Customer success benchmarks

How do you measure success? The business world has defined metrics that track marketing and sales efforts to find leads, move them through the sales pipeline, close deals, and bring in revenue. For traditional companies operating by selling tangible products, these metrics can successfully measure company growth and health. But for companies that operate off a subscription model, these metrics don’t tell the full story.

For B2B and SaaS companies, the customer success team plays a critical role in onboarding and training customers, monitoring customer success analytics, and ensuring they’re happy enough to renew or even upgrade their subscription. But what metrics are used to measure success for customer success (CS) teams both internally and externally? And what are success benchmarks that CS teams should be striving for? We’re exploring answers to these questions and more.

What Is Customer Success?

In short, customer success teams work with customers during the entire lifecycle. In B2B and SaaS companies in particular, the work customer success teams do can truly make or break that relationship. While sales and marketing are absolutely integral in finding and converting customers and running a successful business, CS teams ensure that customers are happy and healthy—keeping subscription renewals and recurring revenue high.

While every company’s CS team will have slightly different responsibilities, CS is generally concerned with the following:

• Onboarding: CS teams take over from sales to ensure that new customers are equipped to use a product.

• Training: CS teams provide ongoing training for their product or platform to new and existing customers.

• Supporting: CS teams act as a frontline, providing technical support and triaging issues.

• Monitoring: CS teams use a customer success scorecard or dashboard to monitor analytics and customer health, especially in the time leading up to a potential renewal.

How do CS teams achieve all of the above–and more? With a lot of hard work, to start. But really, it all comes down to data. CS teams should always be monitoring their customer success KPIs (key performance indicators) to ensure customer satisfaction is high.

With Planhat, tracking data and customer health is a breeze. Planhat integrates with all your favorite applications to automatically collect data and present it to teams in one platform. Monitor that data and build out automations to contact customers, proactively alert you to changes in customer behavior, and manage key processes at the right time. More on our platform later. For now, let’s get back to CS metrics.

How Is Customer Success Measured?

Considering the responsibilities listed above, there are a variety of customer success metrics and KPIs that can be used to measure the performance and success of a CS team. Here are 10 of the most common customer success KPIs and metrics that matter, especially for SaaS companies.

• Churn: A customer churn rate measures the number of customers who churn, or stop subscribing or using your product, during a given period of time. While some customer churn can be expected, a high churn rate or a sudden increase in churn may indicate an issue.

• Customer Effort (CE): This metric measures the amount of effort needed for a customer to perform a specific task, such as purchasing a product, connecting with a customer success manager (CSM), or resolving an issue. The lower a customer effort score is, the better.

• Customer Lifetime Value (CLV): CLV measures the total financial worth of a customer over their entire relationship with a business. It’s probably no surprise that it costs less to maintain an existing customer than to acquire a new customer. Oft-cited research from Bain & Company found that a 5% increase in customer retention led to a 25% increase in profits in the financial sector.

• Customer Health: Health scores provide a measure of how at-risk a customer is to churn. The lower the health score, the more likely a customer is to churn. Tracking this metric can provide key insights to CSMs to help identify and manage potential risks. With Planhat, for example, teams can experiment with rules, build health scores for specific customer groups, and use the data you have in Planhat with unprecedented flexibility.

• Customer Satisfaction Score (CSAT): To measure CSAT, companies send out a short poll that asks customers to rate their overall satisfaction with a product or service. Responses generally range from very satisfied to very unsatisfied.

• Customer Support Tickets: Tracking the number of customer support tickets, what topics they are about, and how long it takes to resolve the tickets can provide key insights for CS teams. An uptick in support tickets about a certain topic, for example, may indicate the need for more customer training or a change to the product.

• Gross Revenue Retention (GRR): GRR is a measurement of how successful a company is at retaining current customers. It looks at total revenue (not including expansions) minus any revenue lost from downsells or churn.

• Net Revenue Retention (NRR): NRR is an indication of how well a company retains and expands its customer base. NRR measures total revenue, including any gains from upsells or expansions, minus any revenue lost from downsells or churn. Learn more about why Net Retention Rate is the #1 priority for company growth and valuation here.

• Net Promoter Score (NPS): Like CSAT, NPS is a short survey that asks customers how likely they are to recommend a product to a friend or colleague on a scale from 0 to 10. Promoters respond with a score between 9-10, passives respond with a score between 7-8, and detractors respond with a score between 0-6. Based on these ratings, NPS provides a company score between -100 and 100, with anything above 0 considered good and anything above 50 considered excellent.

• Upsells and Downsells: Upselling is the process of selling larger products or packages to a customer, which generates more revenue. Downselling, on the other hand, is when a customer downgrades to a less expensive product or package. Tracking both can provide insight into current trends with customers.

What Is Benchmarking?

In business, benchmarking is a way to review a business’s performance and processes against a set of benchmarks, which are usually industry averages, past performance, or goals to aim for. Regular benchmarking can help companies identify what is working well, where there are opportunities for growth, and where they might gain a competitive advantage in their industry with a little work.

Benchmarks are useful for companies as a whole and for specific departments within a company that are looking to analyze and optimize their processes and performance. While we often hear about benchmarking in marketing and sales, benchmarking in customer success is equally as important—if not more important! Depending on who you ask, there are a variety of different types of benchmarking. However, two of the most important types are internal and external benchmarking.

• Internal: This type of benchmarking compares processes or results internally to identify best practices or areas for growth. Internal comparisons may be between locations or teams to compare how performance or practices vary. Alternatively, internal benchmarking may look at a singular department like CS, comparing practices against historical data or other employees to identify strengths and weaknesses.

• External: External benchmarking involves comparing your own internal processes and results to another company—ideally a competitor—or your industry in general. Doing so can help companies place their customer success performance in the context of their market and identify areas of potential growth. Success metrics examples for external benchmarking may include NPS results compared to industry averages.

How To Create Success Metrics and Benchmarks

How does all of the above information relate? To put it simply, customer success teams that track the right metrics and KPIs against benchmarks can ensure that not only are they performing well internally, but that they are performing as well—if not better—than their competitors. If you’re not already benchmarking or you think your process could use some tweaking, that’s okay. We’re laying out key foundational steps to get you started.

Step 1: Decide What Matters

Before doing anything else, companies must choose which type of benchmarking to perform and which key performance indicators are most important. This will be distinct for each company, and it should be based on the benchmarking and metrics that provide the most actionable insights to CS teams. While tracking every data point is certainly helpful for the big picture, choosing and prioritizing a few KPIs that are most instructive will help keep teams focused. The customer success criteria provided earlier in this article can serve as an excellent jumping off point for identifying KPIs. Metrics to track might include customer health scores, gross and net revenue retention, and upsells.

Step 2: Do Your Research

Depending on what you decide to track and which type(s) of benchmarking you set, it may be helpful to research industry averages. For example, a company assessing their own NPS results against competitors in their market may find it useful to understand what the average NPS rating is for their industry. Likewise, a company doing internal benchmarking for a CS team may find it useful to understand what their average customer health score is for customers that churn or customers that upgrade.

Step 3: Set Your Benchmarks

Once you’ve done enough research, you can begin setting benchmarks. CS teams may find it helpful to perform both internal and external benchmarking to understand the full picture of their processes and performance.

• External benchmarks should be set based on the research and data uncovered in step two. Look at industry averages, any insights you can glean from your competition, and more. Ideally, your benchmarks should be realistic and attainable while still setting the bar high enough to surpass your competition.

• Internal benchmarks can be gleaned from historical business data. For example, you might look at year-over-year or month-over-month data for revenue, customer health scores, or support tickets. Keep in mind that while historical data is instructive, it doesn’t always tell the full picture. Benchmarks set based on information from the height of the pandemic, for example, may not reflect your business’ current reality. In other words, context matters.

After you’ve set your benchmarks, set a plan that includes a timeline, how you’ll measure and collect data, how results will be communicated, and what next steps might include.

Step 4: Communicate

Transparency is one of the keys of effective benchmarking. CS teams might find it helpful to have internal meetings to discuss key information, goals, timelines, and more. Additionally, members of your team should have access to data and results every step of the way.

Step 5: Measure and Take Action

Finally, it’s time to measure your KPIs. Consider building out unique dashboards to track your benchmarks, and ensure that every relevant stakeholder, including employees, has access to it. With Planhat, it’s easy to integrate existing sales and marketing data with customer success data, ensuring that everyone in the company can benefit from insights. Not only that, but with data-driven reporting and visual storytelling tools, teams can build out customized dashboards for their benchmarks.

It doesn’t stop with measurement, though. It’s easy to measure (relatively speaking). It’s much harder to take action. Once you’ve gleaned insights into how you’re performing against both internal and external benchmarks, take action. CS teams and leadership teams alike can discuss long-term and day-to-day strategies and develop SMART (specific, measurable, attainable, relevant, and time-based) goals.

A final note: benchmarking, like most business processes, isn’t a one-and-done activity. CS teams should revisit their benchmarks regularly and update them as needed.

Planhat: Empowering Customer Success Teams

Planhat is a powerful, customer-centric platform designed to help companies unlock their customer success potential. With planhat, CS teams gain access to data tools, automations, integrations, workflows, and presentation tools to manage and grow customer success. But it doesn’t stop there. Planhat provides every team in a company access to high-value customer data, strategies, and tools to forge long-lasting relationships and drive net revenue retention higher because ultimately customer success belongs to every department.

Ready to start super-powering your customer success? Sign up for a free demo today!