Handling Data the Right Way
Companies generate large volumes of customer data on a daily basis. This highly unstructured data can be transformed into actionable insights, provided you know how to clean it, and use the appropriate tools to organize and analyze it. Data structuring is done to make use of customer data, in order to enhance the user experience, and make significant product updates. Most companies use customer analytics to get an accurate picture of a customer in order to deliver key business results.
Customer Success is all about data! Before delving into the data structuring process as a whole, it helps to strategize about the most important and relevant metrics and KPIs that fit your use case. We define metrics as a set of quantifiable measures used to track and assess the status of a specific business process, whereas a key performance indicator (KPI) is any metric or measurable value that identifies the extent to which an organization is achieving its goals and objectives.
Customer Success Metrics & KPIs
Let’s take a deeper dive into some of the most crucial metrics used by companies. Some of the metrics used to measure ROI include support ticket resolution time, number of conversions, number of upsells, cross sell, renewals. Commonly used KPIs include revenue growth rate, churn rate, customer acquisition cost, customer lifetime value, retention rate, monthly recurring revenue, annual recurring revenue, expansion revenue, customer health score, and survey scores like Net Promoter Score (NPS), customer satisfaction survey, customer effort score, and so on.
The success of your company is closely entwined with that of your customers. It’s only when your customers benefit from your product and start achieving their targets that they continue to be associated with your company, buy more, and also generate more leads and deals for you through advocacy. In case your product fails to help them, you don’t just lose one customer, but also end up losing potential customers who could’ve been attracted to your business via referrals and word-of-mouth. Since the market is flooded with endless options for customers, retaining customers is an ongoing challenge that most companies find themselves struggling with.
The fact that the cost of acquiring a new customer is much more than the cost of retaining an existing one makes Churn Rate and Retention Rate the two most important KPIs to be monitored. Conversion rate is also another important metric, and CSMs should never lose sight of these metrics that reflect the overall health of customers.
Customer Success & Sports
In any kind of sports or games, there are always binary opposites – either someone wins, or they lose.
The SaaS space is marked by similar characteristics, if you are unable to satisfy your customer, your competitor is bound to win them over! Churn can be compared to losing and retention to winning, and as we know, the most important ingredient in winning is teamwork and performance. Dealing with churn involves a great deal of teamwork – an increase in customer engagement from all fronts helps with product stickiness and shows the customer that you care about their success.
Health Scores provide a Customer Success organization a simple and easy way to determine healthy and unhealthy customer relationships, and serves as an early-warning system to identify customers who are likely to churn. The customer health score is calculated by using various Key Performance Indicators (KPIs) like, upcoming renewals, open support cases, outstanding invoices, survey scores like Net Promoter Score, Customer Satisfaction Survey, Customer Effort Score. All this data is gathered from multiple sources like CRM platforms, issue trackers, billing software, and more. Health scores are computed for each of these KPIs and proper weights are assigned to arrive at a global health score for each customer.
There are many factors that affect customer health. The challenge is to narrow down the list to a manageable number, identify those that are most helpful and relevant, and finally, find out how all of these numbers fit together to formulate an overall Customer Success strategy for tracking and improving the health of customers.
The Turning Point
“People do not buy goods and services. They buy relations, stories, and magic.”
– Seth Godin
Sometimes a winning team loses and a losing team wins. Similarly, even though these KPIs indicate progress, sometimes they fail to predict churn. KPIs need to be merged with customer pulse data based on CSM interactions. KPIs only understand numbers, whereas human interaction provides a more holistic approach to managing customer relations. While a health score based on KPIs is necessary, it is customer engagements and the feedback that follows that gives more visibility into customer health.