The following is adapted from The Seven Pillars of Customer Success.
Imagine for a second a pretend company offering a social media management system that helps customers manage their organization’s social media platforms. Let’s say you’re a long-time customer of this company. Think about what factors make you keep paying for that subscription. Does the software help make your job easier? Does it do what it promised it would do? If you have a problem, does the company move quickly to address it?
My guess is that if your answer to these types of questions is yes, you’re likely to remain a customer, right? If the answer is no, then you start looking for a different solution. And you aren’t alone in that. Everyone stays with a company when it fulfills their needs, and leaves when it doesn’t.
In customer success, the key KPIs that will predict how likely a customer will renew or cancel is known as a customer health score. And as you saw from our example, being able to measure and maintain customer health is a key component of an effective SaaS (software-as-a-service) customer success program. Bottom line, measuring customer health is vital if you want to increase customer retention and reduce the risk of customers leaving.
The good news is you don’t need to spend tons of money developing complicated customer health tracking systems. In fact, looking at just six key metrics will get the job done, especially if you keep each customer’s unique goals and objectives in mind.
#1: Product Usage
The first metric you need to look at is product usage. For this metric, there are a few key things to track. How often is your customer using your product? What is their license utilization? Is their usage increasing or decreasing?
You can dig a little deeper: Are there fewer daily active users or more? Are they utilizing the key features of the product that make it sticky? In fact, feature adoption is a much stronger adoption metric than usage metrics.
Review what’s important to the customer and create metrics for the product. If you notice a downward trend in product usage, it’s an indicator that customer health is suffering and needs to be addressed.
#2: Business Outcomes
Another key metric to review is business outcomes. Customers buy your software because they believe it will deliver their desired outcome. Based on in-depth conversations you’ve had with the customer, you should know what this outcome is.
To create a metric for measuring business outcomes, you need to ask yourself a couple of questions: Are we doing that? Are we making our way down that path? Are we showing evidence? Record these in your Customer Success Plan for transparency.
If your customers aren’t hitting their goals, or if you don’t have a solid plan for how to demonstrate value to them, customer health will suffer. Have a plan in place to take action if this you notice this metric is dipping.
#3: Customer Sentiment
Customer feedback is a vital indicator of customer health. There are many different ways to measure customer feedback. There are NPS (Net Promoter Score) surveys and CSAT (Customer Satisfaction) scores. There is also the customer effort score (CES).
Different teams throughout your organization get feedback from the customer daily. Your job as a customer success professional is to figure out how to funnel all that input in so you can track sentiment and feedback based on all the touch points between your company and the customer. Ideally, you are helping to coordinate all the various teams sending out these surveys.
#4: Relationship Strength
When customer health is strong, chances are much higher that your customer will actively engage in a relationship with you. When they don’t, it might be an indicator that customer health isn’t where it should be.
There are several key questions to ask when analyzing this metric. Have we identified an executive sponsor? Do we have ambassadors/champions/power users identified? How many references have they provided? What rate of surveys are completed?
Again, you can go a little further: Has the customer contributed to online blogs or spoken about their awesome experience working with us? Knowing the answers to all of these questions allows you to gauge account relationship strength.
#5: Services Optimization
The fifth metric looks at whether the customer is utilizing all the service offerings you have that can help them be successful. You may have tailored professional or partner services, training, or success offerings that will elevate the impact of your software. Is your customer subscribed to these services? And if they are, are they leveraging all the features?
If they are, chances are they’re getting the best of the best you have to offer. They’re getting more value because they’re investing in a new service rather than missing out on an opportunity. Review this metric, because when customers utilize those services and features, it has a positive impact on customer health.
#6: Support and Operations
The last key metric to consider relates to some of the key teams within your organization. Are your customers using support? If so, what was their experience? How quickly were their calls or chats answered? How fast were their problems resolved? What percentage of interactions were resolved on the first call? How many unresolved tickets are outstanding?
What about product quality? Are there bugs and/or feature requests? How good is your documentation? Is your invoicing accurate?
Answering these questions is vital to understanding if their overall experience is a positive one. Again, if it isn’t, customer health will suffer. It’s up to you to take steps to address that.
Become More Proactive
Measuring customer health doesn’t guarantee you success, but it does help you become more proactive. Traditionally, customer success professionals were trained to be reactive. When there was an issue, they responded like firefighters—as soon as the alarm was raised, they were there in minutes to solve the problem.
But to achieve true success, you need to rise above these incidents, events, and transactions and look at the whole customer journey. Measuring customer health is key to doing this, because it allows you to plan ahead and look at how to remove obstacles in advance—in other words, be proactive in the relationship rather than reactive.
For more advice on how to measure and improve customer health, you can find The Seven Pillars of Customer Success on Amazon.
One of the world’s leading customer success experts and a Top 100 Customer Success Strategist, Wayne McCulloch works with Google Cloud’s entire SaaS portfolio as the Customer Success Leader. He’s a keynote speaker and the recipient of multiple industry awards with more than twenty-five years of experience in customer-focused roles. Wayne began his software career at PeopleSoft and Vignette before becoming an SVP at Salesforce, the Chief Customer Officer at Kony, Inc., and the VP of the Customer Success Group at Looker. For more information about The Seven Pillars, including downloadable templates and training and certification materials, visit www.cspillars.com.