Dan Martell - August 31, 2020


Top 7 Customer Success Metrics You Should Measure


Episode Stats

Length

8 minutes

Words per Minute

182.1776

Word Count

1,536

Sentence Count

71


Summary

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Transcript

Transcript generated with Whisper (turbo).
00:00:00.000 Hi there, Dan Martell here,
00:00:01.180 serial entrepreneur, investor, and creator of SaaS Academy.
00:00:03.620 In this episode, I'm gonna share with you
00:00:05.100 the top seven customer success metrics
00:00:07.600 that you can use to monitor all your accounts
00:00:09.980 and make sure you don't lose or churn any accounts
00:00:13.220 and most importantly, grow your expansion revenue.
00:00:15.780 And be sure to stay at the end
00:00:16.860 where I'm gonna share with you
00:00:17.440 how to get access to my Precision Scorecard Framework,
00:00:20.740 which is gonna teach you exactly
00:00:22.040 how to look at quarterly, monthly, and weekly metrics
00:00:25.640 to make sure you crush your numbers.
00:00:27.700 Let's get into it.
00:00:30.000 Over the last five to seven years,
00:00:43.120 I've been involved in hiring
00:00:44.260 probably 50 different customer success managers
00:00:47.220 across my portfolio company
00:00:48.780 and 40 plus investments, my own companies,
00:00:51.620 and really trying to ensure
00:00:53.160 that we create the best onboarding experience
00:00:55.720 to make sure that when they land,
00:00:57.460 they hit the ground running
00:00:58.500 and we get the value.
00:01:00.020 To me, investing a dollar in a customer success manager
00:01:02.820 should produce $5 of new revenue
00:01:05.920 if you manage and monitor the right metrics.
00:01:10.060 Here's how you do it.
00:01:11.040 These are the seven that I believe
00:01:12.560 that you should be asking those CSMs,
00:01:14.460 customer success manager, to be accountable to,
00:01:17.040 report, and make sure they improve.
00:01:19.400 Number one, customer churn percentage.
00:01:21.660 This is the amount of, so it's really simple math.
00:01:24.380 The month before, how many customers
00:01:26.060 did you have at the end of the month?
00:01:27.120 at the end of the following month,
00:01:28.680 or in that weekly interval,
00:01:30.140 if you do a kind of a rolling 30,
00:01:31.860 so that it updates a 30-day window the previous 30 days,
00:01:35.020 what percent of customers did you lose?
00:01:37.280 Sometimes it's called logo churn or account churn.
00:01:40.260 So be sure to measure this and track it.
00:01:42.340 Number two, MRR churn percent.
00:01:45.140 This is the amount of revenue.
00:01:47.400 So same thing as the customer churn percent,
00:01:50.100 it's revenue-wise because you have different packages,
00:01:52.680 plans, upsells, add-ons, et cetera.
00:01:54.940 So you wanna make sure that you measure
00:01:56.200 the total revenue MRR wise at the end of the previous month. And then you can use that same
00:02:00.640 weekly 30 day rolling average for the end of the next month to know how much revenue have you lost
00:02:08.120 total, including expansion revenue. Number three, net MRR churn. This to me is probably the most
00:02:15.500 telling on the revenue churn because it's going to take away any expansion revenue and really just
00:02:21.000 look at the revenue churn on a monthly basis so you know if people are sticking around with their
00:02:27.840 payments and making sure they're getting ongoing value from your product. Number four, expansion
00:02:33.660 MRR percentage. Expansion revenue for a lot of first-time SaaS founders is a new concept.
00:02:39.360 Essentially, it's the idea that if somebody starts off on a $50 plan or $500 plan, over the lifetime
00:02:45.780 of that account, what additional revenue do they add on?
00:02:49.940 And for a lot of SaaS companies,
00:02:51.160 they have to figure out their pricing,
00:02:52.440 their packaging and their plans,
00:02:53.800 make sure that they have a value metric
00:02:56.280 and some add-on metrics.
00:02:57.180 And these are all things that you can Google my name
00:02:59.320 plus those terms to find a video on my YouTube channel
00:03:02.160 that covers these in depth.
00:03:03.980 But understanding on a month-to-month basis
00:03:06.880 what your expansion revenue,
00:03:08.060 especially from a customer success manager,
00:03:09.740 because they're accountable for upsells, cross-sells,
00:03:12.620 and really revenue retention.
00:03:14.340 and that's why we wanna measure these metrics.
00:03:16.280 Number five, net promoter score, sometimes called NPS.
00:03:20.440 NPS is actually owned by a company.
00:03:22.380 They license the brand, but a lot of people use it,
00:03:25.520 and it's really a way for you to measure,
00:03:28.380 and it's great, when I buy companies,
00:03:29.960 I use an NPS score to understand, you know,
00:03:32.500 how many of their customers would actually be promoters.
00:03:35.020 Like, it's kind of, sometimes it's called the growth score.
00:03:37.500 If you can only get one number
00:03:39.200 from some company's customer base,
00:03:41.500 that number would tell you so much about
00:03:43.640 not only the product experience,
00:03:45.020 but the customer support, the sales process, everything,
00:03:47.100 because it's a simple question that says,
00:03:48.980 how likely are you to recommend our company
00:03:51.680 to a friend or colleague?
00:03:53.100 Score of one to 10, nine in 10s are your promoters,
00:03:56.820 one to six are your detractors,
00:03:58.600 seven to eights are your neutral,
00:04:00.320 and there's a simple math equation
00:04:02.140 that I'm gonna link to below in the description
00:04:04.240 that tells you how to get your NPS score.
00:04:07.280 Just to give you some context,
00:04:08.540 most telcos, like an AT&T or a Rogers,
00:04:11.700 they have like a 12 or 13 MPS,
00:04:14.100 and companies like an Apple or a Virgin,
00:04:17.280 they'll have upwards to a 60 to 75% MPS,
00:04:20.680 which is just out of the world.
00:04:22.480 Most SaaS companies, when they start working with me,
00:04:25.440 have unfortunately kind of a 25 to 30 MPS score.
00:04:29.180 We wanna get it up to 55, 60,
00:04:32.320 to really make sure that we're creating
00:04:34.320 not only customers that are satisfied,
00:04:36.920 what I call green, but we wanna get them to purple.
00:04:39.800 Purple are referenceable.
00:04:41.360 They're ambassadors of your brand.
00:04:43.060 They're the ones that are gonna promote
00:04:44.240 and get you referrals.
00:04:45.320 Incredible metric for you to monitor
00:04:48.080 on a maybe quarterly or monthly basis
00:04:50.500 to make sure your customer success manager
00:04:52.560 is always reporting that feedback to you.
00:04:54.740 Number six, customer satisfaction score,
00:04:56.880 also known as CSAT.
00:04:59.260 The customer satisfaction score is something
00:05:00.980 that you wanna prompt and ask
00:05:02.580 after some kind of interaction with your company.
00:05:05.300 The easiest one, it's built into most customer support tools
00:05:09.500 is just post support questions,
00:05:12.140 having that asked intermittently.
00:05:14.100 You don't wanna do it every time you may,
00:05:16.000 but it's really just a quick question of one to five.
00:05:19.780 Think of it like five stars.
00:05:21.080 It's like, on a five star level,
00:05:23.240 how satisfied are you with your customer support experience?
00:05:27.360 One star, two star, three star, four star, five star.
00:05:29.820 And that'll give you, as the leader in the organization,
00:05:32.880 as you hire the CSMs to make sure that,
00:05:34.860 because customer success managers should be accountable
00:05:37.360 for the support side,
00:05:38.800 and really any other interaction with your company.
00:05:41.200 It could be after they do an executive business review
00:05:44.480 or quarterly business review, a QBR,
00:05:46.400 or any other experience that they have with your company.
00:05:48.520 You wanna ask them, how happy were you with it?
00:05:51.720 That'll give you a CSAT for that interaction
00:05:54.140 to allow you to monitor and improve that goal.
00:05:57.840 Number seven, customer experience score, CES.
00:06:02.420 CES is one that's not very much talked about,
00:06:04.920 but it's one that I think is incredibly important
00:06:07.140 because if you think of a customer's journey
00:06:09.700 having multiple steps,
00:06:11.540 you know, my buddy Joey Coleman wrote a great book
00:06:13.460 called Never Lose a Customer.
00:06:14.860 He talks about the first 100 days experience
00:06:17.000 and seven distinct phases that a customer goes through
00:06:20.580 for all businesses, but specifically to software.
00:06:23.760 If I think about like, you know, onboarding, activation,
00:06:27.820 adding a module, adding an integration, et cetera,
00:06:30.380 I'm gonna wanna monitor the experience score
00:06:34.800 for those specific actions
00:06:36.660 so that my customers can give me feedback
00:06:38.340 on a one to five effort.
00:06:40.340 You know, one is very, a lot of effort
00:06:43.020 and a five would be little effort.
00:06:46.000 So if you wanna get some feedback on like,
00:06:47.960 hey, when you added that integration
00:06:49.140 for your financial system,
00:06:51.220 you know, what was your CES score?
00:06:53.280 Asking that question to get that feedback on effort level
00:06:56.620 will let you know how to prioritize
00:06:58.500 not only your customer success activities,
00:07:00.840 but also potentially product roadmap.
00:07:03.320 So quick recap,
00:07:04.120 You have seven customer success metrics
00:07:05.860 you need to be monitoring.
00:07:06.860 Number one, customer churn percent.
00:07:09.840 Two, MRR churn percent.
00:07:12.040 Three, net MRR churn percent.
00:07:14.680 Four, one of my favorites, expansion MRR percent.
00:07:18.300 Five, another one of my favorites,
00:07:20.180 net promoter score, also known as your growth score.
00:07:22.700 Number six, customer satisfaction score.
00:07:25.080 And seven, customer experience score.
00:07:28.800 So as I mentioned at the beginning of this video,
00:07:30.480 I wanna share with you an exclusive resource
00:07:32.340 called the Precision Scorecard.
00:07:33.520 You can click the link below to download your copy.
00:07:36.100 In it, I share with you the exact template
00:07:38.220 that I use for managing all my companies
00:07:40.260 in regards to the KPIs or metrics,
00:07:42.660 key performance indicators,
00:07:44.240 how I structure that on a quarterly basis,
00:07:46.420 looking at the targets, breaking it down per month,
00:07:49.260 also measuring targets and actuals,
00:07:51.520 rolling averages for the weekly score.
00:07:54.000 And I even give you the list of the metrics
00:07:55.980 if you're sub a million in revenue in SaaS
00:07:58.060 and if you're a million plus in MRR,
00:08:00.860 then you can look at the other,
00:08:02.560 There's two lists of metrics.
00:08:04.140 It's all included in that Precision Scorecard.
00:08:07.180 Click the link below to download that.
00:08:08.840 If you like this video, be sure to subscribe to my channel.
00:08:11.020 Click the notification bell and leave a comment letting me know if there's any other metrics that I've forgotten.
00:08:16.320 As per usual, I wanna challenge you to live a bigger life and a bigger business, and I'll see you next Monday.
00:08:22.500 I'm your investor and creator of the...
00:08:24.940 Never mind.