Dan Martell - August 31, 2020


Top 7 Customer Success Metrics You Should Measure

Hosted by
Dan Martell
Mentioned
Precision Scorecard Joe Coleman Rogers
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Episode Stats


Length

8 minutes

Words per minute

182.18

Word count

1,536

Sentence count

78


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

Over the last 5-7 years, I ve been involved in hiring 50+ customer success managers across my portfolio company and 40+ investments, my own companies, and trying to ensure that we create the best onboarding experience to make sure that when they land, they hit the ground running and get the value. To me, investing a dollar in a customer success manager should produce $5 of new revenue if you manage and monitor the right metrics. Here s the 7 that I believe that you should be asking those CSMs to be accountable to, report, and make sure they improve.

Transcript

Transcript generated with Whisper (turbo).
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
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.