Are you measuring your B2B customer success metrics? Customer success proves the efficacy of your services and products among your target customers. It establishes the extent to which your services and products serve the customers' needs and purposes.
In other words, customer success determines where you stand as a B2B company and what kind of customer experience you’re delivering. 72% of businesses say that improving customer success is their top priority. Customer relationships that are long-lasting and built on trust can help you grow your revenue and gain an edge over your competitors. Therefore, it’s extremely vital to recognize the importance of customer success metrics such as churn rate and customer satisfaction score (CSAT) and continually measure them.
7 B2B Customer Success Metrics You Need To Be Measuring (and How to Do It)
B2B customer success metrics give an insight into how customers use your products, their satisfaction, and the likeliness of their product recommendations to others. Furthermore, they also aid in strengthening your customer relationships.
Here are seven B2B customer success metrics that you must monitor and improve to ensure the success of your company.
Customer Churn Rate
Customer churn rate is the rate at which you are losing your customers. It is measured over a period (monthly or annually) when your customers quit using your products and services. For example, they might unsubscribe or choose not to renew their subscription for your products or services.
First things first, determine a period (monthly, quarterly or annual) for determining the churn rate. Then measure the total number of customers at the beginning of the selected period. Further, determine the total number of lost customers during the same period.
Finally, to calculate the churn rate, divide the total number of lost customers by the total number of all customers in that period:
Churn rate = Total Number of Lost Customers / Total Number of Customers
Per a recent study, on average, B2B companies can expect approximately a yearly 11 % customer churn rate. This rate can vary between industries and geographies.
Net Promoter Score (NPS)
NPS is all about customer feedback. It assesses customers’ satisfaction and their likeliness to recommend your services to others. NPS measures customer scores on a scale of 0 to 10. The scale evaluates how likely a customer is to refer a B2B company to others, with 0 being “highly unlikely” and 10 being “highly likely.”
Many B2B companies also request that NPS respondents to state the reasons for their scores. This is especially beneficial to understand what needs to be fixed in case of lower scores.
After your customers provide their score on a scale of 0 to 10, group them into the following categories:
Scores 0-6 = Detractors
Scores 7-8 = Passives
Scores 9-10 = Promoters
NPS = Percentage of Promoters – Percentage of Detractors
The detractors are your dissatisfied customers. You need to note their concerns and improve upon the same. You can also look at pushing the passive group to become active promoters. The promoters are your loyal and satisfied customers.
Research shows that the average NPS for B2B industries range from 25 to 68.
Customer Satisfaction Score (CSAT)
The customer satisfaction score or CSAT measures how satisfied your customers are with your products and services.
Start by creating your CSAT survey or questionnaire. Include the questions that can help you evaluate customer sentiments regarding your products and services. For example, “Did you find everything you were looking for?” or “How satisfied are you with the product or service?”
Choose a suitable rating system (for example, star ratings) to determine satisfied and dissatisfied customers. Finally, calculate the customer satisfaction score as:
CSAT= (Number of Satisfied Customers / Total Number of Responders) * 100
A good CSAT score is about 25%. A score higher than 50% is considered excellent.
Customer Lifetime Value
Customer lifetime value (CLV or CLTV, LTV) is one of the important customer success metrics for any B2B business. It exhibits the total revenue that a single customer can bring to your company throughout their relationship with you.
Customer lifetime value is calculated as:
Customer lifetime value = (Average Purchase Value/ Average Customer Purchase Frequency) * Average Customer Lifespan
Customer Retention Cost (CRC)
The customer retention cost is one of the most crucial customer success metrics. It shows the total cost involved in retaining a customer. CRC also takes into account the cost involved in delivering customer success.
Here's the formula to calculate customer retention cost:
Customer Retention Cost = Total Annual Cost of Customer Success and retention Initiatives/ Number of Active Customers
Research shows that the average B2B company generates up to 30% of its revenue from retained customers.
Customer Effort Score (CES)
The customer effort score (CES) determines the ease of customer interaction and query resolution.
After resolving customer issues, you can prompt a customer survey with a rating scale. Once you’ve received all customer ratings, take their average to determine the customer effort score.
Per Gartner research, customer effort is 40% more accurate at predicting customer loyalty as opposed to customer satisfaction.
Qualitative Customer Feedback
Qualitative customer feedback gives the customers the right to voice their opinions regarding your company, services and products. Customer feedback is at the center of this metric.
The simplest way to get qualitative customer feedback is to send out a survey about your products, services, customer support staff, overall customer experience, and so on. Ensure the survey is a mix of objective and subjective questions.