The Metrics of Customer Success Management

Before a SaaS/Cloud vendor establishes a Customer Success Management group, it’s vitally important to set the foundation for winning by clearly defining how the performance of that team is to be measured in both of its purposes.  The first purpose of the CSM group is the real benefit experienced by the customers.  The second is the value brought to the vendor.  To the customer, the success metrics that count are increased productivity and profitability.  How great was the improvement in the effectiveness of the customer’s operation, and how much more money did their company make from their usage of the vendor’s application and expertise?  In reporting to their own Senior Management, the Customer Success executive needs to be able to clearly demonstrate the increase in customer retention and per-customer profitability accruing from the work of the CSM team.  These are the metrics that matter.  To prove them, however, both to the customer and to your own company, will require developing and consistently applying a range of operational, process and financial measurements.

The Operation of a SaaS App

A key advantage to the vendor of a SaaS app over a traditional on-premised system is visibility; you can, if your application has been properly designed and built, monitor what the customers are doing with it in real time.  You can know when they log in to the system, and thereby tell how many of the subscription licenses you sold are authentically used.  Past that point, you can see which features and functions are actually being tapped, and by whom.  If the login rate plateaus, or begins to diminish, the alarm bells need to ring loudly, for there is a customer at-risk.  If a given customer is not using some areas of the app, it’s time for an encouraging call to keep them ever increasing their adoption of the full range of its power.

The operational data, vital to the efforts of the CSM group, also should be closely watched by Marketing.  Which features should be packaged and sold separately?  The key to victory with a “land and expand” strategy is having a range of expansion options to offer to deepen the relationship.

The Process of a Customer Success Management Group

Process metrics for a CSM group are similar to those of a support center.  Through which channels are the interactions coming, and what can be learned from comparing issue and method?  Analyzing duration and frequency can help you to build a sound basis for staffing levels:  how many customers can reasonably be handled by an individual success manager?  Apart from the channel of the communication, it is critical to pay close attention to the categorization and prioritization of the issues.  What are the concerns that prompt the customer to initiate the interaction?   Which types merit proactive handling, and when?

Dollars and Sense:  Financial Analysis

The two most important individuals here are the customers’ CFO — and yours.  Both must be willing to bless your numbers as accurately showing reality in order for the CSM team to have any credibility.  Past the immediate benefit of a customer that is much more likely to stay with you, there is another very vital advantage that can be gained from proving your worth to the customer.  A customer that can clearly articulate in financial terms exactly how much tangible benefit they have gotten from using your app and expertise is a customer that is not only probably going to recommend you, he/she is going to do so in the best way possible. Given the choice between a customer saying: “The people of XYZ Company are really great to work with” and “We got a 37% increase in bottom line in 6 months that is directly connected to our use of XYZ’s system” — I think I’d much prefer to have the latter being said as often as possible.

The Core of the CSM Role