Retaining clients is 70% cheaper than acquiring new ones. With that being said, Customer Success is an essential part of
your sales funnel if you want to build a scalable business. But how do you measure the ROI for your customer success efforts?
Instead of focusing the company’s initiatives solely on new customer acquisition, it is important to make sure you have the right framework in place for your existing clients. More support and less selling might sound counterintuitive, but since your goal is to make the customer experience as good as it can be, you have to genuinely focus on their needs, not on yours. Sometimes this means asking employees to help provide that extra level of guidance to customers to ensure they are experiencing the outcome they expected. Remember, the more value your customers receive, the higher the chances they will remain loyal to you and your company, as well as share their positive experience with others regarding your products and services. Win...win.
To help you out, we have outlined 4 best practices to help you effectively measure Customer Success ROI. Read on to find out what they are.
Typically, the renewal rate is the most important metric when it comes to calculating ROI for customer success. While renewal rates provide insight, it is important to keep in mind that it takes consistent effort and time from your entire team to ensure a repurchase from your customers. In addition to pf-s-18ure renewal rates, it is critical to be aware of your net retention rate which demonstrates the additional revenue value of a client that is adopting your products and having success. Successful clients not only renew products and services with you but also have a tendency to purchase more.
The marketing team worked hard to attract and convince your customers to consider your product. The sales team made sure your product was the right fit specifically for that customer. When it comes to renewal rates, not only does the customer success team take full credit for it, but if one piece of the puzzle is missing, the client will start looking for a better service somewhere else.
Aside from the renewal rate, another great way to determine if your customer success efforts are paying off is to measure how often your clients use your service. In order to do so, you need to define usage based on your specific business model and product. Defining and obtaining customer usage (or adoption) data, such as how often team members are logging into your system and whether or not they are using valuable features of your product, is critical to confidently understand utilization.
Insights that leverage Artificial Intelligence (AI) will also help determine what actions need to be taken to prevent losing a client. For example, based on a customer’s activity and usage history, providing your customer success team with the proper resources to develop and communicate specific action plans is crucial. Ultimately, high engagement rates are necessary to build a business that lasts - not one that relies on vanity metrics and “bad” revenue.
If there’s still uncertainty regarding the success rate of your product or service, the easiest and most reliable metric is to obtain direct feedback from your customers. You may find that some might be too busy to spend a few minutes answering questions from your survey or visiting a website to leave a review. We have seen that discounts and incentive programs can easily influence customer review behavior.
Another option is to deliver valuable outbound customer communication on a consistent basis. This means providing product updates, best practices, training and usage data to your customers. This allows your customers and executive sponsors to be aware of new features, usage increases/drops and adoption rates, without the surprises.
Use a ROI Calculator
If you are still having difficulty measuring your ROI using the previously mentioned metrics, you can always get a good estimate using a customer success calculator which are widely available. In doing so, you will need to gather a great deal of insights regarding the product or service to establish a beginning point when inputting the data. At the end of the day, the ROI of your customer success initiatives should show up where it matters most - on your bottom line.
Happy customers, happy business.