The modern-day world is growing more and more complex, so that the focus of business organizations has changed from the quantity of customers to the quality of customers.
For that reason, it is necessary to define customer success metrics and implement them in your business strategy. The best thing about these metrics is that they allow you to better understand your clients’ needs and thus improve your products and services.
Step 1: Define Customer Success Metrics:
What Are Metrics? Metrics are a quantitative measure used to assess a particular attribute or activity in a particular context. The following are some examples of metrics:
Gross revenue for an entire company; Gross revenue for each product; Net revenue; Average profit per sale; Number of satisfied customers; Number of clients who returned the product after purchase; Number of clients who recommend the product/service to others; Level of customer satisfaction with various services/products offered by the company.
What Are Success Metrics?
Success metrics are measurements used to determine whether or not an organization has achieved its goals or objectives.
If you want to achieve successful results in your business, you need to measure and track these results throughout the life cycle of a client relationship.
Why Are Metrics Important?
The success of a business is dependent on the following factors:
Dependability and trustworthiness of the organization’s products and services; Quality of customer service; Overall customer satisfaction with the company’s products and services.
In order to improve your business performance, you need to determine what success metrics are most important for your business. It is also important to understand how to use these metrics in your business strategy.
How Do You Measure Success?
There are three types of metrics that can be used to measure customer success: sales, retention, and referral.
Sales metrics measure the volume of sales made by an organization, while retention metrics measure the number of clients who continue using a product or service after they purchase it.
Referral metrics measure the number of customers who recommend a product or service to others.
When you are trying to determine which metric is most important for your business, consider these questions:
What type of relationship do you want with your clients? How long do you want this relationship to last? What products/services do you want your clients to purchase from you in the future? How can you help them achieve their goals? How can you help them improve their business performance?
Step 2: Define Success Criteria:
In order to implement success metrics in your business strategy, you need to determine what the success criteria are for each metric.
The success criteria for each metric can be different, depending on the type of product or service you offer.
Sales Metrics: The success criteria for sales metrics are often based on the following factors:
The number of sales made by an organization; The total revenue generated by a company; The average profit per sale; The number of repeat customers; The average amount of money spent by clients.
Retention Metrics: The success criteria for retention metrics are often based on the following factors:
The number of clients who continue using a product or service after they purchase it; How long do these clients continue using the product/service?
How many times do they purchase from you in a year? How many times do they recommend your products/services to others? What is their overall satisfaction with your products/services? What is their level of loyalty to your company? What is their likelihood to refer others to your company? Do they have any suggestions regarding how you can improve your products/services? What percentage of satisfied customers refer other clients to your company?
Referral Metrics: The success criteria for referral metrics are often based on the following factors:
The number of clients who recommend a product or service to others; The number of people these clients refer to your company; The average amount of money spent by referred clients; The average amount of time these referred clients use your products/services.
Step 3: Define Your Goals:
Once you have determined what success metrics are most important for your business, you need to determine what goals you want to achieve with each metric.
For example, if you want more customers to purchase from you, your goal is likely related to sales. However, if you want more customers to remain loyal and purchase from you again in the future, your goal is likely related to retention.
If you want more customers to refer others to your company, your goal is likely related to referral. Goals should be SMART (specific, measurable, attainable, relevant and time-bound). A good goal is clear and concise so that it can be easily measured and tracked.
Step 4: Determine What You Need To Do To Achieve Your Goals:
Once you have identified what goals you want to achieve with each metric, you need to determine what you need to do to achieve these goals.
If your goal is related to sales, you need to develop a sales strategy that focuses on customer acquisition and retention.
If your goal is related to retention, you need to develop a retention strategy that focuses on customer satisfaction and loyalty.
If your goal is related to referral, you need to develop a referral strategy that focuses on increasing the number of customers who recommend your products/services.
Step 5: Determine How You Will Measure Your Results:
Once you have determined what metrics are most important for your business and what goals you want to achieve with each metric, it is time to determine how you will measure the results of your efforts.
Once again, if your goal is related to sales, then sales metrics are likely the best way for measuring success.
However, if your goal is related the number of clients who continue using a product or service after they purchase it or who recommend a product or service to others, then retention metrics are likely the best way for measuring success.
Referral metrics can be measured in several ways depending on how many customers refer others and how much money they spend when they do so.
A successful business is a business that is growing and making money. A business cannot grow or make money if it does not have customers.
Therefore, customer success metrics are essential for the success of any business.
When you know what metrics are most important for your business and what goals you want to achieve with each metric, you can implement a successful customer success strategy.
About the Author
I am the Founder of Cudy Technologies (www.cudy.co), a full-stack EdTech startup helping teachers and students learn better. I am also a mentor and angel investor in other Startups of my other interests (Proptech, Fintech, HRtech, Ride-hailing, C2C marketplaces, and SaaS). You can also find me on Cudy for early-stage Startup Founder mentorship and advice.
You can connect with me on Linkedin (https://www.linkedin.com/in/alexanderlhk) and let me know that you are a reader of my Medium posts in your invitation message.