Customer Success 101.

Defining and measuring the growing trend.

“Customer Success (CS)” is the new cool phrase in the Customer Service sphere. Everyone is looking to start a Customer Success Team, train their current service team to handle CS or bring in outside help to establish a CS culture. This is especially so in the SaaS space. What exactly is Customer Success and how do we measure it?

Customer Success is a proactive approach to the interaction between yourself and a customer, to ensure the customer achieves the maximum possible value they can derive from using your product or service. It’s an ongoing relationship, managing the customer’s behaviour at every touch point. Some of the functions of the Customer Success Team are:

• Customer On-boarding: Getting the customer set up and ensuring there are no issues with the product or service.
• Knowledge Growing: Ensuring the customer has continuous learning of the ins and outs of the product or service, eventually making them proficient.
• Account Management: Growing the customer relationship through constant feedback, contract management, up-sells, cross sells and implementation of any customer expansion requests.
• Customer Retention: Finding ways to keep the customer from changing providers, should that ever occur.

The end result? A satisfied customer, so versed in your product that s/he:

• Consistently buys more products from you (Customer Lifetime Value)
• Reduces the need to seek another provider (Customer Retention)
• Becomes an Advocate for your company. (Net Promoter Score)
• Increase overall Revenue (Revenue Growth)

A great example of Customer Success Management (CSM) is from Trello. Once you sign onto the service you get an email training course from their CS Mascot, Taco. Taco also provides daily tips and webinars to ensure you get the best out of their app.

How does Customer Success differ from Customer Service/Support?

How do you measure Customer Success?

There are still metrics that are being changed and added to Customer Success but are some of the main metrics used:

Customer Churn:

The number of customers who quit or cancel your product in a given time period, usually measured monthly.

CHURN = TOTAL Customers LOST this month/TOTAL Customers end of previous month. 5% and less is a great metric for Churn.

Net Monthly Recurring Revenue (MRR) Churn:

What if you earned revenue in a given month from upgrades, cross-sells etc? You can get your Net MRR churn from subtracting this figure from what you lost.

NET MRR CHURN % = (Revenue Lost by Customers Downgrading/Leaving-Increased Revenue Earned that month)/Revenue from Previous Month

Customer Satisfaction: Net Promoter Score (NPS), Customer Effort Score (CES) and CSAT.

Net Promoter Score (NPS): The Net Promoter Score Determines the likelihood a customer will recommend you to someone else. Customers are broken into three segments:

• Detractors, 0–6 Rating (You Suck!)
• Passives, 7–8 Rating (Meh)
• Promoters 9–10 Rating (You Rock!)

NPS is calculated by: % Promoters — % Detractors and usually shown as a whole number. Some NPS examples recently are Microsoft at 45 andWalmart at -4.

Customer Effort Score (CES): The Customer Effort Score is relatively new to the Customer Service space. It argues that the easier a customer can use your product or service, the more loyal a customer will be. It is aided by:

• The Number of Interactions required to handle an issue.
• The Number of Channels a customer needs to use to resolve ONE issue (Website, Live Chat, Phone Call, etc.).
• The Clarity of information from each Channel. (Accuracy of Information, Clarity of Information, Competency of Reps, Ease of Use.)

This is measured by asking customer to rate how difficult it was to complete their last transaction. A rating of 1 is ideal for this question.

Customer Satisfaction (CSAT): The CSAT Survey Indicates how satisfied a customer is with your product. This can also be used to determine the performance of individual Sales/Customer Service Reps. A 1–5 Rating is used for CSAT Surveys. The desired benchmark for CSAT is 80% (4–5 Rating)

Customer Success is here to stay.

As companies look to become more profitable, using customer success tactics to grow the value of their current base seems more effective than constantly acquiring new customers. The Customer Service/Support role in companies are also evolving to hybrid roles, where they can execute customer success strategies. This is due to the fact that support tasks continue to be automated so Customer Support staff will look for ways to maximize their value to their companies.

Measure your Own Success.

I’ve made a Google Form and Sheet to help you survey your customers and record your churn monthly. You can download here. Happy Success!