The Math of Customer Success - Part 2

By Jeremy Gillespie

This is Part 2 of my series on The Math of Customer Success. If you missed Part 1 you can view it here.

Last time I discussed top-line Customer Success metrics - the metrics that should be reported to your company leadership and board. Today, I'm going to dive deeper into metrics you can use to run your team and ensure that customers are healthy and engaged. 

Customer Success Team Performance

Team performance is a reflection of leadership. To make sure leadership is steering the ship in the right direction you must know your metrics.

UPSELL RATE = [# of customers upgraded in a given period/ Total # of customers in a given period]

Is your team identifying accounts that have outgrown their existing plan? Make sure to you're moving them to a plan that will make them more successful.

EXPANSION REVENUE RATE = [Expansion revenue in a given period/ total revenue in a given period]

This formula will tell you if your team is successfully uncovering and closing opportunities for customers to expand their use of your offering.  This also indicates the percentage of your company's revenue that depends on existing customers.  

SAVE RATE = [# of cancellation requests turned around / Total # of cancellations]

It’s never fun getting a call from a customer who wants to cancel.  Use the time on the phone to figure out why they weren’t successful with the product. From there you can develop a plan to work with them and help them get value from the tool. You can also test if they’re open to a discount or negotiating contract terms.  Measure the success of these tactics with this metric.

SUPPORT INCIDENT RATE = [# of support tickets in a given cohort / # of customers in that cohort.]

Watch this metric closely as your company grows. This will give you a read on how much time is spent on support issues and whether you need to expand either your engineering or support teams. You should also segment and categorize cases to align teams around customer problems.

CUSTOMER BASE COVERAGE = [# of customers contacted in a given period / # of customers] 

Engaging with your customers one-to-one on a regular basis is important. This is a great leading indicator of harder to move metrics like churn and retention rates.

Product Adoption & Customer Value

Product adoption is different with each product, but typically it’s based on things like feature usage and active users. Adoption metrics also vary depending on where your customer is in their lifecycle. For example, a new customer who is on-boarding will have different adoption metrics than a customer who has been on your product for years. I'm not going to discuss how to build an adoption model, but instead will focus on adoption metrics that are relevant to most organizations.

ACTIVE USER RATE (Daily, Weekly, Monthly) = [# of unique logins or activities within given time period / # of total customers or users]

Active user rate can give you an idea of how many customers are adopting your product. As you watch this metric over time you'll be able to see whether the tactics you employ to improve adoption and engagement are working.

FEATURE ADOPTION RATE = [# of unique feature activities / # of total customers]    

For your core features, you should track the rate of usage across your customers. This will identify holes in adoption, feature issues, and training opportunities. 

TIME TO FIRST VALUE (TTV) = Average [Time it takes for customers to reach key value actions or see ROI from your product]

Referred to as the ‘aha moment,’ your goal is to make sure your customers reach this as soon as possible.  This one can be tough to measure, but it is worth taking the time to define key value actions and put measurement tools in place, even if they are somewhat manual. 

In my next post I'll be covering techniques you can use to review these metrics over time in order to make the best decisions about customer success.  Stay tuned for Part 3 in this series.

Need to know how to improve your metrics?  The Success League is a consulting firm that works with executives who want to unlock the retention and revenue a top performing customer success team will bring to their business.  We transform support into success by building metrics, goals and processes that enable customer success teams to perform at their peak.

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.