# The Math of Customer Success – Part 3

By Jeremy Gillespie

If you haven’t been following along, this is the third post in a 3-part series on the math of customer success. You can catch up by reading:

Part 1 - Covers basic metrics and gives you a solid foundation of the state of customer success in your company.

Part 2 - Dives deeper and discusses metrics to understand how your team is performing.

After discussing all of these metrics, it’s only right to give you a way to measure them. Don't worry, this isn’t a pitch for some shiny new software, although there are a ton of solutions out there. Instead, we’re going to stay traditional. By far, my favorite way to measure the metrics described in parts 1 & 2 is through cohort analysis.

### Measuring Success

Cohorts allow you to analyze the change in metrics for particular group of customers. Christoph Janz wrote the book on using cohort analysis for SaaS companies. The best part about that book is that you can you can download an amazing cohort analysis template here. The idea behind this template is to limit the amount of data you need to input, but to still get detailed insights on your customer base.

In addition, virtually all of the metrics I've outlined can and should be tracked over time. By splitting these metrics into cohorts you’re able to detect positive or negative trends in your Customer Success metrics.

Here is an example of what a cohort spreadsheet looks like and how to read the results.

### An Example

To be more specific about the topic at hand, take a look at the example below which highlights churned customers in a lifetime month.

Question: What trend do you notice in this example? Across the top is the customers’ age in months and on the left is the month they signed up. This example makes it easy to see how retention changes over time, and gives you the ability to compare different cohorts with one another.

Answer: You should see high churn in month 2-3. A common trend is that after a relatively high churn rate in the first few months churn stabilizes. This is important to note when building your lifetime estimates, and difficult to see if you’re not looking at data across multiple cohorts.

Cohorts can be used to track any of the metrics mentioned. Some of the most important are:

• Churn Rate
• Renewal Rate
• Upsell & Expansion Rate
• Activation metrics

These charts are powerful tool for monitoring the movements of key customer metrics over time and ensuring they move in the right direction. Combine all the metrics outlined and build out your customer success dashboard. All metrics should be pulled on at least a monthly basis. This will provide you with a solid pulse on your business, and uncover a world of insights on how you can improve.

P.S. If spreadsheets scare you, software like MRR.io can do this for you. They have a free version if you want to give it a spin.

Need help figuring out which metrics you should be measuring? The Success League is a customer success consulting firm focused on helping leaders and teams perform at their peak. To learn how other companies have worked with us to develop their customer success goals and metrics, visit TheSuccessLeague.io.

Jeremy Gillespie - Jeremy is a growth-oriented marketing geek, technology enthusiast and customer evangelist. He loves using complex data to build creative retention solutions. By leveraging technology, Jeremy excels at creating scalable retention marketing programs.  He works for LinkedIn, holds a BA in Communication from the University of Pittsburgh and MBA from Point Park University.  He is a proud former Pittsburgher, but currently lives in San Francisco, CA.