Setting and Measuring Customer Success Outcomes—OKRs v KPIs v Metrics

The ultimate goal of any CS organization is to retain and grow revenues that come from existing clients, but in order to reach this ultimate goal, there are many objectives the CSM needs to achieve.

About the Author: Enrique is a passionate advocate of the Customer Success practice. He has more than 7 years of experience in the SaaS industry and has been part of leading companies such as AppsFlyer, Appsee (acquired by ServiceNow), and Yotpo. He has worked with all types of clients, ranging from SMBs all the way to Fortune 500. Enrique's expertise in CS has helped him lead customer retention and growth by focusing on one thing—constantly delivering value to the customer. He enjoys traveling, scuba diving, skiing, playing/watching sports, reading books, and learning new things.

In B2B SaaS, CSMs are at the center of the picture when it comes to anything that is customer-related. CSMs are basically responsible for everything that happens from the moment the customer buys your product (and in some cases, even before) and then on. That means that the CSM will be responsible for onboarding, training, leading, retaining, and growing the customer throughout the customer’s lifecycle.  

The ultimate goal of any CS organization is to retain and grow revenues that come from existing clients, but in order to reach this ultimate goal, there are many objectives the CSM needs to achieve. That’s why CS organizations should have a clear mapping of these key objectives and results that will ultimately lead to the retention and growth of their installed customer base.

After reading this article, you'll understand the definition of the main CSM outcomes, why they are important, how they differentiate from each other, and how to combine them in order to build an efficient and effective CS operation.

Defining the Different Types of CSM Outcomes

There are different elements that form Customer Success outcomes, and each one of these elements has its own purpose and function within the CS operation; OKRs, KPIs, and metrics.

Customer Success OKRs (Objectives and Key Results)

OKRs should represent aggressive goals that mainly signify meaningful business growth and improvement in the organization. OKRs should be measurable and are usually set on a quarterly basis, although some bigger OKRs can be set on an annual basis. Moreover, the OKRs will determine what should be the focus and direction of the organization during the set period of time. That’s why it’s important to clearly map and understand the impact of the OKRs that were set. Otherwise, you could have a whole organization/company working and focusing on OKRs that won’t necessarily lead to business growth/improvement.

The best way to understand if the objective will be achieved is by using Key Results/KPIs as indicators of whether or not you're moving in the right direction. You can think of them as pulse checks on the probability of hitting your overarching objectives.

Customer Success KPIs (Key Performance Indicators)

KPIs are mainly used to understand how close/far away we are from the objectives. KPIs tend to be less aggressive than the OKRs and thus more attainable during shorter periods of time. It’s important to note that an OKR can be composed of multiple KPIs. For instance, if the OKR is to increase net revenue by 20% by the end of the quarter, then the CS organization could have 2 KPIs such as—maintain a 98% net retention rate, and reach $X in upsells.

Customer Success Metrics

Unlike OKRs and KPIs, metrics are mainly used as tools to measure the overall health of the business and are not subject to a specific timeframe or goal. Having metrics in place is key to understanding what needs to be prioritized/improved/fixed on a very detailed level without the need to wait until the deadline approaches. Well-defined metrics should enable teams to be proactive and “steer the boat” back on track in order to hit those KPIs and ultimately the OKRs.

Now that we understand what each of these elements means and how they connect with each other, we can now go deeper into the CS framework and understand which are the main customer success OKRs/KPIs/Metrics and how to set them up correctly in order to build a strong CS strategy and framework.

How to Set CSM Outcomes

In order to correctly set CS Outcomes, you need to first understand what are the objectives you want the CS Organization to achieve that will have a direct impact on the company’s business growth.

These objectives, also known as OKRs, will be the main focus of the CS organization during that period of time, hence, the importance of mapping the OKRs correctly.

Since the OKRs represent more aggressive and ambitious goals, the CS organization will need to add key milestones that can give CSMs a better understanding of whether or not they will reach the desired outcome and how they are pacing. These milestones will be the CSMs' go-to sanity check throughout the specified time period and can be referred to as KPIs.

Throughout the whole period, it is imperative that the CS organization sets up indicators that can enable CSMs to proactively act in case they’re straying away from their KPIs and OKRs. These indicators can be referred to as metrics and they should help CSMs and CS leaders alike to assess the “health” of their book of business, as well as any other element that is part of the desired outcome.

How to Measure CSM Outcomes Against the Set Goals

Once the organization has a clear definition of the OKRs, KPIs, and metrics they would like to have in place; these goals can be implemented into a platform that automatically connects with the company’s product (product usage), customer support system (product stability + customer service), and CRM (retention + growth opportunities).

It is imperative to be fully connected to the components mentioned above since this will allow you to pull real-time data from the most relevant platforms in order to build insightful reports and fully measure everything that you need in order to reach the desired outcome. Measuring progress toward CS goals without a CS platform is like using a shoe as a hammer. You can do it, but it will be far more difficult, and probably less effective.

The most important thing is to have full visibility of the main OKRs, KPIs, and metrics so CS leaders, CS teams, and CSMs can easily and quickly access this data in order to develop the right strategy to hit those results.

Sample OKRs and Metrics to Measure in Customer Success

Now that we understand the different types of CS outcomes, how they’re connected, how to define them, and most importantly, how to make them visible and accessible to your CS team, we can now review what are the most important OKRs, KPIs, and Metrics you must set in any CS organization in B2B SaaS. We'll also touch on why they're so important and how to measure them correctly.

Objective 1: Improve Net Revenue Retention (NRR) Rate

Why? -> This objective should be within the top priorities of any B2B SaaS business since this not only measures how much revenue a company is able to retain, but also how much a business grew over a period of time.

How? -> NRR = ((Starting ARR/MRR + Expansion ARR/MRR - Contraction ARR/MRR - Churn MRR) / Starting MRR/ARR) * 100

KRs/KPIs you should set:

  • Keep quarterly churn under 5%
  • Reach a quarterly net retention rate of 110%

Metrics you will use:

  • Churn %
  • Renewal %
  • ARR/MRR

Objective 2: Improve Onboarding Flow and Experience

Why? -> This objective should push the CS organization to focus on getting customers fully onboarded with a more efficient and personalized flow. This can significantly reduce churn, increase product adoption, and decrease time to value.

How? -> A quick way to do this is by segmenting your customers based on their industry and mapping out what features are the most relevant to them. Once you have that in place, all you need to do is customize according to the customer’s specific needs. 

KRs/KPIs you should set:

  • Improve Onboarding NPS overall score by 20%
  • Reduce onboarding completion time by 1-2 weeks

Metrics you will use:

  • NPS
  • Feature usage + adoption rates

Objective 3: Increase Product Usage and Adoption

Why? -> This objective should push the CS organization to develop a strategy that will lead to more product usage (stickinness) and broader feature adoption. This should lead to more renewals and growth/expansion opportunities.

How? -> The best way is to connect your product with your CS tool, then you can easily measure usage metrics such as DAU/MAU, retention, etc. You can also have full reporting on feature usage per user or per account.

KRs/KPIs you should set:

  • Increase DAU/MAU to 80%
  • Reach 90% feature adoption on all onboarded accounts

Metrics you will use:

  • Signups/Logins
  • User Flows
  • DAU/MAU
  • Feature adoption metrics

Objective 4: Increase the Tier Level of Accounts

Why? -> If your product has a positive impact on your customer’s business, the more mission-critical it becomes for your customers. This objective should enable CSMs to develop a value-led growth strategy that will see both the customers and the company succeed.

How? -> Higher level tiered accounts are usually determined by ARR/MRR—other companies may take other elements into account as well like headcount or logo recognition. It is important to have clear and defined customer segmentation in place to measure this.

KRs/KPIs you should set:

  • Open at least 10 opportunities per quarter
  • Increase tier level of at least 5 accounts per quarter

Metrics you will use:

  • Product usage (seats or consumption)
  • Number of open trials
  • ARR/MRR

Objective 5: Improve Customer Support 

Why? -> This objective should enable CS organizations to focus on reducing the time it takes to solve a support issue and/or reduce the dependency on customer support to get involved in cases where technical support isn’t really needed. This ultimately leads to a smoother and better customer experience overall.

How? -> Best way to do this is by connecting your CS tool to the customer support tool the team is using. You should have full visibility on how many tickets are open, what are the subjects, and how long does it take to close a support case/ticket.

KRs/KPIs you should set:

  • Reduce time to close ticket/case by 25%
  • Reduce total number of support tickets by 10%
  • Reduce non-technical support tickets/cases by 30%

Metrics you will use:

  • Health Score
  • # of open tickets
  • Customer support metrics

The biggest takeaway from this article is understanding what are the differences between OKRs/KPIs/Metrics and how CS departments should use them and define them correctly for their Customer Success organizations.

Understanding the impact that they will have on the direction and focus of your company, as well as understanding what KPIs and metrics you need to set in order to measure these objectives, is key to succeeding in using this model. Not to mention, having clearly defined and quantifiable customer success goals is what will take Customer Success from a 'nice-to-have' department to a mission-critical, revenue driving department in the eyes of executive leadership.

Unify your customer data, objectives, KPIs, and metrics with Vitally's leading Customer Success platform. Request a free trial today!

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