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Application Software
Ashvin Vaidyanathan  |  May 21, 2019
Four Customer Success Metrics You’re Not Watching (But Should)

Imagine trying to run your business if you could only monitor topline revenue. You’d be totally lost—you need so much more information to truly understand what’s working and what isn’t. And yet I’ve seen many companies try to run customer success (CS) teams without gathering sufficient data to know how the CS team is actually doing.

When it comes to customer success, most companies are measuring customer retention or expansion rates. But these are lagging indicators—if that’s all the data you’re capturing, you’re trying to drive your business while looking in the rear-view mirror. At the moment your contract with a customer comes up for renewal, it’s way too late to change the customer’s mind about renewing, or not. You need to know your customer isn’t getting value from your software before you make that ask, so you have time to repair that relationship and help the customer extract maximum value from your product.

These four customer success metrics are ones that often fly under the radar. But they’re metrics that can give your CS team an earlier indication of the health of your customer relationships.

Verified outcomes

Enterprise software, to be successful, has to either save the customer money or time; generate more revenue; or do some combination of these two things. As a leading indicator, “verified outcome” simply means defining what outcome the customer is seeking by using your product—then helping the customer achieve that outcome, and verifying that the outcome was in part or wholly attributable to the software.

For example, a company like GE Digital is selling downtime efficiency to power plants. A verified outcome their customers will want to measure is: How quickly does GE resolve the problem when machines malfunction? Slack is selling improved productivity, so Slack customers might track outcomes like reduced email volumes, or the average time it takes to resolve a customer-related problem.

I would recommend agreeing on one or several outcomes together with the customer, quantifying them for measurement, and then checking in with the customer every three to six months on their progress in meeting those goals. Ask them: Have we moved the needle on this outcome for you? If the answer is no, look for ways you can help them use your software more effectively. Consider offering additional training for key users, for instance.

If the answer is yes, that’s a verified outcome. We love this leading indicator because tracking it makes renewal-time a breeze. The customer tells you proactively if you’re taking them in the right direction and delivering real value, and they hear themselves confirming that value repeatedly over time.

Customer advocacy

Your existing customers are the best salespeople you have. Customers today increasingly rely on references, case studies, and testimonials to make purchase decisions. What percentage of your total customer base is out there advocating for you?

If you’re over-reliant on a few key customers for references or testimonials, you need to up your communications game with a broader range of customers. Look at those mid-tier customers—have you approached them about a testimonial or case study? Asking for a testimonial is also a great opportunity to remind them about those verified outcomes you’ve been crushing. Quantifying the successes you’ve built together will reinforce your product’s value to those customers and encourage them to advocate for you.

Breadth of customer adoption.

When Gainsight* started out, we measured adoption the way most companies do: by looking at what percentage of users are active daily or weekly—what’s known as the depth of product adoption within a company. But we soon realized there’s another axis to adoption.

Breadth of adoption answers the question: “Are our customers using the full range of features available in our software?” Even if customers don’t use your software every day, the more features they use, the stickier the product it is. Breadth of adoption reveals early warning signs of customers who are likely to down-sell, compress, or churn, so you can reach out with targeted tips and training.

Customer-success qualified leads

A good CS team is so integrated into the customer’s workflow that they should be generating qualified leads for the sales team to pitch. These leads could be opportunities for upsells or cross-sells. Gainsight now tracks CS-qualified leads—that’s revenue that’s directly attributable to the CS team, and it’s a great way to demonstrate the ROI of your CS efforts.

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