SaaS startups thrive on innovation, pushing boundaries with groundbreaking products, and scaling at lightning speed. But, what really defines your growth and success is the strength of your customer relationships.
Research shows effective customer success programs can yield a up to staggering 91% ROI. Despite this, nearly two-thirds of SaaS customers feel their needs aren’t being fully met.
When customer relationships are on the back burner, customers feel ignored, frustrated, and ready to jump ship. On the other hand, customer success truly happens when customers extract maximum value from your product, and are ready to stick around for the long haul.
A successful customer is more likely to renew their subscription, upgrade to a higher-tier plan, recommend your SaaS solution, and help improve your product through valuable feedback.
But how do you achieve customer success? You start by tracking the right metrics. In this article, we learn how to measure the 10 key metrics for customer success so that you can sharpen customer focus by creating exceptional experiences and forging enduring customer relationships.
Key pointers
- Customer success metrics measure how well customers achieve their goals with your products. Tracking customer success metrics helps you learn more about your customers’ journeys and issues, allowing you to proactively offer solutions and create strong relationships.
- Key customer metrics to track include: include customer health, customer lifetime value, customer satisfaction score, net promoter score, customer churn rate, customer retention rate, customer effort score, average time on the platform, product stickiness, and free trial conversion rate.
What are customer success metrics?
Customer success metrics measure how well a business helps customers achieve their goals. These include customer retention, satisfaction scores, and product usage. Tracking these metrics helps improve customer experience and business growth.
Why is it important to track customer success metrics?
Customer success metrics tell you the story of how customers engage with your business, from their very first interactions to their ultimate success (or struggle) with your product. By tracking customer success metrics, you can understand how well your customers are doing, identify areas for improvement, and drive customer satisfaction, retention, and overall growth.
Here’s why you should track your customer success metrics:
1. Understand customer journey
Ensuring customer success starts with understanding how customers interact with your product. The right metrics will show if customers are adopting your product effectively, how quickly they’re experiencing its benefits, and how often they’re engaging with it. By understanding these journeys, you can tailor your strategies and products to meet customer needs, create personalized experiences, and lead them toward success.
2. Prevent churn
Knowing when your customers are not happy can be incredibly valuable. Metrics such as Net Promoter Score (NPS), Customer Satisfaction Score (CSAT), and Churn Rate help you identify early signs of dissatisfaction and prompt you to take corrective action without delays. Proactively addressing issues means customers feel like they are being heard and valued.
3. Meet customer demands
Understanding what your customers want helps you stay competitive. Metrics like Product Stickiness and Customer Feedback Scores provide insights into customer preferences and pain points. You can then align your product development and services to meet customer expectations and build loyalty.
10 metrics to be tracked for SaaS customer success
The key SaaS customer success metrics you should measure include customer health, customer lifetime value, customer satisfaction score, net promoter score, customer churn rate, customer retention rate, customer effort score, average time on the platform, product stickiness, and free trial conversion rate. Let’s look at what each one of these is and how to measure it.
1. Customer health
First on this list is customer health, an important indicator of whether a customer will remain loyal or churn. It defines the health of the relationship between you and a customer. The customer health score tells you the overall status of your customer base, highlighting who is thriving and who may need attention.
It helps you answer questions like:
- Is the customer actively engaging with our product or service?
- Are they experiencing any issues or dissatisfaction?
- What is the likelihood of them renewing or upgrading their subscription?
How to measure customer health?
There’s no single formula to calculate customer health as it depends on various factors. It is usually measured by assigning points on various factors such as usage frequency, feature adoption, customer satisfaction scores, support ticket volume, and payment history.
Another way to measure it is using a simple scoring model with three scores: good, average, and poor.
- A good score means the customer is highly satisfied and engaged.
- An average score indicates they are engaged, but there’s room for improvement.
- A poor score means they are dissatisfied and at risk of leaving.
If your customer health is poor, you want to start tracking product usage and engagement. Segment your customers based on their health scores and tailor your communication. Reach out to at-risk customers with targeted offers and support to prevent churn.
2. Customer lifetime value
Customer Lifetime Value (CLV) is a popular and commonly discussed customer success metric. It calculates how much revenue a customer would generate in the entirety of their relationship with your business. This metric is focused on the long-term relationship and not on one-time gains, which makes it incredibly important for SaaS providers who depend on subscription models.
CLV measures the total financial value of a customer, shows you which customer segments are most profitable, and allows you to make decisions about investing in customer acquisition and retention.
How to measure customer lifetime value?
CLV can be calculated using the formula:
CLV = (Average Purchase Value × Average Purchase Frequency ) × Average Customer Lifespan
A high CLV means that your customers are generating significant revenue over time. This allows you to allocate more resources toward acquiring similar high-value customers and investing in retention strategies. When your CLV is low, this means that customers aren’t seeing enough value to stay with you long-term. In this case, you would want to identify what is important to the customer and offer them exactly that. This could be loyalty programs, personalized onboarding, and ongoing support.
3. Customer satisfaction score
Customer satisfaction is the single most important driving factor of long-term customer retention, and the customer satisfaction score is the most direct measure of it. Customer Satisfaction Score (CSAT) gauges how satisfied customers are with your product, a feature, or a specific interaction.
With the CSAT score, you can know if your customers are happy with your offerings, likely to continue using your product, and willing to recommend it to others. This is a short-term metric and focuses on immediate customer experiences rather than overall loyalty.
How to measure customer satisfaction score?
You would measure CSAT mainly through customer feedback. This could be by asking them something along the lines of, “How would you rate your overall satisfaction with the service you received?” after an interaction and collecting responses on a scale (1-5 or 1-10).
Once you receive individual scores, you’d then categorize each score based on benchmarks:
- 1-3 (Low): Dissatisfied
- 4-5 (High): Satisfied
You can then calculate the CSAT percentage using:
CSAT (%) = (Total Responses/Number of Positive Responses) × 100
A low CSAT score means you have to focus on understanding what customers are dissatisfied with. Are they experiencing technical issues, long wait times, or poor communication? Use this to improve your product, customer service, and processes.
While CSAT is valuable for measuring immediate satisfaction, remember that it does not paint the full picture. Customer satisfaction is a complex and multi-faceted concept, and many elements go into it. To get a truly holistic picture of customer satisfaction, combine CSAT with other metrics like NPS, churn rate, and customer effort score.
4. Net promoter score
The best customer is one who recommends your brand to others. The Net Promoter Score (NPS) tells you if your customer is likely to recommend your product or service. NPS can be a good gauge of customer loyalty and potential for growth through customer advocacy. For this metric, customers are divided into three categories: Promoters, Passives, and Detractors.
How to measure net promoter score?
Customers are asked to respond to a question like: “On a scale of 0-10, how likely are you to recommend us to a friend?” Based on their scores, they are categorized as:
- Promoters (9-10): Loyal enthusiasts who would actively recommend your brand to others.
- Passives (7-8): Satisfied but unenthusiastic customers. They may or may not recommend your brand and are susceptible to competitive offers.
- Detractors (0-6): Unhappy customers. The lower the score, the more likely they are to share negative feedback and discourage others from using your product.
To calculate, here’s the formula: NPS = % Promoters − % Detractors
The higher your NPS is, the more likely you are to have loyal customers who promote your brand. And that’s good news because studies find that loyalty leaders (businesses with highly loyal customers) grow 2.5 times faster than their peers.
5. Customer churn rate
Churn is the most dreaded metric in SaaS businesses—and rightly so. Customers leaving because they are dissatisfied can hurt your business and your reputation. This is why tracking your customer churn rate, the percentage of customers who stop doing business with you over a period, is important.
Here’s what it tells you:
- How many customers you’re losing over time.
- Potential revenue loss due to churn.
How to measure customer churn rate?
The churn rate is calculated using the formula.
Churn Rate = ( Customers Lost During Period/ Total Customers at Start of Period ) × 100
A high churn rate can be a cause for concern, indicating issues with customer satisfaction, product fit, or competitive pressures.
6. Customer retention rate
Customer retention is the flip side of the churn rate. It measures the percentage of customers who continue to do business with you over a period. A study finds that just a 5% increase in retention rates can drive revenue up by 25%. A high retention rate is highly desired and indicates that your customers are satisfied with their experience and loyal to your brand. It tells you the stability of your revenue base and the effectiveness of your customer success efforts.
How to measure customer retention rate?
Retention Rate = (Customers at End of a Period− New Customers Acquired)/Total Customers at Start of Period) × 100
A high retention rate is a positive sign, and you should focus on maintaining it by continuing to provide good customer service, engaging your customers, and addressing their needs proactively. If you have a low retention rate, you should reinvest in your customer relationships by improving post-sale support, offering technical assistance, and making customer feedback-based changes.
7. Customer effort score
Customer effort is how much effort a customer must make to use your product, learn about it, and actually see results. The Customer Effort Score (CES) quantifies whether your product is easy to use.
It tells you:
- The ease of customer interactions with your business.
- Potential friction points in your processes.
How to measure customer effort score?
You can measure it by asking customers to rate statements like, “The company made it easy for me to handle my issue,” on a 7-point scale from 1 (strongly disagree) to 7 (strongly agree). Then, collect the average of all scores to see what the overall effort is.
The lower the effort required to use your product, the more customers you are likely to retain in the long run. In fact, a study finds that 96% of customers with high-effort experiences become more disloyal compared to only 9% with low-effort experiences.
To create low-effort customer journeys, start by identifying major points of friction (complex onboarding, confusing navigation, inaccessible support) and simplify them. You can also offer customer resources such as knowledge bases, FAQ pages and community forums to help them find the information they need to use your product.
8. Average time on platform
As a SaaS brand, you might want to know how much time customers spend using your product, as it shows engagement and interest. Average Time on Platform tracks how long users spend on your product or service. It’s a direct indicator of engagement and tells you which features are most captivating.
How to measure average time on platform?
You can use this simple formula:
Average Time on Platform = Number of Users/ Total Time Spent by All Users
If users aren’t spending enough time on your platform, this usually means that they are not engaged or the platform isn’t providing them with the value they expect. You can change this by improving your product’s user experience, highlighting key features, and personalizing the user journey to ensure they’re getting the most out of their time on your platform.
9. Product stickiness
For SaaS products, customers returning to your product, renewing their subscriptions, and engaging deeply is invaluable. Product stickiness is a metric that tells you how frequently your users return to your product and how engaged they are.
Product stickiness is a great indicator of user satisfaction, product-market fit, and long-term success. Sticky products tend to have higher retention rates and a greater potential for growth.
How to measure product stickiness?
Use this formula:
Product Stickiness = ( Daily Active Users (DAU)/Monthly Active Users (MAU)) × 100
A higher percentage indicates a more “sticky” product, which means the customer is more likely to return to it and build a long-term association with your brand. You can increase product stickiness by designing your product to encourage regular use and habit formation. Apart from this, encourage the adoption of key features through in-app tutorials, tooltips, and personalized onboarding flows.
10. Free trial conversion rate
As a SaaS brand, you may offer free trials of your premium features. Free trials can be an effective way to attract new customers, showcase your product’s value, and reduce the barrier to entry. However, for a free trial to be worth your investment, it should lead to a conversion into a paid subscription. The free trial conversion rate metric helps you understand the effectiveness of your trial in showcasing the value of your product.
How to measure free trial conversion rate?
You can measure free trial conversion rate using the following formula:
Conversion Rate (%)= (Number of Trial Users Who Convert/Total Number of Trial Users) × 100
If your conversion rate is low, you can optimize the trial experience to better highlight your product’s value and provide more support during the trial period to assist users in understanding your product.
Common tips to improve customer success metrics
While tracking and analyzing individual metrics is important, remember that true customer success comes from fostering strong relationships. When you prioritize the customer experience and focus on building genuine connections, your metrics will naturally reflect that success.
Here’s the good news: a few broadly applied strategies can have a ripple effect, positively impacting all your customer success metrics. These best practices will help you cultivate long-term, mutually beneficial relationships with your customers:
Effective customer onboarding
In SaaS, where subscriptions reign supreme, onboarding is not just the first impression but the foundation for the entire customer relationship. Onboarding is your chance to wow customers and show them exactly how your product solves their unique problems and fits their workflows.
For a better onboarding experience, you can create interactive walkthroughs to guide users through your interface and functionalities and offer them clear steps, goals, and milestones to accomplish during the onboarding process to curate their journey. You can also offer personalized support using AI chatbot that can swoop in with solutions when users seem stuck to ensure their interaction with your product results in success.
Facilitate customer education
The more customers know about your product, the more they can achieve with it, and the better your customer success metrics will look. Customer education goes beyond the basic onboarding process. It’s an ongoing process that evolves with your customers through follow-on experiences, advanced guides, and regular check-ins that help them achieve new levels of success with your product.
Knowledge bases are a great way to ensure customers have the resources they need to achieve success with your product. Knowledge bases are comprehensive libraries that offer on-demand access to articles, tutorials and documentation.
With tools like DevRev, making knowledge bases is quick and easy, as you can use advanced generative AI tools to create accurate knowledge base articles based on your product documentation, developer inputs, support tickets and more.
Proactive and personalized customer engagement
When your customer contacts you with a problem, it’s already a bit of a scramble. You’re reacting to an issue, trying to put out a fire. With proactive customer engagement, you anticipate their needs and offer support before things go wrong. This prevents frustration and builds trust and loyalty, as customers feel that you understand their needs and challenges.
Proactive engagement can be made even more effective if this engagement is personalized. According to a McKinsey report, by focusing on personalization you can boost your revenue by up to 40%. You can achieve personalization by detailed segmentation of your audience, creating comprehensive customer personas, and tracking how customers use your products.
Implement customer success teams
A customer success team is a group of advisors who guide customers toward their desired outcomes and ensure that they get the most value out of your product. They ensure that your customers have a smooth, frictionless experience, champion your product, build strong relationships and identity, and proactively address factors concerning at-risk customers to reduce churn rates and increase customer lifetime value. They also track key customer success metrics and actively help you improve these numbers.
Actively seek customer feedback
Customer feedback is a goldmine. It tells you exactly what your customers like and the areas that need improvement. It helps you understand customer sentiment, build better products that make your customers feel valued and heard, and contribute to improving customer success. Encourage customers to share their thoughts through surveys, in-app feedback forms, and online reviews.
Ace your customer success metrics with DevRev
Without the right tools, keeping tabs on these metrics can be challenging. That’s where DevRev comes to your aid.
DevRev is an AI-native platform built from the ground up using artificial intelligence. It brings customer support and developer teams together onto a single platform, effectively breaking down data silos. This unification provides you with comprehensive data to accurately track your customer success metrics in real time. With Turing AI-powered interpretations and insightful suggestions, DevRev enables teams to collaborate seamlessly, share findings, and implement actions swiftly.
But DevRev doesn’t just help you track customer success—it helps you improve it. By increasing customer satisfaction through ongoing support with knowledge bases and AI-powered chatbots, you can provide immediate assistance and personalized experiences. DevRev’s PluG chatbot is intuitive and analyzes user sentiment to tailor responses and offer valuable insights into what your customers think. It facilitates quicker issue resolutions through automation, increases ticket deflection, and makes your customers feel truly valued and heard.
Ready to take your customer success to the next level? Schedule a demo with DevRev today!
