Top 5 Metrics You Should Master in Customer Success And Avoid Getting Lost

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#5 The CS Café – Top 5 Metrics You Should Master in Customer Success


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Customer Success in SaaS is easy.

You just need to understand NRR, ARR, MAU, DAU, NPS, CSAT, TAM, LTV, CAC, GTM, OKR, KPI, SEM, SEO, YOY, YTD, B2B, B2C, IPO, and of course CS, CCO, CSM, CS Ops! !!

:-))

But there is a lot more!

What if there was a full list somewhere out there with all the relevant metrics to help everyone get a broader picture?

This is the question I was asking myself while writing my book and it didn’t take me long before I understood there was …none! !!

So in today’s edition, we’ll explore a few of them in detail and list all the other metrics which I believe are equally important for anyone working in Customer Success!!

Well, it all started a few months ago when I brought this topic to my Linkedin network.

I’ve asked a simple and direct question: “what else would you add to the list”?

To my greatest surprise, my post received 50+ comments with suggestions and a total of 24k+ views in just 2 weeks! !!

Screenshot of my post on Linkedin

Screenshot of my post on Linkedin

This clearly meant there was a need to centralize these topics so everyone could benefit and learn with a quick and single overview!

Based on my research and the crazy amount of feedback received on the post, I’ve then compiled, curated, and published the entire list into my book as a full SaaS glossary and reference guide.

While all these metrics might appear intimidating at first, there are a few fundamentals that always stand out in most conversations around measuring the success of CS strategies.

And here are the 5 simple Customer Success metrics you should primarily know about:

1/ NRR: Net Revenue Retention (in %)

The percentage of recurring revenue retained from existing customers in a defined time period, including:

  • expansion revenue (upsell & cross-sell)
  • downgrades
  • cancellations (churn) 

NRR > 100% => growth

And the higher the NRR, the better: ideally over 120%.

In this category, the all-time record comes from Snowflake with an NRR of …162% ! !!

Source: Gainsight / Bessemer Venture Partners Cloud Index

Source: Gainsight / Bessemer Venture Partners Cloud Index

2/ MRR: monthly recurring revenue 

Revenue earned from subscriptions in a month.

One of the most important metrics, helping identify trends and forecasting future revenue. 

Affected by upgrades, downgrades, and churn. 

If MRR goes down =>warning.

The same goes for ARR: annual recurring revenue.

Source: chargebee.com

Source: chargebee.com

3/ CLV: Customer Lifetime Value

Total revenue you can expect from a single customer throughout the business relationship.

Helps identify the most valuable customer segments.

The longer a customer continues to purchase from your company, the greater their lifetime value is.

Source: Kissmetrics

Source: Kissmetrics

4/ CES: customer engagement score

A single number measuring how engaged your customers are with your products or services and represents the total of your customer’s health, success, and engagement.

The higher CES, the better.

Helps identify 

  • trial customers ready to purchase,
  • customers that need help or are about to churn,
  • customers for up-sell or cross-sell opportunities.

Calculated by combining inputs from frequency and depth of usage, specific actions, and information along the customer journey.

The key benefit is to get one single number only instead of many different data entries and measure a customer’s level of interactions with your company immediately.

5/ Net Promoter Score (NPS)

A controversial, sentiment-based metric to measure how likely a customer is to recommend your products or services on a scale of 1 to 10. 

Not enough alone to assess the bigger picture but yet a way to quantify customer loyalty to some extent.

To have a great NPS, you need more Promoters, fewer Detractors.

And that’s it!

These were just 5 Customer Success metrics that matter in SaaS:

1/ NRR

2/ MRR

3/ CLV

4/ CES

5/ NPS

But there are many more you should be at least aware of and I’m happy to share these with you today as an entire glossary based on my research including the inputs I’ve got from the CS and SaaS communities!

Feel free to bookmark this email and link to my newsletter for future reference!

Hakan’s Saas Glossary

A

ARR: Annual Recurring Revenue

B

B2B: Business to Business

B2C: Business to Consumer

C

CAB: Customer Advocacy Board

CAC: Customer Acquisition Cost

CAGR: Compound Annual Growth Rate

CCO: Chief Customer Officer

CEM: Customer Education Manager

CES: Customer Engagement/or Effort Score

CHS: Customer Health Score

CLM: Contract Lifecycle Management

CLV: Customer Lifetime Value

CO: Customer Outcomes

CRM: Customer Relationship Management

CS Ops: Customer Success Operations

CSAT: Customer Satisfaction Score

CSE: Customer Success Executive

CSM: Customer Success Manager

CSS: Customer Success Strategy

D

DAU: Daily Active User

E

EBITDA: earnings before interest, taxes, depreciation, and amortization

EBR: Executive Business Review

ELO: Enabling Learning Objectives

G

GM: Gross Margin

GTM: Go to Market strategy

I

IPO: Initial Public Offering

K

KB: Knowledge base

KPI: Key Performance Indicator

L

LTV: Life Time Value

M

MAU: Monthly Active User

MRR: Monthly Recurring Revenue

MVM: Minimum Viable Model

MVP: Minimum Viable Product

N

NPS: Net Promoter Score

NRR: Net Revenue Retention

O

OKR: Objectives and Key Results

P

PSM: Partner Success Manager

Q

QBR: Quarterly Business Review

R

ROI: Return On Investment

S

SAM: Serviceable Addressable Market

SEM: Search Engine Marketing

SEO: Search Engine Optimization

SLA: Service Level Agreements

SOM: Serviceable Obtainable Market

T

TAM: Total Addressable Market

TT: Tech Touch

TTV: Time To Value

V

VoC: Voice of Customer

Y

YOY: Year Over Year

YTD: Year To Date

While this list is subject to evolve over the years, I believe it already provides you with the top fundamentals you can refer to in your day-to-day conversations at all levels.

And to finish today’s edition on a funny note, I’ve even come across some creative metrics like:

“WOW: that’s amazing”

or the one that got stuck in my mind: “BRR = it’s cold outside” 🙂 which was twitted by Dharmesh Shah, co-founder, and CTO of HubSpot some time ago:

Screenshot of Dharmesh's tweet

Screenshot of Dharmesh’s tweet

Well, that’s all from me for today!

Thanks for subscribing and welcome to our 76 newcomers to my newsletter this week! !!

Yesterday, we’ve just crossed the 300 subscribers mark and I can’t thank you enough for your trust, confidence, and support!

As of the time I’m sending out this edition, you are 306 professionals eager to explore and learn more about Customer Success and the number keeps growing every day!

Again, I am very happy to share and partner with you on this incredible journey!

And we are just getting started!

If you’ve enjoyed today’s read, please share and help your friends and network find and subscribe as well.

Let’s learn from each other and grow, together!

Have a wonderful Sunday and a great & productive week ahead!

Can’t wait to meet with you next Sunday at our Customer Success Café again!

Hakan.

PS: if you have any suggestions or feedback, please feel free to reach out directly!


Let’s connect!

Twitter: follow me @DrivingCS

Instagram: @drivingcs

Linkedin: let’s connect!

Are you looking for a career change to transition into Customer Success? check out my book to learn more about what it takes to become a great CSM and hit the ground running!

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A quick CS best practice you can read in under 5 mins 
every Sunday at 3 pm CET.

Join 1,170+ other smart people 
and level up your skills every week!

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