• Sarah@VHFY

The Ultimate Guide to Customer Success Metrics

So you've read The Ultimate Guide to Customer Success and see the benefits of bringing Customer Success into your business to add value for your clients.


The next decision is deciding which metrics you are going to track. No matter how large or small your business or how many clients you have, even if you only have a handful of clients you should be measuring your success so you can track trends and review the data to continually improve.


As a smaller business with a handful of clients, you don't need to go over the top and track everything. I'd suggest revenue renewal rates and churn rates are a good starting point but again, it depends on the requirements of each business.


Below are a list of the more common Customer Success metrics but this is by no means an exhaustive list. Point to note: (it maybe obvious but...) Customer Success metrics use current active clients only. New business data is not included.

Let us start by looking at metrics across the client base.


Renewal rate

# of clients who renewed their subscription / # of clients up for renewal * 100


The renewal rate is a simple calculation to understand the number of clients renewing their contract. It's important to note that the renewal rate can't ever go above 100% because you can't renew more clients than you already have.


Renewal rate is a valuable calculation, however each of your clients will have different ACVs (Annual Contract Value). Another factor to consider is the amount they are renewing for. They might be renewing but are they also increasing their contract value?


Therefore, see the next calculation which might be more useful.

Revenue Renewal rate


Total $ of clients who renewed their subscription ($) / Total $ up for renewal * 100


Revenue renewal rate therefore gives you more accurate financial health data. Your revenue renewal rate should be more than 100% as you grow your business. It is a good sign your business is healthy and scalable.

Churn rate


Number of clients churned per time interval / Total number of clients per time interval


Churn rate (also known as attrition rate) shows the number of clients discontinuing with the product or service you offer and are therefore cancelling their contract. Customer churn is not good however it is also notable that there is likely to always be churn due to cashflow problems or just plain unhappiness for example.


As long as you monitor your churn, continually review the data and identify trends which will allow you to improve your customer experience and build up the relationship, you should be able to keep churn to a minimum. In order to grow your business, you need to ensure your growth rate is higher than your churn rate.

Following on from this, you may want to drill down into each client account:


ARPA (Average Revenue Per Account):


Total monthly recurring revenue (MRR) / Total number of clients

As obvious as it sounds...showing the average revenue per account. Depending on your business and your offerings it could be showing you per client but will depend if each client buys more than one product or service.


It's an important metric to provide an overview of company profitability per account (as per the above, if each client has have one product or service) and shows which product or service generates the most or least revenue.

For the next two metrics, a survey would be required.

NPS (Net Promoter Score)


% Promoters (9 and 10) / % of Detractors (0 - 6)


This comes from asking the following question on a survey: “how likely are you to recommend this product or service”. NPS measures how satisfied and loyal your client is and how likely they are to recommend your product or service.


You may add other questions to your survey to gain a better understanding of how your client is feeling but NPS comes from this specific question.


Promoters give a score of 9 or 10 on the above question. Promoters are loyal clients, advocating your product or service and continue to buy to fuel growth. They continue to give positive referrals.


Passives give a score of 7 or 8 on the above question. Passives are non enthusiastic. They may continue to buy more of your products or services but are vulnerable and open to the competition. Note: passive responses are not included in NPS.


Detractors give a score between 0 or 6 on the above question. Detractors are unhappy clients and unlikely to continue to buy your product or service. They may discourage others and negatively impact your reputation and brand.


Once you have collected the data for this metric, it gives you valuable data to work with to improve your customer experience. To turn around your detractors and passives whilst continuing the great work with your promoters.

CSAT (Customer Satisfaction Score)


# positive responses / (#) total responses x 100


CSAT on the other hand, measures how happy your client is with your product or service. CSAT is a survey that is sent to measure satisfaction in relation to a specific event or interaction.


The main question asked would look something like "how would you rate your overall satisfaction with the specific product or service you received?". As per the calculation above, you only use the total number of positive responses as this is seen as more accurate.


Again, once you have the data from this metric, you must dig deeper and use this to ensure you are continually improving the customer experience.

If you're unsure of best practice and benchmarks or if you have any questions, please do get in touch. These metrics are so important to grow and scale your business, to ensure a positive customer journey and to continually your improve your customer experience.


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