Top 10 Make Or Break SaaS Customer Success Metrics To Monitor
Companies commonly struggle with finding the right metrics and the appropriate customer success KPIs to get a handle on what they’re doing. In the early stages of growth, all the inputs can be a bit scrambled, throwing you off your game, and by the time things stabilize, you realize you’ve not been paying attention where it counts.
Ultimately, the correct metrics to track for your business will depend on several factors unique to your business, however, there are some that are almost universally useful, and others that commonly come in handy at any stage of the customer lifecycle. We’ve got a compilation of our top picks for SaaS customer success metrics coming up, but before we get to that, here’s why they’re so important to monitor.
Customer Success Metrics and Customer Success KPIs
While often used interchangeably, customer success metrics are distinct from customer success KPIs in most cases. Metrics tell part of a story, while KPIs paint an overall picture of a situation. The latter is usually made up of a combination of the former, and so they’re intimately connected, but they do differ from one another.
KPIs should be used to inform company decisions. SaaS companies need to make sure they’re tracking the right KPIs for their product and their market, and this involves making use of the right metrics to begin with. Used right, metrics combined into KPIs can offer a total coverage on activities, and how they influence the company itself.
Success in SaaS is dependent on tracking these metrics and building the correct KPIs from them to form actionable targets. They’re the result of turning metrics into goals, and are used to benchmark a company; measuring your performance against your competitors.
It’s obvious then, why they’re so important, and this is particularly so in SaaS. With the ever-changing landscape of SaaS businesses and the latency in the effect of customer success efforts, tracking the right metrics and tracking them well are the solution to streamlining the customer journey and maximizing success.
While forming a flexible yet robust customer success environment, it’s a good idea to know which metrics to put into use for the best effect. That’s why we’ve put together our list of the top ten SaaS customer success metrics for you to monitor.
Top SaaS Customer Success Metrics to Monitor
This list of metrics isn’t going to be comprehensive – it might be missing a few that are relevant to your needs, and contain one or two that aren’t as much. But it’s designed to cover most of what’s important to customer success for most SaaS contexts.
With that in mind, here are the ten most significant metrics we think you should be tracking to monitor the success of your customer success efforts.
1. Churn Rate
It would be remiss of us not to start with this one. SaaS is all about this metric, and this sets the baseline for several useful KPIs. Essentially, customer success is all about saving you money on customer acquisition by retaining the ones you’ve got, and there’s no better metric to track to give you an idea of how many customers you’re losing than your churn rate.
There are two types, though. Customer churn is one thing, often called "logo churn" this means the customer is completely leaving. However, there’s also the concept of revenue churn, which is the amount of revenue lost. Sometimes this may come in the form of a product downgrade, or removing users from your SaaS. Both types of churn are not ideal, and each should be monitored closely.
If you’re early in your growth, your churn is probably going to be higher than you’ll want it to be in the long run. That’s okay, but if you’re using that fact as a reason not to track it too closely, you should start doing so ASAP. Churn is likely the single most important SaaS metric, not only should you and your team measure + monitor it, you should always try to lower your churn rate.
2. Customer Acquisition Cost (CAC)
In the end of the day, your customer acquisition cost is a critical metric for any SaaS. Your CAC can be used to determine how much you can spend to acquire ideal customers. Furthermore, your CAC will relate to Customer Success (CS) when it comes to understanding and segmenting your customers to determine their lifetime value (see number 10.)
CAC also relates to CS when thinking through the true cost of customer retention. Often, SaaS companies may consider the CS department a cost-center, however, if you can compare the cost of your CS function VS your CAC, you'll see that retaining your clients is much more efficient for your company than paying to acquire new customers.
Further, the better you can segment your CAC (by company size, use case, industry, LTV, churn, etc..) you should be able to refine your ideal customer to ensure you are optimizing your CAC to focus on the right customers at the right time.
Reducing your CAC in association with your churn rate is critical to running an efficient company. As such, this is a crucial metric to track.
3. Conversion Rate
Somewhat related to the above is your conversion rate. The number of leads who visit your page and convert is going to be lower than those who visit and don’t. You can track this metric from more or less any stage in the funnel, which makes it great for identifying all the turn-offs in your process.
This metric is useful for improving the quality of your leads, boosting your onboarding process, tweaking your pricing tiers, and other valuable components of your customer success processes. It’s a great metric to use for assessing the efficacy of your marketing and sales side of the journey.
4. Net Promoter Score
When it comes to customer satisfaction there’s no clearer metric than the customer’s net promoter score. This is based on their own response to a survey, which gives you a good idea of how happy they are with your product and how likely they are to recommend it to someone else.
It’s the epitome of a customer experience met and covers a general sense of satisfaction (or dissatisfaction), rather than an opinion about a particular part of the process. It’s also a good way to benchmark as it’s used by many companies all over the industry, so it can be particularly valuable in the context.
This isn’t a comprehensive measure though. It’s a well-known fact that users are more sensitive to bad experiences than good ones when it comes to giving feedback, so the results will naturally be skewed in that direction.
The trick to using NPS is to follow the way it’s trending, rather than its absolute value. If you’re getting more promoters, you’re doing well; if you’re losing them you need to make some changes. It’s a good idea to aim high with this trend, as it translates to reducing both your CAC and churn, so use it as a guide for tweaking your success process with that in mind.
5. Customer satisfaction score (CSAT)
This is similar but very distinct from NPS, in that it covers satisfaction in a specific context and in the short term. While NPS is a sign of longer-term loyalty, CSAT covers anything from the customer experience with billing, support, or any specific features of the product.
As a survey-based metric, it’s particularly accurate for the specific customer, but it does fail to paint the full picture for the same reason that NPS might – many happy customers don’t feel motivated to tell you they’re satisfied.
Still, this form of tracking can be used to improve any and every stage of the customer journey and a good survey does provide a high response rate in many cases. The metric is also easy to calculate and is a good indicator of any emergencies or good trajectories you’re experiencing as a company.
Again, it’s not a catch-all, and it should be used in conjunction with other metrics (like NPS) to cover more bases.
6. Quick Ratio
High growth often leads to high churn. Some of this is to be expected in an early company, but it’s important to know where the limit is before you find yourself running an unsustainable project. If you’re measuring growth only, you might be under the illusion that you’re on the right track when in reality you could have some very dangerous losses coming up.
Focusing on revenue gains without paying attention to losses will give you only one side of the story, so keep an eye on both, and compare the two. Customer success in acquisition and retention will be reflected in the quick ratio and give you an accessible overview of customer success practices from sales and marketing through onboarding and into the full lifecycle.
7. Qualitative Customer Feedback
While you’ve got good coverage of the quantitative feedback from your CSAT and NPS, you’re missing out on some good qualitative data unless you go looking for it. When you ask for opinions, rather than hard numbers, you get an insight into the customer experience. This has huge perks and drawbacks.
First of all, you’ll get a clear insight into what specifically isn’t working, and your success teams can strive to improve upon it. On the other hand, it’s going to be hard to compare or make any scores to measure trends without quantities data, so you’ll still need to measure the trends with your other quantitative metrics.
Missing out on these opinions could be an expensive mistake. Knowing not only where the issue is but what specifically is the issue, can be hugely valuable to fine-tuning your process. You’ll get an idea of why your customer feels the way they do, and this can be as simple as sending out a brief survey with an incentive attached to gather feedback.
8. Onboarding Success
Onboarding represents the healthy middle of the customer journey in SaaS, and a poor onboarding process is often a major contributor to a lot of the high churn and bad customer experiences. Getting onboarding right is so important for taking all the success work in sales and marketing and translating it into the ultimate customer success by generating referrals at the other end.
Tracking engagement with all your popups and in-app tutorials is absolutely necessary to figure4 out what your customers want, and how they want it to be presented to them, and this is the key to making a nice smooth process from conversion to getting the best out of your product. There’s no single metric for tracking onboarding – in fact, it’s a complex series of important information that’s available.
However, with platforms like Onboard, you can track multiple variables from a single dashboard, and this allows you to put in the work where it counts and automate the rest. With Onboard, you can implement the metrics you’re tracking to create dynamic launch plans that involve automating reminders and task lists for each client, leading them to a faster time-to-value.
9. Time to First Value (TTFV)
As an extension of the previous one, there is one great metric that ties together a lot of what you’ll be doing with your success and onboarding processes. The value points along your customer journey tell a lot about your accomplishments when it comes to customer success, and TTFV is the rate at which you take your new customer to their purchase to their comfort zone with your product.
This rate is important, as it’s the key to riding the emotional momentum of the purchase through the rest of the onboarding process successfully. However, it’s not so much a metric to track as a goal to set. While in general, the TTFV should be as short as possible, rushing it can have the opposite effect and overwhelm and confuse your customer.
The trick to using it as a metric, then, is combining it with the customer-perceived value of the product. This way, you’ll be able to balance your onboarding rate against the perceived value at the end of the process and set an optimal goal that covers all bases in a comfortable amount of time.
As long as this value matches or exceeds the TTFV expectation, you’re on the right track. Once your customers are onboard successfully, if you’ve done everything right, you’ll be seeing an increase in our final metric to track.
10. Lifetime Value (LTV)
This is one of the most significant metrics to track for customer success. It’s almost a direct depiction of success, and it relates so closely to what you’re doing all the way along the success process. Measuring the LTV can give you insights as to whether your practices are working or not, and whether your customers are getting value out of your product.
Knowing the revenue generated by each customer over their entire relationship with you tells many stories and gives you a tracking metric to follow whenever you tweak something in the process. Add some resources in one place and pay attention to this metric. If it goes up, you’re doing something right; if it goes down, undo the process!
This is essentially a long-term depiction of your customer engagement strategy and can also tell you a lot about where and how to improve the value of your product and make it a necessary component of your users’ workflows. This ensures that they’ll stick with you as they scale, and your LTV will continually increase.
This metric can also be useful for getting funding. Subscription models rely heavily on renewals, so showing investors that you’ve got this one in the bag and you understand the strategies needed to accomplish it can go a long way to reassuring them you’re worthy.
SaaS companies should aim for a LTV to CAC ratio of 3:1, but this ratio will be different for startups.
There’s rarely, if ever, a single KPI that can cover all your bases, and the metrics you use for yours will depend on your product, your customers, and your goals. Still, these should point you in the right direction, and many can be used together to get a deeper and wide-scope view of the success and failures of your customer success efforts.
So, what makes good SaaS customer success metrics? Typically you’ll be looking at things that will change in response to what you put into the success system and show you whether your efforts are working or not. This means they could be quite a variety of things, depending on your goals and the relationship between your product and your customer.
However, some things are relatively fundamental to SaaS, such as the significance of your CLV, and your detailed and thorough onboarding process. At the end of the day, you’ll find the ones that work for you, but these ten SaaS customer success metrics to track will likely take you a long way.