Are you looking to set up ‘KRAs for your customer success managers’?
It is highly likely that you are in the subscription business.
Well, let’s reword that.
You are in the ‘relationship’ business.
In the SaaS world, your customers are paying for the experience that your product, services, and people offer. And if that experience happens to be a good one, then there’s no stopping you.
Keeping a customer is probably not so important to any other business as it is to a subscription business, for a repeat customer is a sign of things going right, the potential to earn new customer references, and is a reason enough to celebrate.
So, what drives a happy relationship with your customers and keeps them sticking with you through thick and thin?
It is customer success, no doubt.
Though customer success is a holistic concept not reducible to a metric, it is possible to check how much or little your business benefits your customers through various Key Result Areas (KRAs).
Thus, in a way, customer success management is measurable. And that’s a beautiful thing because measuring it helps you monitor the health of your customer relationship, and take proactive steps to mend the matters, so things don’t turn ugly.
Why it is vital to set up the right KRAs for customer success?
The difference between ‘measuring’ and ‘measuring right’ comes from deciding the Key Result Areas (KRAs) you want to measure.
Every customer success metric tells you something unique. Moreover, there are metrics directly in control of your customer success team, and those that are not directly under their control. Besides, there are multi-faceted customer success metrics (which depend on several connected factors) and those that are standalone parameters (which help assess one exclusive area of performance).
What customer success metrics you choose to measure should also take into account your stage as a SaaS company – in terms of your product breadth and depth and age in the market.
Likewise, some indicators are useful to measure short-term customer success performance, whereas others are more suitable for long-term measurement.
How to set up KRAs for customer success?
The footwork you do in setting up your customer success management KRAs will hold you in good stead throughout your customer lifecycle and your product maturity curve.
Let us jump into the most important things to keep in mind when setting up KRAs for customer success:
1. Think of both ‘customer value’ and business value.
What’s right for your customers is good for you.
Your customer success management KRAs must be able to tell you whether your customers are deriving value from investing in your product or not.
If your metrics measure value only for your product or company, you may miss critical gaps and may fail to correct them in time.
For example, ‘Customer Churn’ is often measured as the percentage of customers that leave every month but doesn’t take into account customers ‘shifting to lower-priced tiers’ which reflects in ‘Gross Dollar Churn.’ Thus, though these two metrics are from the same family, the latter helps better to tightly monitor how much value customers derive from various product tiers.
2. Ensure metrics link to key ‘actions.’
Your metrics must tell you precisely what to do, what not to do, what to change, and where to dig deeper.
For example, counting the number of support tickets raised, the number of customer escalations, or customer complaints helps you plug the holes in your product interface, your technical infrastructure, and even your customer service management operations.
3. Support a ‘high-touch’ customer experience.
Your customer success KPIs should allow for ‘frequent’ and ‘regular’ reporting, which you can share back with your customers, not just some annual business review, which happens disconnected with your customer experience and interactions.
So, it is crucial to set up KRAs that you can measure on an ongoing basis, such as ‘time spent on the software’ or ‘number of business users.’
They will give you something meaningful and valuable to talk about every time you call your customer!
4. Combine hard-core numbers with ‘soft metrics.’
Often, we end up missing the bus when we focus too much on numbers and not enough on ‘people.’
So along with financial metrics like ROI or bottom-line impact, you must measure customer ‘satisfaction’ scores, ‘willingness’ to refer your product to peers, and ‘intention’ to continue using the product in the next billing cycle.
Regular customer surveys help you gather these attitudinal and emotional insights.
5. Do not miss the ‘costs’ of customer retention.
If you continue to focus too much on retaining ‘all’ the customers, you may end up in an unprofitable zone.
Some customers are best allowed to leave, as keeping them may be more harmful to your business than losing them.
It means there are ‘right’ customers and ‘not-so-right’ ones, and you must not invest your resources in keeping the latter with you. ‘CRC’ or the ‘Customer Retention Cost’ helps you optimize ‘how economically’ you achieve your customer success goals.
6. Align to both short- and ‘long-term’ health.
When designing your customer success KRAs, it is essential to keep an eye on both immediate goals and broader business direction.
An example would be to measure not just quarterly indicators such as Net Recurring Revenue but also business-wide ratios such as the SaaS Quick Ratio (which is monthly recurring revenue versus revenue churned).
This way, you and your team will not lose sight of the overall growth efficiency as you serve your customers month after month.
In SaaS, like in most other B2B industries, customer relationship managers exist to increase your customer lifetime value and the positive word of mouth you receive from your customer base.
Getting new customers as a result of references, bare-it-all testimonials, and ratings on popular software review platforms (like G2 and Capterra) is the holy grail of customer success management.
The guidelines mentioned above in setting up your customer success KRAs will ensure that you move towards exponential growth – one that comes from keeping your customers and keeping them happy!