give you an idea of how many customers are promoting your service, and which channels they tend to use. These metrics can help you discover where you need to focus your efforts for more growth.
Net Promoter Score (NPS) is an example of a referring metric. It reveals how many customers are willing to refer your product to others and the likelihood that they would recommend it.
We'll explore these categories in more depth a bit later, but first, let's answer a major question:
Why Are Customer Success Metrics Vital?
Even the most innovative products won't survive without happy customers.
Customer success metrics help you understand what your customers want and how they behave. It's your way to get valuable insights about the adoption of your product.
The data collected will help you figure out whether your pricing is right, what features to improve, and much more.
Besides, customer success metrics reveal invaluable information about how your customers interact with your product.
This kind of insight proves to be the foundation for crucial decision-making and helps you make well-grounded predictions about future customer behavior.
Other important benefits of tracking customer success metrics include:
- Better understand your customers: These metrics reveal where a customer's interest lies and what problems you can solve for them.
- Improved customer service: Tracking metrics helps you figure out what's causing customers to cancel their accounts, why they're struggling with certain features, and how to help them.
- Improved sales efforts: A thorough understanding of your customers will make it easier for you to target the right people. This will help you increase your sales conversions.
- Identify new opportunities: Tracking metrics allows you to see which products are the most popular among your customers, and where there might be room for improvement.
What Customer Success Metrics Should You Track?
Now that we've established why we need to monitor these KPIs, let's get to the good stuff. We'll explore 15 SaaS KPIs you should be tracking to learn more about your performance.
We'll divide these metrics into the four categories we covered earlier:
At this stage, your goal is to help your customers adopt the product and achieve business value. Here are a few KPIs you should track:
1. Time to Value (TTV)
TTV is a type of onboarding metric that measures the time it takes for your customers to start getting value from your product. Tracking TTV can help you figure out whether people are having trouble with certain features or how quickly they're learning to use your product.
This is especially helpful to understand whether your product is easy to use. If people are having difficulty with certain tools, you need to improve them or change the way you present the product to customers.
Customer success managers can combine the data from TTV with time in use and engagement metrics to determine what your customers want more.
2. Time in Use
This metric is a good indicator of adoption. It measures the amount of time customers spend using your product each day, week, month, etc.
Time in use reveals how quickly your customers get “hooked,” and whether they're using the right tools to get results.
3.Support Tickets During the First Month of Use
During initial onboarding, you need to focus on customer success and keeping clients satisfied. This metric is a good indication of whether your customers are having issues.
It can also tell you what problems they're facing, and whether your product is the source of these issues. If it's not, clients might be struggling to understand your product.
If there are many ticket requests during this period, you're probably doing something wrong or not providing the right guidance.
Maintenance metrics measure your customers' happiness. Are they getting the most out of your service? Do they feel satisfied with your product? Are they using it enough to make a return on their investment?
Your goal is to establish long-term relationships that benefit both you and your customers.
Some of these metrics include:
4. Qualitative Customer Feedback
This metric reveals both how satisfied your customers are and what they want. If a customer is having a hard time using a feature, for example, they might request you to improve it.
Since these requests are often very detailed, it makes sense to track them.
5. Customer Satisfaction
If a customer is satisfied with your service, they're unlikely to cancel. This metric helps you understand the quality of your product, and whether it's meeting or exceeding your customers' expectations.
If they're not satisfied, you'll want to improve your product or service. You can also use this metric to understand the customer's level of engagement and identify areas where you can improve.
6. First Contact Resolution Rate (FCR)
This metric measures how many issues are resolved on first contact. It's another customer satisfaction indicator that reveals how good your support team is at resolving users' problems.
7. Renewal Rate
You can use this metric to track whether your customers are happy with your product. If they're satisfied, chances are they'll renew their subscriptions after the first month (or year).
If your customers don't renew, it means that the product doesn't meet their needs or requirements. You'll need to focus on improving your product or service to prevent cancellation.
8. Churn Rate
Churn rate is probably the most obvious customer success metric. It's a type of retention metric that reveals whether customers are satisfied with your product or service.
If churn is high, it means they're not satisfied and are unlikely to renew their subscriptions. You can figure out why customers are leaving by collecting feedback, analyzing why they're canceling, and what you can do to solve their issues.
Post-churn metrics help you understand why customers leave and whether you can retain them. You'll want to identify any patterns in your customers' feedback and use that information to come up with a strategy.
These metrics also provide you with valuable insights into the overall health of your business.
Let's explore some of them:
9. Customer Lifetime Value (CLV)
Customer Lifetime Value is the average revenue you make per customer. This metric helps you understand your ability to retain customers and how long they'll be using your product.
A high CLV means you can spend more money on marketing and recruiting new customers, while a low one means you need to rethink your retention strategy.
10. Customer Lifetime Complaints
Customer lifetime complaints reveal how well you retain customers, and whether they're experiencing issues when using your product. You can use this metric to improve your customer success program and retention strategy.
11. Cancelation Feedback
Cancelation feedback is a type of qualitative metric that measures your customers' reasons for canceling. It can help you identify any problems with your product or service that lead to an increased churn rate.
12. Customer Effort Score (CES)
This metric helps you understand your customers' perspectives on how easy it is to work with your company. It can help you identify and resolve any customer experience problems, resulting in increased satisfaction and retention.
These metrics measure the number of customers who bring in additional new subscribers through referrals. It can be a key indicator of customer success and how loyal your customers feel.
It's also a great way to reduce customer acquisition costs and recruit new users.
Some of the most important referral metrics include:
13. Viral Coefficient
This metric measures your ability to gain traction and grow with the help of referrals. It represents the number of new users who come from existing users.
For your startup, a high viral coefficient can be the key to achieving growth and improving customer success indicators. That's why you should focus on making your customers happy and providing them with a great user experience.
14. Viral Cycle Time (VCT)
This metric measures how long it takes for your customers to bring in new users.
The faster your existing customers share their experience with others, the more likely they are to create a positive referral cycle.
VCT also helps you understand your customers' referral behavior and optimize the customer experience.
15. Net Promoter Score (NPS)
Net Promoter Score is the most widely used customer feedback metric. It's based on customers' likelihood to recommend your company to others.
Promoters are customers who gave you a 9 or 10 score and will likely continue using your product.
Passives are satisfied with your product but will likely leave if given the chance, while detractors are dissatisfied customers who WILL actively discourage others from buying your product.
NPS can help you identify and resolve issues with the customer experience and product quality, as well as reduce churn rates.
It’s All About Customer Success
Customer success metrics reveal a lot about your SaaS business and can help you identify areas to improve. By tracking these metrics, you can keep your customers satisfied and retain them over time.
Remember; happy, loyal customers are the key to your business' success, so focus on building a strong customer base and providing them with an excellent user experience.
It's the only way to win over the long run.