UK Office Hours: Customer Success Metrics to Track in 2022

In this session of UK Office Hours, cohort host James Stuart (from hackajob) was joined by Alex Farmer of Cognite and Tom Purcell of Kluster to discuss top CS metrics and how to track them.

The session revolved around the topics:

1. Overview of CS Metrics
2. Importance of CS Metrics
3. How you can use CS Metrics to promote your team

Overview of CS Metrics

Alex Farmer

Initially, Cognate started tracking the Holy Trinity of CS metrics. These metrics are not usually tracked for more mature CS organizations:

• Retention - Retention is vital. It is one of the lagging indicators to track because you get to measure it only after the customer has decided not to stay. But, tracking retention helps you to stay accountable as a team.
• Customer success and qualified leads - CS is about finding the right opportunities for upselling. MQLs (Marketing Qualified Leads) and community qualified leads are some other metrics to track. At Cognate, a new customer community team has been started within CS, and leads that come inbound from community engagement are treated as a separate category. However, this is not purely in the pure CSM lane. And if aiming for expansion, it doesn't matter if the lead is closed or not. Creating the lead is what matters.
• Advocacy - NPS at Cognate is done more like an early warning system. Detractors were identified even before they were pointed out. Advocacy was more of a proxy for CSAT. So, instead of surveying the world and asking them to be your customer advocate, this shows that the customer is satisfied and whether they are getting value. It's an excellent little metric combination to use for the quantitative and qualitative side of long-term success and value realization. 

Cognate is now pivoting more towards churn prevention and revenue generation. So, along with revenue retention, the NRR of accounts is also being tracked. More shared metrics are tracked and incentivized to drive connectivity and collaboration for better outcomes.

Tom Purcell

1. NRR - Despite being a lagging indicator, NRR is what was reported to the board. The expansion pipeline was added to provide a key view of the renewal pipeline. You can do that through your CRM or use your revenue analytics platforms. Treat that expansion pipeline as a new business forecast and run through key health indicators of the opportunity, having as many data points around those operations as possible to track.
2. Time to Launch - This metric is how you compare yourself against your competitors. It's critical to try and bring that launch time down to get them hot and firing as soon as possible.
3. NPS - At Kluster, most end users go from CRO to sales management to individual contributors at the account executive level. And there is a need to ensure that each strand of the business is well looked after and they're happy. So NPS is something that should be tracked. Additionally, we measure response time. 
4. Usage - This is a bit more complicated to track. However, usage is a crucial metric to tell everyone what you're doing is worthwhile. Other metrics include the CS influence pipeline, how many returning customers you have, etc.

Bonus tips

For customer onboarding, time-to-value, onboarding satisfaction, and smooth handoffs/internal metrics (whether we are sticking to our internal processes or not) are three metrics that Alex vouches for. The customer's maturity and health (sticking to time and getting things done as vouched for) are also something to look out for. 

Importance of CS Metrics

Tom Purcell

Going back to that master metric, NRR, if you look at every single one of the most successful multiples that have come over the last ten years, they all come from those companies that have gone north of 130% or at least north of 120%. So if you're tracking NRR from that point of view, when you're going to the board, that's the metric used for how much money we take on for the subsequent funding round. It's what we can eventually sell up for. It's the most important metric within a SaaS organization. And as long as you're tracking that, and you can find some really neat ways to track it, you will do great. Remember to check if NRR is trending in the right direction, and if not, it's time to change it.

Also, when in CS, you are the frontline, and you are the voice of the customer. This cannot always be quantified. Sometimes, even qualitative feedback works. Even if it's something simple, like in a spreadsheet, you can get feedback on each key item within the platform if you're a SaaS business. And that allows you to understand which parts of the platform you use the most and which ones are being used effectively. It allows you to tailor the platform with the product team to be as customer-centric as possible. Continuous tracking will make the overall business more effective, thereby allowing your sales team to sell quicker with a high value. Ultimately, your customers are happy, your CSMs are happy, and you are happy. 

Alex Farmer

The importance of metrics is indisputable and obvious. However, for CS, it becomes imperative to track because many organizations make an investment and still see it as a cost. You can advertise your success as an organization through the metrics that you track as a post-sales function. 

The structure behind CS is that you take 20% of the most customer-centric things from every other function post-sale and combine them into one role. For instance, before CS, maybe support would go above and beyond for being reactive and more proactive with the customer. But they would do it on their own time. So, in some ways, the function is to help customers navigate their engagement with every team. And that's an investment. Of course, everybody in the company is part of customer success. But the CS team is specifically designed to wave the flag for customers when we are being customer-centric.

Another thing to remember about the importance of CS metrics is that it's the job of the CS to keep everyone's focus on their workloads and on the customers, where the company is going to serve their customers better, and remove friction. Tracking helps with CS investment and helps businesses understand where friction exists, how their function performances can be tailored to become more customer-centric, and drive key company-wide metrics.

How can you use CS Metrics to promote your team?

It's pretty easy to demonstrate how well your sales team has done because there's a sales number against it. But one of the challenges with CS is that a lot of work has gone in, but they might not necessarily be able to see it. So how would you show they are doing a good job?

Alex Farmer

22%-30% is usually a good number for closing a new business. But when one customer churns, you have to explain yourself in some organizations. You will have to justify your existence to save that account. But CS is not a team. It's a company-wide responsibility, and CS is there to try and help the customer navigate through your organization. Still, it also helps your organization become more easily navigable for the customer. The expectation can be quite alarming at times. 

And yes, closing a new business is more challenging than keeping customers. But CS is not solely responsible for keeping customers. There's a real job to be done to position quality customer success performance, not as a CSM team role, but as a company-wide role. The macro-level point here is positioning customer success as the voice of the customer and sharing information where there's friction, regardless of where it sits. Use your metrics not just to point fingers but also to identify where the company is more challenging for the customer to navigate. So, while tracking customer health, look at the reason for the change.

If there's a lack of ROI, quantify value in the pre-sales, post-sales, and product lead phases. So, you are not promoting your team, but you are promoting your customer's needs through your team and this makes your company's job easier. One underrated role of a CS team is to use data. And Alex uses the phrase customer data service to explain how this can help CSs focus on improving and injecting that data into the forums for decisions to be made. 

Some metrics that Cognate uses are quantitative feedback from NPS surveys and qualitative summary feedback from the actual EBR. Injecting customer feedback directly into decision-makers' inboxes and slack messages help influence the decisions to be more customer-centric. This helped position customer success and used both quantitative and qualitative data to drive smarter decisions as an organization.

Tom Purcell

At Kluster, it comes down to two key areas: user experience and how CS can enhance that. G2 reviews are trending to indicate how well the company is doing and what the CS teams are doing. And every time a customer makes a request, it is noted down by the CSM, who then brings it to the attention of the product team if the request is made often by customers, etc. Naturally, this will improve user experience, which will influence how much the organization is winning over new business.

Secondly, regarding how you are influencing the go-to-market, it's the idea of how much you are influencing the overall growth in terms of revenue and not just what you're selling in the world. This kind of thing lets you know if the relationships you are building with your clients are long-lasting and if they will keep coming back to you because of their experience. 

Concluding thoughts

Normalizing the definition of regretted and non regretted customer churn when moving up the market is ideal. And, if you have a less-than-desirable grasp on the ideal customer profile, track ICP fit. Try and refine your ideal customer profiles, and then track and fit customers and prospects into your ideal profile. Even a simple good fit- -stretch fit-bad fit system will work. This will help you show churn, forecast churn, and customer health by ICP fit. This data speaks for itself and shows the sales team the value of targeting the right fit customer. Different teams are also connected around finding the right customers who are predisposed to success instead of being on the back foot.

Aim for using CS concepts and data to drive the right organizational influence to make your job easier and make company-wide metrics like NRR more achievable. Equality of measurement is essential, and driving the right organizational mindset around making customers successful is a happy path.

Bonus metrics

Time spent in that relationship between CS and a company - time spent with the client (or on calls) is a celebration metric. But the more you bring it down, the more time you have left to spend elsewhere. And if you were to renew your biggest client for three years in a row, you would be able to know the CSM that had spent over 50 hours with them over the past year. And that is one of the key reasons that allow you to continue that relationship.

Recap

1. CS values across the business are integral.
2. Although CS is a team, the really good organizations have CS as a part of everybody. It's not just the one team; it's the entire organization.
3. CS can play an important role in deciding ICPs. And the more customers that fit your ideal customer profile, the better it will be because these are the customers you will be able to grow and spend resources on to avoid churn.

More resources from industry leaders and experts

1. Propel22 recordings
2. Implementation Stories
3. Preflight Conversations
4. The Launch Station - a podcast for all things customer onboarding
5. Customer onboarding resources from Rocketlane