Want to be a more customer-centric organization and tap into the brand advantages and revenue potentials they create? While there are many tactics and strategies needed to create a customer loyal brand, few are as important as championing your customer’s success.
Achieving this requires that your customer-facing teams become incentivized and managed through shared customer-centric KPIs.
This blog will outline the most critical customer-focused metrics and how they can help transform your teams and business.
Before we get started, we should mention—we are advocates of customer experience and success strategies. We believe the best way to generate revenue is by empowering customers and fostering community. If you’re interested in reading about the core principles required to create a customer-driven organization—and its benefits— you can read that here: How to Grow your Business with Customer Success.
Let’s get into it.
The Value of Your Customer-Facing Teams Working Together
Effectively leveraging customer success strategies requires that your departments work together. Specifically—that your marketing, sales, and service teams share responsibility, incentives, and accountability throughout the customer journey.
Rapid growth is rarely efficient. Often, as organizations grow, they hyper-focus on KPIs and goals that serve more immediate needs. As those organizations mature, many of those tendencies become operationally “engrained” and cause friction between departments.
I am sure you can remember a time in your career in which another department was indifferent to your struggles—or even incentivized to counteract your department’s efforts.
We often encounter organizations that have become so internally driven and siloed that they don’t even realize they are undermining other teams’ efforts. Ultimately, this stifles their growth and hinders their ability to develop and improve relationships with customers.
Some common examples of these disconnects are when:
- Sales teams hyper-focus on transactions, overpromise results, “drop off” upset customers on other teams, and make appearances only when there is a deal to be closed.
- Marketing teams only engage the top of the funnel and work diligently to generate awareness but do little to empower their sales and service teams with collateral or nurture customer relationships.
- Service teams become consumed by closure rates and responding to “fire drills” and cannot lend their technical or tactical expertise to marketing and sales team members.
In these environments in which departments have siloed and set independent performance goals—teams work against each other. If left unchecked, these behaviors can deeply damage customer experience, loyalty, and revenue potential.
Unfortunately, you can’t be a customer-centric organization if your teams aren’t bound to customer outcomes.
The best way to ensure customers are successful is to set customer-centric metrics that cross departments. When done successfully, your organization incentivizes customer-facing teams to share their diverse skill sets and focus on benefiting the customer. Doing so creates customer experiences that ensure the customer feels important, supported, and valued.
So what metrics are cross-departmental and meaningful to customers?
Download The Ultimate Customer Success Metrics Calculator
Key Customer Success Metrics
Net Promoter Score (NPS)
Net Promoter Score (NPS) measures how likely a customer is to recommend your company or product. You can measure NPS by surveying customers and soliciting direct feedback. Calculate your organization’s NPS by taking the total number of promoters and subtracting all detractors. Because NPS is based on customer opinions—each team that interacts with your customers has the potential to affect this score. To get an accurate measure, it is recommended to survey customers after major events and meaningful interactions.
Accountable teams: Marketing, Sales, and Service
Any organization focused on growth wants a high net promoter score. When your customers promote your brand, they provide your business with the cheapest and most effective marketing form, word-of-mouth. Consider—according to Nielsen’s Global Trust in Advertising Report, 83% of respondents said they trust family and friends’ recommendations more than any other form of advertising.
Customer Acquisition Cost (CAC)
Customer Acquisition Cost (CAC) measures the cost of marketing, sales, and service efforts required to close a deal and onboard a customer. It is calculated by summing a company’s total sales and marketing spends (plus implementation costs) and dividing it by the number of new customers. Companies can calculate CAC for a given time period or all time, and it is helpful to compare the effectiveness of different marketing tactics and strategies. In the last five years, the cost of acquiring new customers has increased by over 50%, as marketing becomes more expensive and consumer distrust of brands grows.
Accountable teams: Marketing, Sales, and Service
Making marketing and sales teams accountable to this metric encourages them to generate, identify, nurture effective leads, and convert them efficiently. Adding service to the equation encourages onboarding teams to maximize the tools and techniques at their disposal to quickly and efficiently implement and train on solutions. This causes all customer-facing teams to reduce spend on broad approach and low-value tactics and replace them with targeted engagements.
Customer Lifetime Value (LTV)
Customer Lifetime Value (LTV) is the revenue an average customer will provide a company before they discontinue their patronage. LTV is calculated by determining the number of customers, their average time spent as customers, and their yearly spending. Monitoring this metric at the macro, segment, and individual level is critical for revenue growth. A study conducted by Bain & Company found that a 5% increase in retention rate can increase profit between 25% to 95%.
Accountable teams: Sales and Service
By focusing on LTV, businesses work to extend their relationships with customers, continuously provide value, and expand services. This creates an environment in which revenue is tied to customer longevity and outcomes rather than short-term steroids. Service and sales teams have the greatest impact on this number, and tying them to this metric ensures teams don’t focus on transactions and neglect customers.
LTV:CAC Ratio
This metric enables organizations to compare Customer Acquisition Cost (CAC) to the revenue that customers will provide over time. It helps businesses determine and understand how long they need to retain a customer to turn a profit. This metric is critical for determining whether investments are paying dividends or if the customer experience being provided is driving away customers before becoming profitable.
Accountable teams: Marketing, Sales, and Service
This is an all-hands-on-deck metric, and every customer-facing team has an impact on it. Tying performance to this metric ensures every team is helping customers achieve success and creating meaningful touchpoints. It will also reveal if your current growth is sustainable and if your business focuses too much on new acquisitions and neglects your patrons.
Customer Satisfaction Score (CSAT)
Similar to NPS, Customer Satisfaction Score (CSAT) measures how happy your customers are. Like NPS, CSAT is a subjective measurement of how a customer feels. Because of this, it’s a difficult metric to set targets around or produce actionable results. However, when sampled often, it gives a good impression of how customers perceive your brand at specific engagements and moments in time.
Accountable teams: Marketing, Sales, and Service
Because this measures what a customer thinks of your brand, each customer-facing team has the ability to impact it. Measure customer temperament at key engagements and interactions to determine if you’re building valuable touchpoints or hindering your customers. While the results of CSAT aren’t usually groundbreaking, they can identify outliers and areas for growth.
Customer Effort Score (CES)
Customer Effort Score (CES) measures how much effort was required of the customer to solve their needs. This metric is a more tangible and actionable measurement of customer satisfaction than NPS or CSAT. There’s ample evidence that, at times, the ease of a given experience is a better indicator of customer loyalty than simply measuring direct customer satisfaction. A great overview of customer effort was done by HBR in 2010, with the publication of an HBR article entitled “Stop Trying to Delight Your Customers.”
Accountable teams: Marketing, Sales, and Service
Like other customer surveys and feedback measurements, CES is impacted by each customer-facing team. The difference is that effort provides actionable insights. If your customers found it hard to make a purchase, navigate your website, or resolve an issue, it’s easy to identify and resolve the friction. Reducing customer effort will lower your cost to serve, increase your efficiency, and truly delight customers. Ensure each of your teams makes it easy on customers and pays particular attention to lifecycle events and handoffs between teams.
Customer Retention Rate (CRR)
Customer Retention Rate (CRR) measures your company’s ability to retain customers over a specific time period. This is a central metric to all customer success strategies. Retaining customers so they can expand their spending with your organization is what customer success is all about. The inverse of this metric is the customer churn rate, and it measures the amount of customer drop-off.
Accountable teams: Marketing, Sales, and Service
This metric will reveal how effective you are at retaining and building loyal customers. Each of your customer-facing teams has agency over this metric. Service focuses on delighting and empowering customers, sales with forming relationships, identifying opportunities, and marketing with continuous nurturing. Just remember, it’s 5 – 25X more expensive to acquire a new customer than it is to retain an existing customer.
Revenue Churn Rate
Your Revenue Churn Rate is the percentage of revenue you’ve lost from existing customers in a given period of time. For example, revenue churn can result from an order cancellation, a plan downgrade, or an end to a business relationship. Calculating this one is a bit more complex and does not apply to all businesses. But when tracked at a macro level and on a per-customer basis, it gives deep insights into customer health and when you’re likely to lose a client.
Accountable teams: Marketing, Sales, and Service.
Once again, when it comes to generating revenue from existing customers, it’s a team effort. Sales and service teams should be leveraging their expertise and relationships to expand customer offerings and overall spend. Marketing can support these efforts by nurturing campaigns that inform customers of features, advice, and future development.
Existing Customer Revenue Growth Rate
This metric is similar to Revenue Churn Rate but is less nuanced and a bit more applicable to most business models. This metric only focuses on revenue generated and lost from existing customers (not new) and thus is a great indicator of your customer success strategies’ health.
Accountable teams: Marketing, Sales, and Service.
Just like revenue churn rate, each of your customer-facing teams has direct influence over this metric. Make each of them accountable to it, and they will find ways to engage customers with additional offerings, expand usage, and cement relationships.
First Contact Resolution (FCR)
A straightforward metric measures how often customers have their needs met with a single interaction—the more interactions to solve an issue, the greater cost, and effort. Microsoft recently found that not solving a customer’s issue in a single interaction increased customer churn and lowered satisfaction scores.
Accountable Teams: Service and Sales
This may seem like a service-only metric, but your customers come to people they trust to solve problems. When you make sales teams accountable to resolving issues that customers bring to them, you encourage them to be knowledgeable about the business, its solutions, and where to locate resources. A proactive and self-sufficient sales team is invaluable to customer success.
Repeat Purchase Rate
Repeat Purchase Rate (RPR) is the percentage of customers that have returned to buy from your company again. This metric is a great indicator of customer loyalty. Customers who love your solutions and enjoy working with you continue to do so.
Accountable Teams: Marketing and Sales
What’s especially useful about repeat purchase ratios is their application to specific demographics. By looking at which types of consumers, companies, markets, and demographics make the most repeat purchases, you can adjust your target buyer personas, tactics, and positioning accordingly. By targeting better-fit customers, CAC goes down, and LTV goes up.
Final Thoughts
To effectively establish, capture, and measure cross-functional customer success metrics—your organization will need to adopt digital systems that work seamlessly across the entire customer journey. In our experience, this is a common gap in many organizations. These gaps are typically formed when individual teams implement solutions in isolation from other teams and the customer journey. When this occurs, silos are reinforced and customer journeys become disjointed and hide valuable insights.
While common, these problems are solvable. The first step is to unite teams under shared customer-centric goals. This will exacerbate and make apparent the gaps in customer experiences, processes, hand-offs and systems that hide insights and hinder customers. Making customer-facing teams accountable to customer outcomes will motivate them to work together and solve these blind-spots and adopt systems that “speak the same language.”
When your teams work together to ensure your customers’ success, predictable and resilient growth opportunities are created.
Have you aligned your teams with customer-centric metrics and empowered them with digital systems to manage customer relationships and glean important insights at scale?
The Ultimate Customer Success Metrics Calculator
We’ve prepared this resource to help you identify, measure, and harness the most important metrics and KPIs related to your customer-focused teams and efforts.
This calculator (spreadsheet) provides insights and formulas for: Net Promoter Score (NPS), Customer Acquisition Cost (CAC), Customer Lifetime Value (LTV), LTV:CAC Ratio, Customer Satisfaction (CSAT), and more…
