Many business owners measure the company’s health by the client success team’s productivity.
How many tickets are customer support reps closing? How many emails are they responding to? Are our customers happy with our support? These metrics can help customer success managers establish if a customer support rep is doing their job well or underperforming.
But instead of monitoring activity, what if you tracked something different?
Old customer success methods are no longer enough to keep customers satisfied and coming back. A new customer success playbook is emerging. It’s less focused on making more calls or closing as many customer support tickets as possible, and more focused on building, maintaining, and strengthening connections with your customers. This means that tracking client success is changing, too.
Measuring Client Success
Monitoring client success metrics is the key to improving customer loyalty and happiness. Contributing to your client’s success with your products or services isn’t only beneficial to your customers. It’s also beneficial for your company because it eventually leads to client satisfaction and loyalty.
Client success metrics can help you determine the type of customer experience you’re delivering. You can also position your brand as a customer-centric business by measuring customer success and embracing an organization-wide ideology of nurturing client growth. However, you still need to know if your product or service is positively impacting a client’s daily workflow.
The goal of client success is to generate recurring revenue by improving customer lifetime value. This means constantly retaining and educating your clients by tailoring your business approach to meet their unique needs. By leveraging the right client success metrics, you can track if your efforts are working or not.
Client Success Metrics that Matter
So how do you track whether your product or service is helping your customers succeed? Here are the five most important client success metrics that matter and crucial details on monitoring them.
1. Client Lifetime Value
Client lifetime value is one of the most crucial client success metrics that you can monitor for your business. It helps you determine the total revenue that you expect a single client to generate throughout your relationship with them.
Companies can leverage client lifetime value to track the value of their clients’ overtime. If the value of clients increases, that’s a sign that your products and services are helping your clients succeed. However, if the value is declining, then you need to re-evaluate your strategy and look for weaknesses in the customer experience.
Client lifetime value compares a client’s revenue value to the client’s predicted lifespan. You can calculate client lifetime value as follows:
- Multiply the average purchase value by the average purchasing frequency rate.
- Next, multiply that amount by your average client lifespan. This gives you a predicted amount of revenue that one client will spend on your company.
Let’s say your clients spend an average of $100 every time they shop at your online store. Your clients also visit your online store about 4 times a month. Further, let’s say that the average client lifespan in your store is typically three years before customers stop purchasing from you. From that, your client lifetime value is ($100 x 4 x 72 months = $21,600).
2. Customer Feedback
What are your customers saying about your brand and the products you offer? What do your customers like about their relationship with your brand, and what do they hate?
Jeannie Walters notes that “cross-functional customer experience leadership means customer feedback isn’t just collected. There’s an ongoing cycle of listening, understanding, and acting on the feedback customers provide.” Thus, your customers need to feel that they can voice their opinions and thoughts about your products.
Providing your customers with an opportunity to give their feedback and offer insights is a brilliant way to build meaningful and long-term relationships. Customer success managers can gauge how well their customer success reps are working with customers by gathering qualitative feedback. It’s disheartening to hear where your onboarding or customer support process is failing, but getting the chance to improve on your flaws before a client jumps ship is worthwhile.
The best way to gather customer feedback is to send out surveys. Pose some questions to your existing customers and track how they feel about your customer support team.
You can also hold a “client day.” Invite some customers to your headquarters or office for a meeting or lunch, and talk to them face-to-face. Note their body language and facial expressions as they talk about the service they received and how they’d like you to improve the customer experience.
It’s essential to note that customer feedback shouldn’t solely focus on your products; it should also cover how customers feel about your brand and business.
3. Recurring Revenue
Recurring revenue is a crucial client success metric that you can use to assess how your customer base or their spending has increased since working with your company. This metric monitors the amount of money that your clients are spending on your services or products. You can monitor this value over time to establish if your clients are succeeding with your products. This is especially valuable for SaaS businesses that operate based on a subscription model.
Multiplying the total number of monthly or yearly active customers by the average revenue per customer to measure recurring revenue. This will give you an idea of how much revenue you’re generating monthly or annually.
For instance, if you have 500 monthly active clients and your average revenue per client is $200, then your monthly recurring revenue will be (500 x $200 = $100,000) and your annual recurring revenue would be (500 x $200 x 12 months = $1,200,000).
4. Customer Retention
It’s great to attract new customers, and expanding the top of your marketing funnel with new customers is crucial in scaling your business. But if customers are buying your products once and never coming back, that’s a sign that customers aren’t getting value from your products or don’t fully understand your products. This is a significant problem because it’ll increase your churn rate and stunt your business’s growth.
Monitoring customer retention can help you determine how many customers are getting value from your products versus those who aren’t deriving any value from what you’re offering. To calculate your customer retention rate, take the number of your active customers and divide it by the total number of customers during a particular period.
So, let’s take a 30-day time period. You have 100 active customers who continue to buy your product out of 150 customers. Your customer retention rate, in this case, will be 67%.
After determining how many customers are actively coming back to buy your products, target those who aren’t returning with educational materials or additional messaging to help them understand how your products can help them succeed. If you have a lower customer retention rate, you must reach out to those customers who aren’t returning to your business and see why they’re leaving, or you can send out helpful tips to entice them to come back.
5. Customer Satisfaction
Customer satisfaction is another crucial client success metric you can use to track customer success. You can monitor customer satisfaction by asking your customers how satisfied or dissatisfied they’re with what you’re offering. To do this, send out surveys to your customers asking questions, such as “How satisfied were you with our service, product, or interaction with our brand?” And often customers use a 1-5 or 1-10 scale to respond.
To measure customer satisfaction using a 1-10 scale, take the total number of 7, 8, 9, and 10 responses and divide by the total number of responses gathered, then multiply the value you get by 100. For instance, if you have 200 responses and 100 of them gave a score of 7 and above, then your customer satisfaction rate would be 50%.
A good time to collect customer satisfaction metrics is when you’re looking for feedback about something specific, like when a client completes an onboarding process or after an event.
Client success metrics are everything. They give you a gauge to measure sales, retention, and growth. The five client success metrics discussed above can help you uncover weaknesses and strengths in the customer experience you’re delivering. They can be your ultimate downfall or redemption when proving the return on investment of your efforts.
Each of these client success metrics offers you a profound insight into your approach–internal operations, customer feedback, and much more. They’ll offer a vision that’ll enable you to fuel improvement and monitor your progress along the way.
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