Most B2B SaaS companies follow a subscription-based model that depends on recurring revenue. To maximize profit in a recurring revenue scenario, a SaaS company must do what it can to increase customer retention and control churn. Customer Success Operations are critical to building deeper relationships with your customers, increasing how much they're willing to spend, and extending the time they stay with your company.
Because Customer Success requires cooperation from multiple departments, managing this operation is a complex undertaking that requires the skills of a competent manager. So with numerous moving parts, what's the best way to track and measure a Customer Success Manager's (CSM) effectiveness? This article covers several Customer Performance Indicators (CPI) that link to Customer Success Manager's productivity and why you should distinguish CPIs from Key Performance Indicators (KPIs).
The Importance of a Customer Success Manager
Optimizing the customer experience has taken a front-and-center seat on most B2B SaaS companies' priority lists. This emphasis on the customer experience has given rise to Customer Success as a critical business operation, and, ultimately, how important the Customer Success Manager role is to achieving a positive customer experience.
The Customer Success Manager's role involves building customer loyalty and extending customer lifetime value. Accomplishing this requires a CSM to collect, track and analyze data that provides insights into product usage behavior. Knowing their usage behavior allows CSMs to serve their customers better, helping them use the product(s) or platform more effectively and exceed goals and expectations.
Another essential responsibility of Customer Success Managers is selecting tools and technology that allow the Customer Success team to conduct their work most effectively and efficiently as possible. To achieve the Customer Success organization goals, the CMS are also cross-collaborating with multiple departments within the business, including Marketing, Sales, and Engineering.
What Are Customer Performance Indicators?
If a SaaS company wants to be truly customer-focused, it must track Customer Performance Indicators (CPIs). CPIs are buyer-based metrics that measure the amount of success a customer is having with your company. Often, companies make the mistake of focusing on KPIs with corresponding CPIs in hopes of gaining more insight into the customer journey. The problem with this is the different types of data these two indicators show. KPIs typically involve metrics showing how customers perform for the company. CPIs, on the other hand, track how a company performs for the customer.
Customers are the life's blood of a B2B SaaS company. While tracking KPIs like Annual Growth Rate, Monthly Recurring Revenue, and Cost of Acquisition are important, a positive outcome for these metrics depends on how good of a job you're doing supporting customer satisfaction. Customer Success needs to focus on tracking metrics that prove CS strategies are working well to keep customers loyal and target customer journey problems early.
Examples of Common CPIs Tracked by B2B SaaS companies
The following CPIs can be used to track Customer Success outcomes, but they can also reflect your CS team's productivity. Therefore, use the list below as starting point to help determine which Customer Performance Indicators are most valuable to your Customer Success organization.
- Customer Satisfaction Score (CSAT) – Gathering direct customer feedback is essential to gaining real insight into what buyers are experiencing as they engage with your product or services. CSAT scores effectively show whether a Customer Success Manager meets or exceeds customer expectations. CSAT is also helpful for highlighting customer pain points and presenting opportunities for improving the customer journey.
- Customer Value (CV) – Customer Value is a metric that measures the perceived and actual value your company delivers to your buyers. Customer Value is calculated by identifying the benefits provided by your company, determining the cost to customers, and measuring the impact your product or service produces for buyers. This CPI is important not just for proving how well your company delivers but also for demonstrating how closely your solution aligns with your Ideal Customer Profile (ICP).
- Customer Loyalty – Customer Loyalty tracks the "stickiness" of your products and services. It also measures how likely a current customer would recommend your product or service to friends, family, and acquaintances. There are various ways a business can approach calculating this metric. One method is to use the Net Promoter Score Survey (NPS). Another method is to use the simplicity of NPS as a model and formulate a survey that best fits your customers and products.
- Customer Health – Customer Health is tracked using a Customer Health score. A Customer Health score provides an overall view of the health of a customer's relationship with a SaaS company's brand, products, and services. It's a comprehensive metric formed from a combination of several CPIs, and it can be as simple or comprehensive as a company requires.
Customer Success operations are vital to establishing and maintaining meaningful customer relationships. But due to its multifaceted nature, measuring your Customer Success Manager's effectiveness can be difficult. Knowing the right CPIs for your business will ensure that you have a successful CS team leading the effort. While KPIs focus on goals, CPIs evaluate value from the buyer's perspective and help teams understand how productive their Customer Success Managers are in delivering value to the customer and their goals.
Ultimately, creating a customer-centric culture for your Customer Success organization and developing customer-centric goals is critical. And one way to reach customer-centricity is by taking advantage of Customer Performance Indicators to help your Customer Success Managers be their most productive selves. Improving the productivity of Customer Success teams is our mission at Vitally, providing an all-in-one workspace with powerful automation that takes care of everyday tasks and puts back time in the hands of the CSM. If you want to know more, schedule a demo with our team and see how productive your Customer Success team can be.