In the last installment in our series about Customer Success ROI, we talk about metrics for Customer Success. Metrics are of course used for many other purposes beside ROI calculations so we will start with the trusty balanced scorecard (discussed here in the context of support):
If you are thinking about ROI, the Financial Performance quadrant is most important and one of the critical task is to clearly define how you measure renewals. You can measure them in a number of ways:
- Raw renewals bookings, i.e., $ renewed / $ for renewal. In this case, renewals will always be less than 100%.
- Net renewals booked, i.e. $ booked/$ for renewal. In this case, renewals can be higher than 100% since upgrades are included in the numerator.
- ARR growth, i.e new ARR/old ARR (or sometimes MRR). This is different from the above in that it reflects ongoing recognized revenue rather than bookings.
Whichever you choose, carefully analyze lost business. In particular, healthy net renewals could hide painful losses for certain products, customers, or customer segments.
On the cost side, the example above shows the customers/CSM ratio but if you have onboarding specialists you will also want to add the customers/onboarding rep ratio — and both are used in creating the staffing model.
Have you implemented a balanced scorecard for customer success? How did that work for you?
(If you’d like to read more about ROI for Customer Success, the first installment discussed the wisdom of not doing ROI analyses. The second showed how to calculate benefits. The third discussed how to create a staffing model. The fourth described how to create and deliver a persuasive ROI presentation.)