The Customer Success area is vital to ensure your customers withdraw the best performance from your product / service, earning their satisfaction and consequently, retention. Therefore, assessing your CS performance is of utmost importance. Do it the right way!

For subscription businesses, retention is an absolute necessity, since the ROI takes place through time. In other words, the longer a customer stays in, the greater is the return.

By thoroughly diagnosing why your customers cancelled or expanded the use of their accounts, you can prevent future negatives,as well as proactively support those who are still struggling to extract value from your solution, for example.

Let’s take a closer look at the  most important metrics, having in mind that they also relate to other areas, such as finances, product development or Customer Service. So, the whole team must be aware of their own contribution on the delivered quality of Customer Success.

Churn – Cancellation Rate

Churn means attrition or turnover of customers. It may happen due to various reasons, from a bad experience with the CS area, bugs, wrong billing or lack of delivery aligment. However, it’s the CS team who responds for this metric.

The monthly churn, the most used one, is calculated using the formula below, and it has many related metrics:

Churn Revenue = lost revenue / previous month total revenue

Net Revenue Churn: The same as above, although deducting monthly total upselling and downselling

Anual Revenue Churn: the same as Net Revenue Churn, but aggregating current last 12 months

Churn average lifetime: The average time a customer takes to call off, based on the analysis of your previous churn customers’ profile. For example, if most of your former clients cancelled between the fourth and sixth month of contract, this might be a critical period for others too, demanding more attention for existing customers within this very period. This metric is very important to  prevent future churns.It’s possible to take proactive action based on the “risky” behaviour observed in previous churns, such as not using your solution’s full capacity, not accessing the tool for too long, etc.

Expansion: While Churn stands for revenue losses, expansion is related to increases on monthly revenue. For subscription businesses, it might come through upselling of your features and plans or hiring of different products (cross-selling).

The CS managers play the most impacting role on this metric, since they cater for the company’s image and leverage the brand, through top service and support.

Subscription companies can build their earnings up by increasing their number of users, access to different features, modules, etc. Once your clients realize the ROI they get from investing in your solution, they’llstart looking for ways of profiting or saving more in different areas of their business.

Expansion = (Total revenue for the month – New revenue) / (Total revenue for previous month – Net Churn – 1)

Customer Happiness Index (CHI)

The CHI measures clientele engagement. It gathers variables which allow customizing the index according your business needs. Quoting Jonah Lopin, founder of Crayon and CS at Hubspot:

“CHI is our Customer Happiness Index. It’s a pun with the Chinese word 气, which means power of life. […] Our high-scoring CHI companies grow their traffic rates and base of leads every month. They also rate our highest scores on Net Promoter Score and  renew their contracts more frequently. The index is a collection of many variables […] it’s calculated based on the quality of the company’s inbound marketing. […] Having analyzed thousands of clients over the years, we determined which dimensions of inbound are more related to success. These dimensions are more significant for CHI than others, and that’s what our marketing, sales and CS professionals advise our clients about.

Some criteria that can be used do determine CHI, for example: weekly number of accesses, customizing of platform features, user sharing or invitation to the platform, among others.

Each criterion scores 0 to 1 point, while the total maximum score is 10. Some criteria can hold a higher grade than others. So companies are able to customize criterion and adjust scores to their own product or service.

It’s advisable to establish a CHI monthly target and collect the data frequently in order to take actions related to the outcomes. Following the

customers path is also an important tool to assess your customers engagement vs their results. This way, it’s possible to create content, showcasing your best clients as models, leveraging both brands and encouraging others to engage in extracting value from your solution.

Net Promoter Score (NPS)

NPS is a metric which assesses how satisfied is the clientele of companies from any segment or industry. The research is done using a single query questionaire (there are variations):

“On a scale from 0 to 10, how much would you recommend our company to a friend or colleague?”

Answers are then aggregated in 3 groups:

  • between 0 and 6 the customer is a company’s detractor;
  • between 7 and 8 the customer is neutral;
  • from 9 to 10 they are promoters of your solution.

Customers who undergo negative experiences with your company might become detractors. While clients who experience positively are bound to become promoters, bringing your most dreamed referrals.

If the questionaire is manual or via email, it’s advisable to keep a lower frequency, whereas software based questionaires grant you a higher frequency.

The NPS varies from -100 to 100 and is segmented in zones:

  • ExcellenceZone – NPS between 75 and 100
  • Quality Zone – NPS between 50 and 74
  • Perfectioning Zone – NPS between 0 and 49
  • Critical Zone – NPS between -100 and -1
  • Calculating your NPS:

    NPS = % Promoters – % Detractors

    Understanding the clientele thoughts on your company is trully important. Get to know the pros, cons of your product or service, how you can improve and other valuable info can be fast, simple and you can quantify this data, comparing your business to the benchmark and competition.

 

In Conclusion

Gathering all these metrics, it’s possible to obtain a clear perspective and better manage your operation, spotting strenghts and weaknesses to define targets and improvements.

Notice that CHI grants the assessment of engagement and hapiness of your clientele, and being satisfied your customers should become your promoters, rating better NPS scores. Detecting your customers satisfaction via NPS, it’s easier to identify upsell opportunities or take actions to prevent churn, for example.

Bear in mind that all these assessments rely on a database, so it’s important to store your information for further analysis and changes.

Developing your CS quality assessment into a more concrete concept with these metrics facilitates your daily routine, and your search for constant improvements, revenue increments and, therefore, your success!

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*Sarah Cascaes is graduated in Foreign Trade, experienced in Customer Success, falls for Content Marketing and currently responsible for Support and Implementation of our Contentools Platform.