When your CSMs touch so many different aspects of the customer journey, it’s tough to decide which customer success metrics to track.
Your overarching goal is straightforward: increase revenue and reduce churn. But without the right metrics to keep you on track, you’ll never know how to steer the ship in the right direction.
Measuring an abundance of KPIs is all well and good, but track too many and you’ll probably struggle with deciding where to put your focus. And if KPIs should help you do anything, they should help you focus on what matters most.
On the flip side, choosing just one metric in isolation from everything else ignores the fact that the customer lifecycle is complex and interconnected. You’ll miss important aspects of the bigger picture.
The best customer success teams rely on a small number of core KPIs.
The question is common: Which customer success metrics are worth tracking? In this guide, we’ll take a look at the most common metrics you should consider.
Using customer success KPIs in goal-setting
Great key performance indicators (KPIs) are basically a cheat code to setting SMART goals.
When you’ve got a specific KPI in mind—like maximizing lifetime value—you’ll naturally form specific, measurable, achievable, and relevant goals—meaning all your customer success team then needs to do is make them time-bound.
Some metrics are part and parcel of all customer success teams, like renewal rate and net revenue retention. But other metrics—like time to value—only make sense for specific business models or for customer success teams engaged in certain activities.
Here’s one way of looking at it:
- High-touch customer success teams are more likely to benefit from metrics like a customer health score, Net Promoter Score, and expansion revenue. These KPIs help you measure and improve your relationships with existing customers and identify customers at risk of churning. They’re key to helping you increase monthly recurring revenue.
- Low-touch teams rely more on product usage or engagement metrics, like monthly active users or feature adoption rate. They’re looking for opportunities to build automated systems or self-service tools that can create a meaningful shift in behavior across whole customer segments.
In both cases, using KPIs effectively provides your team with direction, enables you to measure progress, helps you make informed decisions, and alerts you when course corrections are needed.
Revenue and retention metrics
You’ve probably heard that acquiring a new customer can cost five to seven times more than retaining one.
The meteoric growth in customer success organizations in the last decade is a direct result of business converting to subscription models and awakening to the importance of customer retention.
That’s why revenue and retention metrics are the bread and butter of customer success.
These are the most important metrics to measure how your efforts are impacting business priorities.
1. Customer Retention Rate (CRR)
Your customer retention rate is the percentage of customers your company retains over a given period.
Retention is the best high-level indicator of how well you’re doing at providing value to your existing customers.
High customer retention means customers are satisfied with your product. It often correlates with other metrics, such as high customer lifetime value (often abbreviated as CLV or LTV) .
Companies with great retention grow at least 1.5x - 3x faster.
Low retention is a major warning flag indicating risk to your business. Diagnosing the reason for a low retention rate usually requires cross-referencing with other metrics.
Measuring retention is simple.
Start with your total number of customers at the end of a time period, then subtract the number of new customers added during the period. Divide that number by the number of customers at the start of the period.
Say you started June with 500 customers and added 43 new customers during the month. At the end of June, you have 512 total customers.
Your retention rate would be 93.8%.
Customer Retention Rate (CRR) =
(# of customers at the end of the month - # of new customers) / # of customers at the beginning of the month
2. Customer Renewal Rate
The renewal rate measures the percentage of customers that renew their contract or subscription at the end of its term.
It’s slightly different from your customer retention rate because it’s only looking at customers whose contracts are up for renewal (whereas retention rate looks at your whole customer base).
To calculate your customer renewal rate, take the proportion of customers who opted for renewal out of the total number of customers whose contracts were up for renewal in any given time period.
If 950 customers renewed out of 1000 potential renewals last quarter, your renewal rate was 95%.
Some data suggests that a healthy renewal rate is higher than 80%. Highly successful SaaS companies average a renewal rate of 90% or more.
Understanding how to improve customer renewal rates is essential to building a strong customer success team.
Customer Renewal Rate =
(# of customers renewed / # of potential renewals) x 100
3. Customer Churn Rate (CCR)
Customer churn rate, or customer attrition rate, is the inverse of retention.
To calculate it, take the number of customers who leave your product over a given period of time and divide it by the total number of customers at the start of the period. Then multiply by 100 to get a percentage.
If you lost 32 customers last month and started with 400, your churn rate was (32 / 400) * 100 = 8%.
Many SaaS businesses struggle with churn.
Some reports suggest that the average monthly churn rate is 5%, which translates to more than 40% annual churn. High churn is typically a sign of poor product-market fit and indicates you may need to change how you serve customers or market your product.
Churn Rate =
(# of customers lost in a set period / total # of customers at the beginning of a set period) x 100
4. Recurring Revenue (MRR or ARR)
Recurring revenue is often measured either monthly (MRR) or annually (ARR), depending on the subscription model. If your business runs on a subscription model, consistent and growing recurring revenue is the best indicator of business health.
It represents predictable future revenue.
To calculate monthly recurring revenue, multiply your average revenue per user or per account (ARPU) times your total number of active users or accounts.
If ARPU is $25 each month and you have 1000 users, your MRR is $25,000.
To calculate your annual recurring revenue, just multiply your average MRR by 12.
A primary focus for most customer success initiatives should be to have a positive impact on recurring revenue.
Recurring Revenue =
Average revenue per user in month x total # of users (MRR) x 12 (ARR)
5. Expansion Revenue
Expansion revenue refers to the additional recurring revenue you generate from existing customers.
This usually happens through upselling (when customers upgrade their existing product) or cross-selling (when they purchase an additional product or service from you).
To calculate expansion revenue, take a set of your customers. This could be all your customers, or it might be a specific segment or a specific CSM’s portfolio.
Subtract the recurring revenue at the end of the period from the recurring revenue at the start of the period, then divide that by the recurring revenue at the start of the period. Multiply by 100 to get a percentage.
(($30k at the end of the quarter - $25k at start of quarter) / ($25k at start of quarter)) * 100 = 20%
A positive number means you’ve grown revenue from your existing customers. A negative number indicates you’ve lost revenue from your existing customers (known as “contraction” and typically caused by downgrades).
Expansion revenue is something every customer success team involved in upselling and cross-selling should track. It’s a metric your team can have a direct impact on.
While retention rate and renewal rate are great indicators of satisfied customers, a customer being willing to spend even more money with you is the strongest indicator that they’re finding value from your offering.
Expansion Revenue =
(Recurring revenue at the end of a period - recurring revenue at the start of a period) /
Recurring revenue at the start of a period x 100%
6. Net Revenue Retention (NRR)
It provides a comprehensive view into how well your business is retaining revenue, taking into account upgrades, downgrades, churn, and expansion.
NRR does not include revenue from your new customers—it’s strictly looking at what happens to revenue from your existing customers during a period of time.
Net Revenue Retention (NRR) =
(Starting MRR + Expansion MRR - Contraction MRR - Churn MRR) /
Starting MRR x 100%
That’s a long formula, but that’s why NRR gives you a comprehensive look at your revenue retention.
7. Customer Lifetime Value (CLV or LCV)
Customer lifetime value (CLV) or lifetime customer value (LCV) is a metric that tells you the average value of every customer your business acquires.
If an average customer spends $600 per month and stays a customer for 28 months, their lifetime value is $600 times 28, or $16,800.
Calculating CLV can be tough, particularly if you have a diverse customer base or massive variations in customer lifespan. Sometimes, it’s easier to track CLV by customer segment because each individual customer segment is less likely to have wide variations.
When you can measure it reliably, CLV presents many opportunities for customer success organizations.
Your team can impact both aspects of lifetime value:
- Average Revenue Per Customer—through upselling and cross-selling
- Average Customer Lifespan—through reducing churn by helping customers find success
Customer Lifetime Value (CLV or LCV) =
Average revenue per Customer x Average customer lifespan
8. Average Revenue Per User (ARPU)
ARPU is your generated revenue averaged over all users (or accounts).
ARPU is helpful because it can help you understand revenue growth on a per-user or per-account basis, which is useful for comparing with competitors in the industry. A lower ARPU compared to industry benchmarks or historical data indicates that there might be room to upsell or cross-sell existing customers.
ARPU is also an important metric because it feeds into several other important metrics (like CLV and MRR).
If your revenue last month was $52,000 and you have 2500 users, your ARPU was $20.8.
Total revenue / total number of users
9. Customer Retention Cost (CRC)
Customer retention cost (CRC) calculates the total amount of money your company spends on activities and initiatives to retain its existing customers over a certain period.
Calculating CRC can be complex because it involves adding up the costs of multiple activities, some of which might not be tracked directly as retention efforts. These costs can include:
- Customer Success salaries and tooling
- Customer Support team costs
- Marketing communications to increase engagement (like email newsletters)
- Loyalty and rewards programs
You can estimate your CRC by adding up the total costs of retention-related activities and dividing that by the number of customers retained.
Striking the right balance here is important.
Spending too much on retention can erode profitability, while spending too little can lead to higher churn. Retaining existing customers should be less expensive than acquiring new ones, but smart customer success leaders are strategic about investing in initiatives that provide the highest possible ROI.
Comparing customer retention costs with acquisition costs and CLV provides valuable insights into the financial health of your customer relationships.
10. Customer Acquisition Cost (CAC)
CAC is the total cost of acquiring a new customer.
It includes costs related to marketing and sales activities, such as:
- Advertising expenses
- Employee salaries
Any expense associated with persuading a potential customer to buy your product should be included here.
A high CAC means retention is even more important, because it will take longer to recoup the costs of acquiring each customer.
That being said, CAC isn’t usually used as a primary metric for customer success teams, since they’re rarely responsible for acquiring new customers. Its importance primarily comes from the fact that it informs many of the other KPIs your team might be working with.
How to measure revenue and retention
Measuring revenue and retention is like measuring the lifeblood of your business.
Many of the metrics in this section are key business KPIs that your finance team is probably already looking at.
What’s important for your Customer Success team is to differentiate and track the impact of your work on each of these metrics:
- If your goal is to increase MRR, your CS team should be able to see how and how much they’ve contributed.
- If you’re making a big push to up-sell and cross-sell, you’ll want a clear way to track your impact on expansion revenue
Getting this kind of insight typically requires combining data from multiple tools, including:
- your CRM
- your customer success management platform
- your financial system
- your product
With all these data sources in play, it’s often easiest to work with your data team and leverage a business intelligence tool like Looker to visualize your performance.
Onboarding and product adoption metrics
The next major category of customer success metrics is around onboarding and product adoption.
Effective onboarding and adoption are a major way your customer success team influences revenue and retention.
Great onboarding experiences play a critical role in confirming customers’ choice to choose your product, as well as setting them on the path to long-term success.
11. Onboarding process engagement
Measuring engagement during the customer onboarding process can have a massive impact on customer success.
You can measure customer engagement during your onboarding process by looking at metrics such as:
- Completion rates: the percentage of new users that complete each step in your onboarding process.
- Time to completion: the time it takes for new users to complete the onboarding.
- Feature activation: the number of key features users interact with during onboarding.
- Retention: whether users that complete your onboarding process become active users of your product.
Onboarding can be improved dramatically by investing in tools like Dock. When you have one collaborative workspace and a simple, structured customer onboarding process, driving successful product adoption is way easier.
Each of the above metrics can also be compared to your retention and churn rates. You might ask questions like:
- Are users that complete onboarding less likely to churn?
- Which key features correlate with the highest long-term retention?
Tracking these metrics and asking questions like these form the foundation of a feedback loop that enables you to continually improve your customer onboarding.
12. Trial Conversion Rate
The trial conversion rate measures the number of free trials that convert into paid customers.
Conversion rates can vary significantly based upon your model and other factors.
What’s most relevant for customer success teams—particularly at SaaS companies where freemium and free trials are common—is that you can move the needle by identifying which features and aspects of your onboarding process drive higher conversion rates.
Trial Conversion Rate =
# of free trials converted to paying customers / total # of free trials x 100 %
13. Customer Activation Rate
Customer activation typically refers to the moment when a new user first realizes value from a product or service. The customer activation rate is the percentage of new users that reach that activation point.
Measuring activation starts with defining what that moment is for your product. It should be a critical milestone early in the customer journey, after which users are much more likely to become engaged and continue using the product.
For an email marketing tool, this might be uploading your email list and sending your first newsletter.
Once you’ve defined the point of activation for your product, tailor your onboarding experience to get users there reliably.
Customer Activation Rate =
(# of new customers that have reached activation point / total # of new customers x 100%
14. Time to Value (TTV)
Another insight into activation comes from time to value (TTV), also known as Time to First Value (TTFV).
Where Customer Activation Rate measures what percentage of your customers achieve that “a-ha moment,” TTV measures how long it takes them to get there.
Shortening TTV depends on a number of factors, including:
- Your product’s complexity
- Your customer’s knowledge
- Your onboarding process’s effectiveness
Keep in mind that “value” may look different for each customer segment or use case you serve.
15. Feature Adoption Rate
Feature adoption is the process through which users start using a new feature after it has been introduced.
A high feature adoption rate shows that the feature adds value for customers, was communicated effectively, and fits seamlessly into your customer experience.
Calculating feature adoption rate is as simple as measuring what percentage of customers are using a given feature.
When customers adopt your product’s most critical features, it’s a strong signal that they’re engaged and should correlate to high retention and potential expansion down the road.
Feature Adoption Rate =
# of customers using a given feature / total # of customers x 100%
16. Monthly Active Users (MAU)
MAU measures user engagement over a one-month period.
A user is often considered "active" if they have interacted with your service or app in some way within the past month. This can include actions like logging in, posting content, making a purchase, or simply opening the app.
MAU is probably more useful for low-touch customer success because it can only be influenced in a meaningful way by high volume initiatives like a newsletter or in-app messaging.
17. Total Number of Customers
The value of this metric lies in how you use it.
Your total number of customers generally refers to the total number of active subscribers or accounts at a given point in time.
When you’re looking at a given time period, this number can be broken down into paying, existing, churned, or new customers.
Most companies only rely on percentages for these things—like churn rate—but tracking the specific volume of customers in each bucket can be valuable for comparing to your competitors and industry benchmarks.
- You can use it to track the number of customers (or sales) per employee
- You can use it to estimate market share
- Year-on-year customer growth is a great measure of business success
- It informs whether your customer success team operates in a high-touch or low-touch model
- It’s a foundation for customer segmentation, which directly impacts your customer success team’s efforts
18. Customer Health Score
Customer health score is a way to measure how “healthy” a customer or an account is based on a number of factors.
It looks different at every company, but its goal is to estimate the likelihood that a customer will remain a customer for the foreseeable future.
Customer health score is intended to be a proactive measure that helps businesses understand how their customers are doing and predicts potential churn before it happens.
Some factors that might be included in a health score are:
- Product usage
- Customer feedback
- Number of support tickets submitted
- Interactions with the company
- Payment history
Once a customer health score is calculated, it's typically categorized into segments such as "at risk", "needs attention", or "healthy." Your team can then use that segmentation to combat churn and prioritize activities.
A customer health score can take a lot of work to dial in, but it’s a great metric for high-touch customer success teams.
How to measure onboarding and product adoption
The right way to track these metrics largely depends on the tools you’re using for onboarding or to drive product adoption.
If you’re using a Dock workspace for customer onboarding, it’s super easy to get insight into how engaged your customers are. You can see analytics like views, interactions, and downloads of important resources in real-time:
Dock also enables you to track the progress customers are making on task lists in their workspace, so you can measure things like how much of their onboarding has been completed. It’s a simple but effective way to understand customer health at various stages.
Other products that can provide data to calculate these KPIs include tools like FullStory or MixPanel.
Of course, for product-related metrics you’ll also need to work with your product team to ensure you’re capturing the appropriate data on things like feature usage.
Overall, onboarding and product adoption metrics are most valuable for customer success teams when you’re able to connect them with bottom-line results like revenue and retention.
Customer satisfaction and sentiment metrics
Customer satisfaction and sentiment give you insight into how successful you are at client management.
These metrics aren’t typically owned solely by customer success. While they ought to correlate with bottom-line metrics like revenue growth, it’s often difficult to indicate cause and effect or to use them in a predictive manner.
19. Net Promoter Score (NPS)
NPS is a popular measure of customer loyalty.
It's a simple, yet powerful, tool to gauge customers' willingness to recommend your product to others.
Customers are asked a single question:
"On a scale of 0-10, how likely are you to recommend our company/product/service to a friend or colleague?"
Based on their responses, they are then categorized into three groups:
- Promoters (9-10): These are loyal enthusiasts who will keep buying and refer others, fueling your growth.
- Passives (7-8): These are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
- Detractors (0-6): These are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.
Net Promoter Score =
% of promoters - % of detractors
The final score can range from -100 (if every customer was a Detractor) to 100 (if every customer was a Promoter).
A positive NPS is generally considered good, while an NPS of 50 or above is excellent.
In SaaS, NPS scores tend to be pretty high, with an average NPS being +36.
You can use NPS in many ways in customer success, especially in a high-touch model:
- Work with promoters to get testimonials, case studies, or build a referral program.
- Use NPS as one of the factors that influence customer health. A drop in NPS can be an early warning signal of a potential churn risk, allowing for proactive action.
- Trigger personalized actions based on a low response to an NPS survey or other qualitative feedback.
20. Customer Satisfaction Score (CSAT)
Customer satisfaction (CSAT) measures how satisfied customers are with their experience with a product, service, or a particular interaction.
It's typically measured using a customer survey where customers rate their satisfaction with an experience on a scale.
You’ve seen these everywhere—they range from a 5-point scale ("very dissatisfied" to "very satisfied”), to a binary yes/no, to a scale from 1-10, or even a scale of emojis representing different levels of satisfaction.
CSAT isn’t great at measuring overall satisfaction or loyalty—it works better for gauging satisfaction with a specific interaction (like a quarterly business review) or aspect of the product. That means you can use it to isolate specific opportunities for improvement, which can be very useful.
The average CSAT score in SaaS was 78% in 2022, indicating just how high customer expectations are.
21. Customer Effort Score (CES)
Customer effort score is a measurement of how hard it is for your customers to resolve issues or complete tasks.
It’s somewhat similar to CSAT, with important differences.
Rather than asking how satisfied customers are with your service, this one asks how much effort they had to invest. Customers are typically far more loyal if they can achieve their goals without expending a lot of effort.
CES is great for identifying friction points in your customer journey.
Every point at which your customers have to expend a lot of effort introduces risk into your customer relationship. Using joint customer success plans or creating a client portal are some fantastic ways to reduce that effort.
22. First Contact Resolution Rate (FCR)
FCR refers to the percentage of customer inquiries that are resolved during the first interaction with your team.
This is a good metric to use in low-touch customer success models. High FCR often indicates that there’s a lot of potential in self-service solutions, so it might mean your customer success team (in partnership with customer support) should focus on self-service adoption or in-app onboarding.
These self-service channels enable customers to achieve their goals with less effort, so they can also reduce your CES.
First Contact Resolution Rate (FCR) =
# of customer inquiries resolved during first interaction / total # of customer inquiries x 100%
How to measure satisfaction and sentiment
Most metrics that give insight into how your customers feel about your company and product are measured through surveys.
Investing in modern survey software is a good way to keep track of customer sentiment and satisfaction. The best survey tools enable you to survey customers on their preferred channel, whether that’s via email, during a live chat, or in-app.
Unlock customer success with Dock
Choosing the right metrics for your customer success team is a great first step in setting the direction for your team and empowering them to create value for your customers.
But when you start working with some of these KPIs, you’ll notice very quickly that a single team can’t do it all.
The most important KPIs— like revenue or time to value—can’t be owned by just one function.
Dock is a dedicated platform that brings your teams and customers together to remove friction and create long-lasting customer relationships.