11 customer success goals your team should care about

Top metrics to help your customer success team focus on what matters most

April 12, 2022
8-minute read Yellow Squiggle

A note to customer success leaders: your team rocks.

They’re responsible for the big stuff: product usage, retention, customer satisfaction, and — in at least some capacity — recurring revenue.

They’re the team closest to your customers, and they partner frequently with cross-functional stakeholders to elevate the customer's voice. They spend their days nurturing customer relationships, problem-solving issues, and creating trainings and other customer success programs to make your product stick. It’s a job that requires patience, creativity, quick thinking, solid business acumen, and top-notch communication. They’re all-stars responsible for all that and more.

So while your team is so deeply focused on the success of your customers and business, it’s your job as a customer success manager is to focus on theirs.

Let’s break down some of the most essential customer success metrics. As a customer success team, you’ll want to think about goals across four key areas:

  • Customer retention goals
  • Revenue goals
  • Product usage goals
  • Customer loyalty goals

Each of these categories of goals can provide valuable insights into customer behavior and help your team uncover ways to uplevel the current customer experience. They’ll give you a more complete picture of customer engagement, provide the team (and business partners) with key indicators to rally around, and most importantly, help you keep customers happy.

Customer retention goals

Customer success and retention go hand in hand — the more successful your customers are, the more likely they’ll stick around and continue using your product over time. Many teams use retention as a primary metric because it has such a powerful pay-off — a 5% increase in retention can produce a 25-95% increase in profit. And it’s more cost-effective — retaining existing customers over time is often 5x cheaper than acquiring new ones.

Here are a few metrics you’ll want to consider when measuring customer retention:

1. Customer retention rate

Customer retention rate measures the percentage of existing customers your business retained over a given period. In other words, from one month, quarter, or year to the next, how many of your customers stick around? To calculate customer retention rate, first choose your time period (month, quarter, etc.). Take the total number of customers at the end of that period (E) minus the total number of new customers (N). Then, divide that number by the total number of existing customers at the start of the time period (S) and multiply by 100 to get your retention rate.

Customer retention rate = [(E-N)/S] x 100


2. Customer churn rate

Churn rate is another way of thinking about retention, but focuses on the loss side of things. It’s typically measured as either the number of customers lost or the dollar value lost that those customers represent, over a given time frame. Your churn rate is calculated by the number of customers who churned divided by the total number of customers at the beginning of that time frame. So, using the same variables as above:

Customer churn rate = [(S-E)/S] x 100


3. Customer retention cost

Retention cost measures the financial investment required to retain each customer, and is a good way to measure whether or not your customer success efforts are yielding returns. Effective customer success teams grow customer retention in a greater proportion than the costs of their operation. To calculate your average customer retention cost, divide the total annual cost of your customer success team and initiatives (CS) by the number of active, current customers.

Customer retention cost = [$ spent on CS] / # of active customers

4. Customer lifetime value (CLV)

This key customer success metric takes into account a customer’s revenue value in comparison to your business’s predicated customer lifespan. It’s a great way to identify your customers or segments that are most valuable to the company — and then prioritize education and trainings, product updates, and other services to help retain them. You can look at your average customer lifetime value at a company level, by customer segment, or at the individual level for a single customer.

To calculate it at the company or segment level, you’ll need a few different inputs, including:

  • Average purchase value (APV): Total $ value of all purchases over a particular time period (typically a year), divided by the number of purchases in that time period.
  • Average purchase frequency (APF): Total # of purchases made in that same time period divided by # of individual customers who made purchases during that time.
  • Customer value: APF x APV
  • Average customer lifespan: Average length of time a customer continues buying from you

Customer lifetime value = Customer value x Average customer lifespan

To calculate CLV for individual customers, follow this formula:

Customer lifetime value = Revenue made from that customer in a year x the # of years they’ve been a customer — Cost of acquiring and serving them

5. Renewal rate

Customer renewal rate measures the percentage of customers who renew with your business at the end of each subscription period. It’s calculated by taking the number of customers who renew (R) divided by the total number of customers up for renewal (C).

Customer renewal rate = [R/C] x 100

Revenue goals

No matter what team you’re on, company revenue matters. Revenue growth = business growth, and it’s one of the most tried and true measures of success. While net new revenue often falls on sales teams — recurring revenue is all about keeping existing customers around and unlocking incremental value over time. Think: onboarding process, training programs, adoption programs for new features — these are all efforts your team focuses on that can contribute to revenue goals.

6. Monthly recurring revenue (MRR)

This key metric is a way to measure your business’ predictable revenue for each month. You can measure MRR by multiplying the average monthly revenue per customer (AR) by the total number of customers (C) you have that month.

Monthly recurring revenue = AR x C

Product usage goals

Customer success is often responsible for driving the adoption of new products — in particular among current customers — so product and feature usage metrics are key. Your team might create things like customer training programs, onboardings, or other educational materials to get users up to speed. Customer feedback also plays a big role here — and customer success is often responsible for collecting that feedback and passing it along to the product team to improve new features and inform additional features.

7. Product adoption rate

This is used to measure feature adoption of a new product or service over a given time period. You can calculate it by dividing the total number of customers who used the feature during your set period of time (CF) by your total number of customers during that same time.

Adoption rate = [customer who used feature / total customers] x 100

8. Daily active users (DAU)

The more often a customer uses your product, the more likely they are to get value out of it (and the more value they’ll provide to your business down the line too). DAU can give you a deeper insight into how sticky your product is and how customers engage with it. To measure DAU, simply count the total number of unique users or customers on a given day. You can also calculate your average daily active users by counting the total number of active sessions you’ve had over a time period — usually a month — and then dividing by the number of days in that month. (You can double count users with this method, so long as their visits were on different days.)

Average DAU = Total active sessions / days in that time period

Tip: Defining a DAU depends on your product. Definitions of “active” may differ from product to product. Ask yourself: what’s the minimum action a user needs to take to get value? For a messaging app, that might be sending one message. For an e-commerce store, that might be visiting the website or app and/or average session duration.

Customer loyalty goals

Customer loyalty goals should be top of mind for customer success leaders. In a world where customers have so many options to choose from, customer loyalty can make or break your business. Loyal customers stick around for the long haul — providing a reliable source of revenue, championing your brand to new users, and unlocking incremental value over time. When customers don’t feel a sense of loyalty to your brand or business, they’re more easily swayed when a competitor comes around.

So how do you know if your customers are happy? Customer loyalty goals can help you understand the effectiveness of your customer success strategies — identifying opportunities to better serve your customer base through things like customer loyalty programs, customer marketing, and education — and produce a greater number of happy customers overall.

9. Net promoter score

This metric is all about direct customer feedback. It’s based on customer responses (on a scale of 1-10) to a net promoter survey question: “How likely are you to recommend [business/product] to a friend or colleague?” Customers who respond 0-6 are “detractors;” 7-8 are “passives;” and 9-10 are “promoters.” After surveying customers, your net promoter score is calculated by the difference between the percentage of promoters and detractors.

Net promoter score = % of promoters - % of detractors

10. Customer satisfaction score

Similar to NPS, your customer satisfaction score is also based on customer feedback and the percentage or rate of positive responses. It’s measured by how customers rate their experience with your company or product. Where it differs from NPS, is that the questions you ask and rating scales can be customized to understand your customers’ level of satisfaction.

11. First contact resolution rate

First Contact Resolution rate can be useful in helping track and improve your customer success team’s efficiency.

First contact resolution rate = [Issues resolved on first contact / total issues] x 100

Track team progress toward customer success goals

At Range, we recommend tracking goals asynchronously so there’ll always be a written record and complete picture of everyone’s progress. This is especially valuable on highly collaborative teams (like customer experience, customer success, or customer support — pretty much all customer success functions). Through async updates, everyone can see each other’s progress and then go deeper into the information that’s most relevant to their function.

It’s a powerful way for customer success leaders to get an accurate picture of how your team is tracking toward all your critical metrics — and for the whole team (and business partners) to see their direct impact on business outcomes.

How to track daily goals seamlessly in Range

Got 3 minutes? Range check-ins were built for fast, effective daily goal-tracking. They make it easy to share what you’re focused on and what you’ve accomplished in just a couple of clicks—and link back to docs, tickets, and other reference points for context. Prompts help folks know exactly what to share and #tags make goals searchable over time. You can even track trends to see when a goal needs attention and steer things back on track.

Learn how to create, assign, and track all your goals seamlessly with Range

Better teamwork, fewer meetings

No credit cards required to practice better teamwork.
Smile EmojiChart EmojiStar EmojiSweat-Smile Emoji
11 customer success goals your team should care about
  • Share with twitter
  • Share with linkedin
  • Share with facebook

Subscribe

The Lead Time newsletter delivers high quality content designed to help you build highly effective teams.

Learn More