Customer Success KPIs - What to Track and Benchmarks
As a software company, it's crucial to prioritize customer success and ensure your users are getting the most value from your product. One effective way to measure and improve customer success is by tracking key performance indicators (KPIs). In this article, we will discuss the essential KPIs to monitor and provide benchmark data to help you gauge your company's performance.
1. Customer Acquisition Cost (CAC)
The CAC metric helps you determine the average cost of acquiring a new customer. This includes marketing costs, sales team expenses, and any other expenses associated with acquiring customers. Calculating CAC is relatively simple:
CAC = Total Marketing and Sales Costs / Number of New Customers Acquired
By comparing your CAC with industry benchmarks, you can determine whether your acquisition efforts are efficient or if adjustments are needed.
2. Customer Churn Rate
Customer churn rate indicates how many customers you are losing over a specific period. A high churn rate can demonstrate underlying problems with product satisfaction or poor customer support. The formula to calculate churn rate is as follows:
Churn Rate = Number of Customers Lost / Total Number of Customers at the Beginning of the Period * 100
Industry benchmarks reveal that a healthy churn rate typically falls below 5%. However, depending on your industry, this benchmark may vary.
3. Net Promoter Score (NPS)
NPS measures customer satisfaction and loyalty by gauging how likely your customers are to recommend your product or services to others. To calculate NPS, you need to conduct surveys and ask customers to rate with a score from 0-10:
NPS = % Promoters - % Detractors
Monitoring your NPS over time and comparing it to industry benchmarks will indicate the strength of your customer relationships.
4. Customer Lifetime Value (CLTV)
Customer Lifetime Value estimates the total revenue a customer is expected to generate throughout their interaction with your company. To calculate CLTV, use the following formula:
CLTV = Average Purchase Value * Average Purchase Frequency * Customer Lifespan
Comparing your CLTV against industry benchmarks helps identify potential areas for improvement and the long-term profitability of your customer base.
5. Time to Resolution
Time to Resolution measures the average time it takes to resolve customer support tickets or issues. A faster resolution time indicates efficient customer support and improves overall customer satisfaction. To calculate this metric, sum up the time it takes to resolve each ticket and divide by the total number of tickets:
Time to Resolution = Total Time to Resolve Tickets / Number of Tickets
By comparing your Time to Resolution with industry benchmarks, you can ensure your support team is meeting or exceeding customer expectations.
Remember, tracking these KPIs is not a one-time task. Regular monitoring and analysis are crucial for identifying trends, setting benchmarks, and making data-driven decisions to improve your customer success efforts.