How do you know if a new business strategy is working when you first implement it? The best way to determine its success is to identify the relevant metrics before moving forward. With the right customer success strategy, key metrics can be used as a benchmark to see how your business is performing.
In this guide to success metrics, you’ll learn about product and customer success, the benefits of measuring success, and some useful metrics every organisation should measure.
What are success metrics?
Success metrics give your organisation a way to measure the progress of certain business goals and strategies. A business success metric is a quantifiable measurement that many leaders use to view how effectively their strategies are working. Success metrics are also sometimes known as KPIs (key performance indicators).
Using only one metric does not determine success, so many organisations use various KPIs to gauge outcomes across different departments. In general, companies often use two types of success metrics: product success metrics and customer success metrics.
Product success is the overall effectiveness of a product or service in the market. In other words, it’s how good the product is at solving a customer’s problem.
Customer success metrics track and assess two things — how successful the customer service team is, and how successful the customer is at adopting and using the product. Successful teams proactively anticipate customer queries or challenges to provide answers and solutions.
Benefits of measuring success
It’s important to quantify customer and product success metrics for many reasons. Any business that doesn’t measure success metrics will have a harder time knowing where to focus – here’s why.
Customer success helps boost customer satisfaction and retention, which increases customer loyalty, churn rates and revenue. Monitoring the right metrics will help you keep your business on track, and a goal-setting framework like OKRs will only be effective if you have measurable KPIs that you can use in your Key Results.
Fundamental customer success metrics help improve your product or service, as you can get an idea of the areas you should be improving based on what the customer likes, doesn’t like and has a hard time with. Knowing what your customers think about your product is an important aspect of making future adjustments to the product or experience.
You can forecast your revenue, as you’ll have an idea of whether your product is generating enough gain to make a fair profit.
Lastly, tracking all metrics can help you identify gaps in your existing features, and generate the right conversations to fix things before it’s too late. Customers will continue to be satisfied, loyal, and happy with your brand as a result..
How do you measure success metrics?
When calculating product success, your main goal should be to increase the product’s effectiveness. Different teams define a successful product by different factors. In general, the product should:
- Be a good fit in the market, meaning it helps solve a problem and is needed by customers
- Engage the customers, who should find value and usefulness in the product
- Have new customers come back to purchase again
- Be regularly used by customers
- Have a relatively low churn rate
You can measure customer success metrics in a few different ways:
- In-app behaviour tracking – your teams can see what users do when using your product or service and collect live statistics
- Net Promoter Score surveys – a quick way of telling you how your product, service or company is performing
- Feedback forms – can collect in-depth measurements of how engaged your customers are and how they’re feeling
Ways to measure success in business
Below are a few key product and customer success metrics every company should measure.
Net Promoter Score (NPS)
This metric measures the percentage of satisfied customers who recommend your product or service to others, as well as those who detract it. To track NPS, give your customers a survey asking their likelihood of recommending your product or service to others on a scale of 1-10, 1 being “not likely” and 10 being “extremely likely.” Customers who rate you 9 or 10 are called promoters, and those who rate you 6 or less are called detractors.
To calculate an NPS, subtract the percentage of detractors from promoters.
Customer Retention Rate (CRR)
This metric measures the percentage of loyal customers who are longtime users or subscribers of your product or service.
To calculate a CRR, subtract the number of customers at the end of a given period from the number of customers acquired during that period. Divide that by the number of customers at the start of the period, then multiply it by 100.
Monthly Recurring Revenue (MRR)
Critical to estimating the future profitability of your entire business, this metric is the expected revenue your company will earn from active subscriptions in a given month.
You can calculate your Monthly Recurring Revenue by multiplying the average revenue per account by the number of accounts in a month.
Customer Churn Rate (CCR)
This metric measures the percentage of customers who leave your company, product or service within a certain period. Tracking it is essential to help structure your retention strategies.
To calculate your Customer Churn Rate, take the number of churned customers during a specific period and divide it by the number of customers at the beginning of that period. Multiply the result by 100.
Average Customer Lifespan
Also called the Customer Lifetime Value, this metric is the expected revenue you’ll earn from one customer during the entire time they pay for your product or service.
To calculate customer lifetime, simply divide the average revenue per account by the Customer Churn Rate.
More examples of metrics:
There are many more metrics you can implement, including Customer Effort Score, Active User Percentage, Customer Acquisition Cost and Customer Satisfaction Score. If you try to track all of the above, you’ll be flooded with numbers and statistics, and you won’t be able to take relevant action. So it’s your job to determine which metrics will be the most useful to track for your business’s success.
Ready to put all this into action? With Tability, you can track the metrics that align with your business goals while checking in with your team and sharing progress updates. Get started for free today.