Customer Success Metrics To Maximize Revenue
As the world has moved to a subscription economy, the importance of customer success has grown. Today, many organizations drive more new revenue from their existing customer base than they do from their new accounts sales team. In parallel, once a business has a reasonable base of customers, the need to minimize attrition is paramount. A single percentage point change in the churn rate can mean millions of dollars in top-line revenue and bottom-line profit.
Managing customer success teams to maximize revenue, however, is an interesting challenge. Unlike sales teams where revenue is a single, clear, objective, customer success needs to balance three somewhat-competing priorities:
- Customer Satisfaction: the satisfaction of the customer in question based on their perception of the value they are receiving from your solution. This client satisfaction drives long term account success, retention, and growth through referrals.
- Retention: retaining each customer at renewal time, ideally without having to compete for the business aggressively each year.
- Growth: signing on new users or divisions at each client, or expanding the offering that you are delivering in order to grow the revenue within that customer account.
These priorities can compete, as any experience customer success or service leader knows. Pushing aggressively to grow an existing account can mean creating some risks of either attrition or reduced customer satisfaction. Likewise, focusing on maximizing customer satisfaction can cause an account team to miss opportunities to grow and expand.
Manage For Success
How your team manages an account determines the path that account is likely to take. If you spend all of your time with front-line users, working on product configuration challenges, you may have very satisfied users, but the executives who signed the contract might be completely unaware of your performance.
If you focus all of your time trying to sell a broader engagement and more functionality to buying execs, and ignore the front-line users, you will run into trouble when those buying execs consult the users on the value they are already getting, and find that there are challenges.
If your fear of churn prevents your team from asking hard questions about the broader business that the client is in, you may miss the opportunity to serve other teams or deploy a solution more broadly.
Put simply, to succeed in maximizing within-account revenue, you need to do all these things. This means your management metrics need to set you up to be aware of any gaps in execution against these disparate goals.
New Customer Success Metrics
Most customer success organizations already track adoption metrics that give a good sense of if the front-line users are using your product or service. However, a customer health score with just this information does not give an accurate sense of whether the relationships are in place to be aware of challenges, and be involved in discussions around new growth opportunities and expansion projects.
To track those key success factors, you need measurements of the relationship dimension of customer accounts. Specifically, strong customer success and account management leaders add in the following metrics to their customer models:
- Strong Relationships with Users: the number of relationships that are either strong or very strong, with people identified as the front-line users of your solution
- Relationships with Executives: the number of relationships with executives at the level of director or above
- Last Contact with Users: the number of days since a member of your team has engaged with the users
- Last Contact with Execs: the number of days since a member of your team has engaged with the executives
Given these metrics, it’s possible to quickly identify where risk in the customer base exists and flag what to do about it.
Churn Risks, Growth Risks
- Accounts that are up for renewal, where there has been no communication with executives in 15 days should be flagged for quick outreach.
- Enterprise accounts where there are not strong relationships with at least two executives should be flagged as a single-threaded risk. SMB accounts might only require one executive relationship.
- Customers where there is strong product adoption but no relationships with users should be built into customer champions
- Clients where user adoption has fallen off, and there has been no contact with users for 30 days should be flagged for emergency help
In many cases, attrition risks pop up because customer success teams are busy managing competing priorities within a hectic daily schedule, and a key relationship going quiet just isn’t noticed. Adding metrics to measure that outreach, and flagging risks against it, makes this automatic and removes churn risk quickly.
Automation is Key
If collecting the data requires any manual work at all – even a single click – the effort quickly falters. Logging of data is forgotten, delayed, and ignore. With data being partial and untrusted, the ability to flag at-risk accounts is lost.
The key to having the customer success metrics that allow you to manage your team through data is having automated data collection. Fully automated capture, to your CRM platform, such as Salesforce, or your customer success platform, such as Gainsight, gives you the data points you need. Specifically, to gather the right relationship metrics, you’ll want to use a relationship intelligence data platform such as Nudge to gather:
- Every customer contact your CS team is interacting with
- The strength of each relationship between CS person and customer
- The decision-making level of each individual at the client
- The functional role of each individual
- The history of communication between your team and theirs
With these customer metrics, automatically collected, you can begin to manage based on an up-to-date understanding of relationships.
Better Metrics, Better Management
Maximizing customer retention, satisfaction, growth, and expansion simultaneously is not just a matter of asking your customer success team to do more. You need to put the metrics in place to enable them to focus on just the right activities.
Product adoption metrics only indicate front-line users’ usage of your offering, but do not give insight into whether there is executive-level buy-in that you are adding value to their organization. High performance customer success teams add relationship and communication metrics to their CS management dashboards to ensure that this dimension is properly covered.
With correct metrics, any risk in the customer base can be quickly identified. When customer risk is identified early, it’s possible to act quickly to remove churn risk or ensure you are well positioned for expansion. With recurring revenue making up the dominant part of both top-line and bottom-line numbers, you cannot afford not to.