SaaS Customer Success Metrics
To succeed in a highly-competitive SaaS world you need to track and analyze SaaS customer success metrics.
- Key metrics for customer success give you vitally important information on how satisfied your current customers are with your product
There are dozens of customer success metrics for SaaS and here we are going to list, in our opinion, the three most important: CLV, Retention rate, and Referrals.
Customer Lifetime value
Let’s start our list with one of the most important SaaS success metrics- Customer Lifetime value (CLV). In one of our previous blogs, we already defined it as:
- CLV = total revenue from 1 customer during their subscription time
Additionally, we talked about the importance of CLV for SaaS businesses and how to properly calculate it. Now we are only going to summarize it in a few sentences.
CLV helps you understand how the user is handling your product. If CLV grows along with increasing use then the customer benefits from your product.
Vice versa, if you notice a decrease of CLV, it is time to make certain changes in order to reduce the chance of a churn.
- CLV helps you to track your customer success
Speaking of churn rate, the basic formula for CLV takes it into account ARPA (Average revenue per account) and CCR (Customer Churn Rate).
- CLV = ARPA/CCR
Acquiring new customers is just the first step in the process of retaining them. If you manage to convince interested customers to use your product and then they only try it once or twice it is a damaging sign. You are facing a serious problem because your formal customers didn’t see a point in using your service.
By monitoring and analyzing the retention rate, you find a ratio between those who find your product useful and those who do not.
The formula for calculating this metric is as follows:
- Retention rate = number of active customers/number of all customers
For example, if you have 250 active users who continued to use your product that month out of 350 total users then your retention rate would be 71%.
- Reach out to passive users, help them understand the value of your product. Use educated emails and useful tips to win them back.
Last on our list, is another perceptive way to measure customer success by tracking the number of referrals. It is a well-known fact that people are much more likely to buy your product if the one who promoting is a member of their family or friend. Strong referral numbers always point to a healthy user base.
- The higher your number of referrals are the more satisfied your customers are
Referrals are the great customer measurement metrics to see how pleased your customers are with your product. If you provide real value for your customers, they repay you by sharing a word and boosting your reputation among their acquaintances.
We said in the beginning that there are dozens of metrics that can determine SaaS customer experience and success such as expansion revenue, renewal rate, onboarding rate, free-to-paid conversion, etc. But keep in mind that not all of these metrics are important for your business. Focus only on those that are important and related to your decision making.