The SaaS universe is growing at an exponential pace. The industry is expected to grow
to $76 billion per year per sector. Some of the highest performing SaaS companies have grown their teams at an average pace of 56% per year. However, statistics
also reveal that if a software company grows at a 20% rate one year, there are 92% chances of it ceasing to exist in the future. Alternately a company showing a growth of 60% annually has a chance of surpassing USD 1Billion in revenue. These numbers clearly show that with the rapid proliferation of SaaS comes the risk of market saturation. SaaS companies thus have to ensure that they measure the right metrics to ensure they stay ahead of the curve.
In this blog, we take a look at some key customer service metrics that SaaS companies should obsess over.
Customer Effort Score (CES)
Customer Effort Score is the new customer experience
metric that measures the ease of experience with the SaaS product. It simply estimates how easy or difficult it was for the customer to accomplish what they wanted in their interaction with the product. CES validates if the product is delivering a superior customer experience or the customer is experiencing several frustration points that could eventually cause them to leave. Proactive measurement of CES ensures timely intervention as this points out early signs of customer disengagement.
Customer Health Score
The Customer Health Score is the user engagement
metric. It monitors how the customer engages with the product, the average log-in time, and other usage statistics such as too many or no support conversations, survey scores, usage of key features etc. The Customer Health Score is a leading indicator that shows if a customer is happy using a product, is at risk or completely dissatisfied. This score can be mapped by measuring the users time spent on the product in relation to specific goal-oriented objectives.
Net Promoter Score
The Net Promoter Score, or NPS, identifies customer loyalty and determines how likely they are to refer you the product others. While SaaS companies have to be heavily focused on customer retention, their main goal should be to ensure customer loyalty. The NPS is the stethoscope that helps companies assess who are their loyal followers, who are the complacent ones and who are waiting to jump the boat. NPS templates have to be easily customizable for easy personalization. NPS scores provide insights into customer loyalty towards the brand and assists in turning customers into brand advocates.
Customer Churn Rate
While the customer churn
rate is a late-stage marker, it is directly related to customer success and the bottom line. If SaaS product fails to create value or does not deliver the expected value to the user then they fail to drive customer success. This leads to customer churn. The customer churn rate is the percentage of customers lost within a specific timeframe. It includes the customers who do not renew their subscriptions or cancel their subscription to the total number of customers you have during that specific time period. This does not include the new customers acquired during this period. Identifying the non-active customers, identifying their pain points, and taking proactive measures to convert them into active users can positively impact the churn rate.
Customer Satisfaction Score
SaaS companies have to be laser-focused on measuring customer satisfaction. Customer Satisfaction is a valuable transactional metric to assess how satisfied the users are with their product interaction. CSAT surveys can be highly customizable with open and close-ended questions. These can give companies a clear idea of the user needs, their expectations, and demands etc. and help them identify what the customers think and feel about the product. These insights can be used to chart the product evolution roadmap and also solve underlying product and usage related issues.
Are the customers satisfied with the level of support provided? Do they have a single vehicle through which they can communicate with all the relevant stakeholders? Do they spend time figuring out how to resolve their queries? What is the ticket deflection rate? Are you measuring the number of tickets raised per user? Does the customer find resources they need easily? Do the customers have access to online information repositories? Is self-service enabled? All of these factors contribute to support satisfaction. The lack of or inadequate support can also be a deal-breaker for SaaS companies. The data from the support satisfaction
levels can then be used for product and service improvements to grow a loyal customer base.
Expansion MRR is the measure of the additional recurring revenue generated from existing customers through add-ons, upselling and/or cross-selling. Measuring Expansion MRR shows customer interest and indicates that the customers are receiving value from their product. Expansion MRR involves adding additional revenue from existing customers that occurred within a specific timeframe. This metric is also a negative churn indicator. Good Expansion MRR rates indicate that you have a good negative churn rate. This means that the revenue generated from the existing customers is higher than the revenue lost to churned customers.
For any SaaS company to be successful, they have to singularly focus on customer success
and successful customer enablement is a key piece of the puzzle. By keeping a close eye on these metrics and by engaging with the customer at the right time, SaaS companies can ensure customer success for their clients. This is also essential as only when a customer reaches an ‘aha’ moment in the product journey will they turn from subscribers to users and then to product advocates.