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How to Measure SaaS Customer Success

By Emily Smith on Mon, Jul 26, 2021

The health of your SaaS business is directly tied to its ability to retain customers and create recurring revenue. This means championing measurable Customer Success right from Day One: for their benefit, and yours.

Today I’m looking at how your SaaS business can measure Customer Success, to improve customer retention and promote sustainable growth.

What Does Success Look Like?

Before you can measure Customer Success, you first need to understand what success looks like for your customers – the factors that help them decide whether they are getting value from your service.

Your customer’s success factors are what they expect your software-as-a-service solution to do for them and their business.

Understanding this will provide you with valuable insights into the priorities of your ideal customers, and can provide the context to help you interpret data for indicators of Customer Success.

Learn more: How to Uncover Your SaaS Customer Success Factors

Four Measurable Indicators of Customer Success

There’s no “one size fits all” set of metrics for you to measure Customer Success: what success looks like will vary depending on your service and how it’s used by your customers.

However, below I have identified four measurable activities that all point to whether your customers are achieving their customer success factors... or not.

1) Churn

Churn is the customer success metric you’ll be most familiar with. It gives you a great overview of how well or poorly you’re doing at retaining customers, but it doesn’t provide any insight as to why.

So it’s best to think of churn as your starting point for measuring Customer Success. It’s vital that you measure customer churn correctly to get an overview of the health of your service, but you need further data to provide the context for your churn data.

Download your free churn calculator!

2) Customer Referrals

The clearest indicator of customer success is when a user recommends your service to other people. Measuring customer referral data will help you identify customers that are particular advocates for your service.

You can then identify trends and similarities between your customer advocates, and look at this in relation to your buyer personas. Is there one type of customer who is particularly successful using your service – and therefore more likely to recommend it to a friend? If so, this will help you to guide your future marketing activity, to attract more, similar customers who are clearly a really good fit for your service.

3) Free Trial Conversion

It’s easy to fall into the trap of thinking that once a lead signs up to a free trial of your service, your work is done. Of course they’ll go on to pay for your service – it’s brilliant. Except it’s not a done deal.

Measuring the conversion rate from users on a free trial to paying customers will give you insight to the value that your initial onboarding and trial provides. Your free trial needs to provide real, tangible value to the user as quickly as possible, to convince them that it’s worth paying for. Making improvements to your free trial or onboarding process could make a marked difference to your churn rate.

Learn more: the 7-step Essential User Onboarding Checklist

4) Product Utilisation

This is a great indicator of the value your customer is getting from your service. How frequently are they logging in to your tool? Are they using all of its features, or only a small percentage of the tool’s functionality?

As a general rule, the more functionality they are using, the more value they’re getting from your tool, and the more likely it is that they are achieving their success factors. Additionally, the longer and more heavily someone uses your service, the cost and inconvenience of switching increases – which provides an added incentive for them to stay.

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