In the ever-evolving world of customer success, the only constant is change.
Metrics we rely on to gauge customer loyalty and retention are shifting beneath our feet.
Let’s dive into the metrics that matter most for the forward-thinking CSM, ready to navigate the complexities of the future of customer retention.
Customer Success Trends for the Upcoming Year
The future promises a pivotal shift towards more strategic, data-driven approaches to customer success.
Industry experts predict a heightened emphasis on commercialization, with B2B and B2C companies alike recognizing the crucial role of customer success in retaining clients, driving revenue, and fostering sustainable growth.
The narrative is clear: as growth rates have moderated, the pressure on SaaS businesses to double down on their customer bases has intensified. Successful CS teams are expected to deploy segment-specific playbooks that combine products, services, and proactive engagements aligned with customer value
Another notable trend is the move towards specialization within customer success teams.
Faced with the need to do more with less, companies are increasingly seeking deep technical expertise or revenue-focused roles over generalist profiles.
This shift towards specialization, coupled with the adoption of fractional or part-time experts, is reshaping the structure of customer success teams
Core Retention Metrics
1. Net Revenue Retention (NRR):
Remaining the gold standard for measuring customer success, NRR provides a holistic view of revenue performance by accounting for expansions, contractions, and churn.
It reflects the ability to not only retain customers but also expand their value over time.
2. Churn Rate:
A perennial concern, the churn rate gains even more attention in times of economic uncertainty.
It measures the percentage of customers or revenue lost over a specific period and is a critical indicator of the health and sustainability of a business.
3. Expansion Revenue:
This metric tracks the additional revenue generated from existing customers through upsells, cross-sells, and add-ons.
Expansion revenue is a testament to the success of customer success initiatives in driving further engagement and investment in a company’s offerings.
4. Gross Revenue Retention (GRR):
GRR focuses on the revenue retained from existing customers, excluding any expansion revenue.
It’s a pure measure of a company’s ability to maintain its existing revenue base and is especially important for businesses facing high churn rates.
5. Health Scores:
Customizable scores that predict customer success or risk by aggregating various indicators such as product usage, customer feedback, and support ticket trends.
Health scores enable CSMs to proactively address potential issues before they escalate.
6. Logo Retention Rate:
While revenue-based metrics are crucial, logo retention provides a different angle, measuring the ability to retain the number of distinct customers.
It’s particularly relevant for understanding brand loyalty and customer satisfaction on a broad level.
7. Net Promoter Score® (NPS):
A well-established metric that gauges customer loyalty and satisfaction by asking customers how likely they are to recommend a company’s products or services.
NPS is a strong indicator of customer perception and potential for organic growth through referrals.
8. Customer Lifetime Value (CLV):
CLV estimates the total revenue a business can reasonably expect from a single customer account throughout the relationship.
Understanding CLV helps businesses allocate resources efficiently and forecast long-term growth.
9. Earned Growth Rate:
A newer metric that focuses on the growth achieved through existing customers.
It complements NRR and expansion revenue by highlighting the contribution of customer success to overall business growth.
10. Customer Effort Score (CES):
This metric assesses the ease with which customers can get their issues resolved or utilize your product or service.
A lower CES indicates that customers find it easy to interact with your business, which can lead to higher satisfaction and retention rates. It's particularly useful for identifying process improvements that can enhance the overall customer experience.
11. Customer Engagement Score (CES, or CEGS):
Second CES in a row?
Seems confusing, and if you want to use both the Customer Effort Score and Engagement score, it can be confusing. Using CEGS to refer to engagement score in this case is used by a select few CSMs.
CEGS compiles various indicators of customer engagement, such as product usage frequency, feature adoption, and interaction with support or educational resources.
A high CEGS suggests strong customer engagement, which is predictive of higher retention and potential for advocacy.
12. Time to Value (TTV):
TTV measures the time it takes for a new customer to realize significant value from your product or service.
Reducing TTV is critical in today's fast-paced market, as customers who quickly find value are more likely to remain loyal and less likely to churn.
13. Adoption Rate:
The adoption rate tracks the percentage of customers who have started using a product or feature relative to the total number eligible.
High adoption rates are indicative of successful onboarding processes and product-market fit, both of which are key drivers of customer retention.
14. Repeat Purchase Rate (RPR):
For businesses that operate on a non-subscription model, RPR measures the percentage of customers who make more than one purchase over a given period.
It's a direct indicator of customer loyalty and the effectiveness of your retention strategies.
15. Customer Satisfaction Score (CSAT):
CSAT is a straightforward metric that asks customers to rate their satisfaction with your product, service, or a specific interaction.
It provides immediate feedback on customer sentiment, allowing CSMs to address issues promptly and prevent potential churn.
16. First Contact Resolution (FCR):
FCR measures the percentage of customer inquiries or problems resolved upon the first interaction with your support team.
High FCR rates contribute to higher customer satisfaction and retention by minimizing customer effort and frustration.
17. Customer Support Ticket Trends:
Monitoring the volume and nature of customer support tickets can provide invaluable insights into recurring issues, product improvement opportunities, and areas where customers need more guidance or resources.
18. Customer Onboarding Success Rate:
This metric assesses the effectiveness of your onboarding process by measuring how well new customers transition to proficient users.
Successful onboarding is critical for long-term retention, as it sets the foundation for a customer's entire lifecycle.
19. Account Escalation Rate:
The rate at which customer accounts require escalation to higher-level support or management can indicate broader issues with product complexity, customer satisfaction, or support effectiveness.
Lower escalation rates are generally indicative of a healthier customer success environment.
20. Renewal Rate:
Specifically for subscription-based businesses, the renewal rate tracks the percentage of customers who renew their subscriptions at the end of their term.
It's a direct measure of customer loyalty and the perceived ongoing value of your offering.
These metrics, while individually powerful, yield the best insights when analyzed together.
They offer a multi-dimensional view of customer success, encompassing financial performance, customer satisfaction, and operational efficiency.
Conclusion: Steering Through 2024 with Data-Driven Precision
In sum, the future of customer success demands a balance of strategic foresight, technological adoption, and an unwavering focus on the metrics that matter.
For proactive CSMs, this year is an opportunity to redefine success, leveraging insights and trends to craft strategies that not only retain customers but also elevate their experience and value to unprecedented heights.
