Leaders in customer success need to be more economically savvy. This has been a hot topic in the CS community for some years.
How can you determine if your firm is expanding, staying the same, or declining?
Knowing where your company stands is critical because it will enable you to make efforts to ensure that it continues to grow in the right direction.
Instead of making educated guesses about the company’s current state, the ideal approach is to use data points that never lie. As a result, we must concentrate on customer success measures to assist us in selecting what to pursue next.
However, there is so much data that we can analyze that big data might cause us to get confused.
For example, if you’re a pilot and your plane is at the proper altitude. Then you’ll concentrate on the speed, determine whether you’re moving at an optimal rate, and take appropriate action if you’re not. However, if your plane is flying at a low altitude, the height, not the speed, should be your primary concern. In this situation, focusing just on speed could result in a crash.
Another example could be managing all expenses, including wages of employees. This gets hectic if you don’t keep a record of expenses. However, this lack could be filled by keeping your paystubs for your financial records.
Similarly, you must ensure that you track the success measures that will help your business expand.
1. Churn data
Churn data can help you figure out how many of your consumers are leaving your business on average.
When can you tell whether a client has churned?
When customers unsubscribe from your services or don’t buy your items for a set amount of time, you can consider them churned. Business owners can choose how long that term should last in their specific organization.
Check when a customer typically makes repetitive purchases from you to make it a little simpler for you. Let’s imagine a client buys from you every 90 days on average. In that situation, you can classify any customer who hasn’t purchased in that period as churned.
How do you calculate the churn rate?
To figure out your client attrition rate, do the following:
Subtract the number of customers at the start of the month from the amount at the month’s end.
Then multiply the result by the total number of customers at the start of the month.
Why should you be concerned?
Because a loss of customers equates to a loss of money.
If you can’t keep users, it will have a long-term negative impact on your bottom line. However, if you can figure out when they churn, you may devise tactics to keep them from doing so.
This SaaS customer success statistic should be tracked to determine the customer health score. It’s also crucial because the cost of obtaining a new client is 5 to 25 times greater than the amount of keeping a current customer.
Furthermore, if you lose clients, you’ll have to find new ones, which can be expensive in the long term.
The turnover rate affects other necessary customer success measures and slows growth. Knowing this number might help you create more accurate financial forecasts. It can also tell you how well your business is doing and what you might expect in return.
2. Cost of Customer Retention (CRC)
It is the total amount of expenses incurred by a company, usually in technical assistance, to retain and grow existing clients. CRC is calculated by adding all costs associated with customer retention and engagement.
The average cost of keeping each client category is calculated using the following formula:
Customer Retention Cost = Customer Success Team + Renewals and/or Account Management Team + Customer Engagement and Adoption Programs + Professional Services and Training + Customer Marketing + Customer Retention Cost
Annualized CRC / Active Customers = Annualized CRC per customer
CRC assists SaaS organizations in monitoring their performance, calibrating their financial health, and influencing their investment decisions by helping them in identifying product areas of concern. It also aids the development team in determining the optimal feature updates and guarantees that the sales department is focusing on the correct market.
When paired with CAC, the CRC statistic forms the foundation for determining a subscription business’s performance.
3. Customer satisfaction
A final important customer engagement success statistic has nothing to do with turnover or value. Instead, it’s all about how happy your consumers are with your service or whether or not they would recommend you to others. The Net Promoter Score (NPS) is a metric that is calculated by asking a simple question: “How likely are you to recommend us to others?”
Customers are asked to rate their likelihood on a scale of zero to ten, with zero indicating very unlikely and ten indicating very likely. Your promoters are those who answer with a nine or ten. Don’t take anything for granted with them. Encourage them to take on the position of advocate, and you’ll be able to take advantage of one of the best and most cost-effective lead sources.
NPS is calculated as follows:
NPS equals the ratio of promoters to critics.
Passives are those who respond with a seven or an eight. You might like to spend some time converting them to promoters, but first, look at the consumers who fit into the zero to six categories. Furthermore, you should set up a GDPR compliant system to eliminate the risk associated with data leaks—as data is the hot topic in customer satisfaction domain.
These are your skeptics, and they can prevent you from succeeding. Investigate why they are dissatisfied, not just to regain their trust but also to correct the problem.
The first step is to determine which customer success indicators are appropriate for your firm. It would provide answers to queries that would assist the organization in analyzing the situation and assisting consumers in achieving their objectives.
Even though these indicators are used to measure success, there are instances when they create more questions than they answer. This occurs when a CSM team focuses on multiple metrics simultaneously, resulting in excessive analysis. This frequently results in a situation in which the organization becomes obsessed with data, and other divisions cannot participate. To avoid paralysis by analysis, the CSM team should only track a few success measures that are accurate indicators of the company’s success.