Customer Success Metric Teardown
Hi, I’m Markus, and welcome to a 🔒 subscriber-only edition 🔒 of my newsletter. I help you to deliver, grow, and monetize customer value to improve your performance, accelerate your career, and build a profitable SaaS business.
There’s not a shortage of Customer Success metrics.
But which ones are most accurate? Which are the ones that really matter?
Too many companies don’t know and blindly follow the masses.
They simply copy & paste what’s popular without questioning whether it makes sense for their business.
In today’s episode, I’m going to talk about their pros and cons to help you better understand what you need for your business.
Net Promoter Score
Measures the likelihood of customers recommending your product to their colleagues or friends.
Pro: Very easy to measure because you only need to send a survey with a single question.
Con: There are no standards for the evaluation and scores are highly subjective. Also, customers are not obligated to give an accurate score. Research could not find a correlation between NPS and customer renewals.
Customer Satisfaction Score
Determines how customers are satisfied with your product and service.
Pro: Similar to the NPS it requires only asking a single question through a survey.
Con: Superficial as it only captures how customers feel at a single point in time. A recent negative experience dilutes an otherwise great one.
Customer Effort Score
Measures how easy it is to use your product, receive help, and find useful information.
Pro: Again, easy to measure as it requires asking only a single question via survey
Con: There’s no guidance for customers on how to score accurately. Consequently, scores are highly subjective.
Customer Health Score
Measures which customers are at risk for churn and which are likely to renew.
Pro: Better suited to predict customers’ future behavior than all other scoring methods due to the use of multiple factors.
Cons: The accuracy of the health scores rises and falls with the chosen factors. Adding only superficial ones results in the so-called “watermelon effect” where customers appear all-green on the outside while they are red on the inside.
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