{"id":3196,"date":"2020-08-21T20:03:22","date_gmt":"2020-08-21T20:03:22","guid":{"rendered":"https:\/\/wiki.thomasandsofia.com\/?p=3196"},"modified":"2020-08-24T19:27:30","modified_gmt":"2020-08-24T19:27:30","slug":"ecc-customer-success-metrics","status":"publish","type":"post","link":"https:\/\/wiki.thomasandsofia.com\/?p=3196","title":{"rendered":"ECC &#8211; Customer Success Metrics"},"content":{"rendered":"<p><a href=\"\/ecc-customer-success-framework\/\">&lt; 6 Customer Success Framework<\/a> | <a href=\"\/essential-customer-success\/\">Home<\/a> | <a href=\"\/ecs-bringing-it-all-together\/\">8 Bringing It All Together &gt;<\/a><\/p>\n<p><span style=\"color: #339966;\"><strong>78% Complete!<\/strong><\/span><\/p>\n<h1>42. Essential Metrics Introduction<\/h1>\n<p><a href=\"https:\/\/www.udemy.com\/course\/essential-customer-success\/learn\/lecture\/20998228#overview\" target=\"_blank\" rel=\"noopener\">https:\/\/www.udemy.com\/course\/essential-customer-success\/learn\/lecture\/20998228#overview<\/a><\/p>\n<p>Focusing on the leading indicators<\/p>\n<ul>\n<li>will help me plan and execute the right activities.<\/li>\n<li>Will see positive results in the metric (lagging) that we&#8217;re measured on.<\/li>\n<li>If the customer is successful, and the value is visible to them, they will renew.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h1>43. Revenue Metrics<\/h1>\n<p><a href=\"https:\/\/www.udemy.com\/course\/essential-customer-success\/learn\/lecture\/20766822#overview\" target=\"_blank\" rel=\"noopener\">https:\/\/www.udemy.com\/course\/essential-customer-success\/learn\/lecture\/20766822#overview<\/a><\/p>\n<p>SaaS business do not sell products, they sell subscriptions.<\/p>\n<ul>\n<li>Old school\n<ul>\n<li>Client makes a payment<\/li>\n<li>Business hands over a CD<\/li>\n<li>Done<\/li>\n<\/ul>\n<\/li>\n<li>Subscription Based\n<ul>\n<li>Revenue is recurring<\/li>\n<li>MRR &#8211; Monthly recurring revenue<\/li>\n<li>ARR &#8211; Annually recurring revenue<\/li>\n<li>ACV &#8211; Annnual contract value\n<ul>\n<li>MRR + One off fees\n<ul>\n<li>Consulting<\/li>\n<li>Professional Services<\/li>\n<li>On boarding<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li>TCV &#8211; Total contract value\n<ul>\n<li>MRR x 12 x Years<\/li>\n<li>ARL x Years<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li>If customers can pay Month to Month, my key revenue metric should be MRR.<\/li>\n<li>One Off fees would not be included in MRR\n<ul>\n<li>Consulting<\/li>\n<li>On boarding<\/li>\n<li>Professional Services<\/li>\n<li>These would be included in ACV<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2>Examples:<\/h2>\n<p><a href=\"https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/metrics.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-3210\" src=\"https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/metrics.png\" alt=\"\" width=\"753\" height=\"345\" srcset=\"https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/metrics.png 753w, https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/metrics-300x137.png 300w, https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/metrics-150x69.png 150w\" sizes=\"auto, (max-width: 753px) 100vw, 753px\" \/><\/a><\/p>\n<ul>\n<li>Carrefour\n<ul>\n<li>Contract Length: 1 yr<\/li>\n<li>MRR: $10k<\/li>\n<li>ARR: $120k<\/li>\n<li>One Off: None<\/li>\n<li>ACV: $120k<\/li>\n<li>TCV: $120k<\/li>\n<\/ul>\n<\/li>\n<li>Walmart\n<ul>\n<li>Contract Length: 1yr<\/li>\n<li>MRR: $10k<\/li>\n<li>ARR: $120k<\/li>\n<li>One Off: $25k<\/li>\n<li>ACV: $145k<\/li>\n<li>TCV: $145k<\/li>\n<\/ul>\n<\/li>\n<li>Waitrose\n<ul>\n<li>Contract Length: 3yr<\/li>\n<li>MRR: $10k<\/li>\n<li>ARR: $120k<\/li>\n<li>One Off: $25k (But negotiated in for 3 yr term<\/li>\n<li>ACV: $120k<\/li>\n<li>TCV: $360k<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<h1>44. Retention Metrics<\/h1>\n<p><a href=\"https:\/\/www.udemy.com\/course\/essential-customer-success\/learn\/lecture\/20766828#overview\" target=\"_blank\" rel=\"noopener\">https:\/\/www.udemy.com\/course\/essential-customer-success\/learn\/lecture\/20766828#overview<\/a><\/p>\n<p>If everything has been done correctly across the 5 Metrics, this will be <strong>maximized<\/strong><\/p>\n<ul>\n<li>OR(A)EO\n<ul>\n<li>Outcome<\/li>\n<li>Relationship<\/li>\n<li>Adoption<\/li>\n<li>Expansion<\/li>\n<li>Organization<\/li>\n<\/ul>\n<\/li>\n<li>This doesn&#8217;t mean it will be perfect\n<ul>\n<li>Customers may need to reduce costs<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2>Forms of Retention<\/h2>\n<h3>Gross\u00a0 Retention Rate (GRR)<\/h3>\n<p>&nbsp;<\/p>\n<ul>\n<li>$$ of contracts at End of Period \/ $$ of contracts at Start of Period<\/li>\n<li>This measures success at retaining customers\n<ul>\n<li>It will NEVER be over 100%<\/li>\n<\/ul>\n<\/li>\n<li>Example<\/li>\n<\/ul>\n<h3>GRR Example<\/h3>\n<p><a href=\"https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/gross-retention.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-3211\" src=\"https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/gross-retention.png\" alt=\"\" width=\"714\" height=\"418\" srcset=\"https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/gross-retention.png 714w, https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/gross-retention-300x176.png 300w, https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/gross-retention-150x88.png 150w\" sizes=\"auto, (max-width: 714px) 100vw, 714px\" \/><\/a><\/p>\n<ul>\n<li>Google developed their own service<\/li>\n<li>Start = $400k<\/li>\n<li>End = $300k<\/li>\n<li>GRR = 75%<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2>Net Retention Rates (NRR)<\/h2>\n<ul>\n<li>($$ Contracts at End of Period + $$ Expansions &#8211; $$ Downgrades) \/ $$ Contracts at End<\/li>\n<li>Measures success in Expansions<\/li>\n<li>Can be over 100%<\/li>\n<\/ul>\n<h3>NRR Example<\/h3>\n<p><a href=\"https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/Net-Retention.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-3212\" src=\"https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/Net-Retention.png\" alt=\"\" width=\"728\" height=\"415\" srcset=\"https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/Net-Retention.png 728w, https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/Net-Retention-300x171.png 300w, https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/Net-Retention-150x86.png 150w\" sizes=\"auto, (max-width: 728px) 100vw, 728px\" \/><\/a><\/p>\n<ul>\n<li>Apple and Alibaba each bought our Analytics functionality\n<ul>\n<li>Purchased seats for 1000 users at $25,000<\/li>\n<\/ul>\n<\/li>\n<li>GRR stays the same.\u00a0 Gross Retention<\/li>\n<li>NRR increased to 112.5%<\/li>\n<\/ul>\n<h2>Churn<\/h2>\n<ul>\n<li>The opposite of Retention<\/li>\n<li>Churn = 100% &#8211; Retention<\/li>\n<li>Businesses will often focus on the Positive, rather than the negative.<\/li>\n<li>By reviewing Retention, Churn is implied (anything less than 100%)<\/li>\n<\/ul>\n<h1>45. Retention Benchmarks<\/h1>\n<p><a href=\"https:\/\/www.udemy.com\/course\/essential-customer-success\/learn\/lecture\/20998436#overview\" target=\"_blank\" rel=\"noopener\">https:\/\/www.udemy.com\/course\/essential-customer-success\/learn\/lecture\/20998436#overview<\/a><\/p>\n<p><a href=\"https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/retention.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-3214\" src=\"https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/retention.png\" alt=\"\" width=\"723\" height=\"233\" srcset=\"https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/retention.png 723w, https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/retention-300x97.png 300w, https:\/\/wiki.thomasandsofia.com\/wp-content\/uploads\/2020\/08\/retention-150x48.png 150w\" sizes=\"auto, (max-width: 723px) 100vw, 723px\" \/><\/a><\/p>\n<h1>Retention<\/h1>\n<ul>\n<li>The amount of Revenue retained from the beginning of a period to the end of the period.<\/li>\n<li>This is one of the most important lagging indicators I&#8217;ll be measured on as a CSM\n<ul>\n<li>Important to the line manager<\/li>\n<li>Important to the business<\/li>\n<\/ul>\n<\/li>\n<li>Benchmark Retention rates may vary depending on the size of the customer.\n<ul>\n<li>SMBs, average contract value ~10k\n<ul>\n<li>GRR 70% &#8211; 80%<\/li>\n<li>NRR 80% &#8211; 100%<\/li>\n<\/ul>\n<\/li>\n<li>Midmarket (Avg. contract $10k &#8211; 50k)\n<ul>\n<li>GRR 80% &#8211; 90%<\/li>\n<li>NRR 90% &#8211; 120%)<\/li>\n<\/ul>\n<\/li>\n<li>Enterprise (Avg. contract 50k+)\n<ul>\n<li>GRR 90%+<\/li>\n<li>NRR 100%+<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h1>Quiz 5: Metrics Quiz<\/h1>\n<p><a href=\"https:\/\/www.udemy.com\/course\/essential-customer-success\/learn\/quiz\/4957346#overview\" target=\"_blank\" rel=\"noopener\">https:\/\/www.udemy.com\/course\/essential-customer-success\/learn\/quiz\/4957346#overview<\/a><\/p>\n<h3>1. The cost of onboarding would be included in which metric?<\/h3>\n<ul>\n<li>Annually Recurring Revenue (ARR)<\/li>\n<li>Monthly Recurring Revenue (MRR)<\/li>\n<li><strong>Annual Contract Value (ACV)<\/strong>\n<ul>\n<li>The annual contract value includes any one-off fees including onboarding.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3>2. Which of the following, relating to the cost of customer acquisition (CAC), is the SaaS secret that no one wants to talk about?<\/h3>\n<ul>\n<li>The median cost of acquiring one dollar of revenue is less than one dollar<\/li>\n<li><span style=\"color: #ff0000;\"><strong>The median cost of acquiring one dollar of revenue is exactly one dollar<\/strong><\/span><\/li>\n<li><strong>The median cost of acquiring one dollar of revenue is more than one dollar<\/strong>\n<ul>\n<li>The median cost of acquiring $1 is $1.14 (according to Key Bank Capital Markets)<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3>3. When should you measure and manage MRR rather than (or as well as) ARR?<\/h3>\n<ul>\n<li>For small value contracts, most common in B2C SaaS<\/li>\n<li>For large value conracts, most common in B2B SaaS<\/li>\n<li><strong>If my customer can make month-to-month decisions about their contracts for our service<\/strong>\n<ul>\n<li>Whilst MRR is measured most often in B2C SaaS businesses it can happen in larger B2B businesses too. The principle is that if the customer can make month-to-month changes you should, as a Customer Success Manager, measure and manage MRR.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3>4. Net retention is a measurement of what?<\/h3>\n<ul>\n<li>The successful retention of customers<\/li>\n<li>The rate aw which customers are churning<\/li>\n<li><strong>The successful expansion of customers<\/strong>\n<ul>\n<li>Net revenue retention includes any expansions and downgrades so is the most suitable metric for measuring the successful expansion of customers<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3>5. You start the period with 5 customers In your portfolio, each with an ARR of $100,000. At the end of the same period one of your customers does not renew. What is your GRR?<\/h3>\n<ul>\n<li>20%<\/li>\n<li>75%<\/li>\n<li><strong>80%<\/strong>\n<ul>\n<li>(4 x 100k) \/ (5 x 100k)<\/li>\n<li>Gross Revenue Retention is the retained revenue over the subscribed revenue at the start of the period<\/li>\n<\/ul>\n<\/li>\n<li>25%<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h1>46. Metrics Wrap-Up<\/h1>\n<p><a href=\"https:\/\/www.udemy.com\/course\/essential-customer-success\/learn\/lecture\/20998462#questions\" target=\"_blank\" rel=\"noopener\">https:\/\/www.udemy.com\/course\/essential-customer-success\/learn\/lecture\/20998462#questions<\/a><\/p>\n<p>What has been discussed<\/p>\n<ul>\n<li>Key Metrics needed to understand as a CSM\n<ul>\n<li>As part of of the Organization perspective<\/li>\n<li>Along with Customer Health<\/li>\n<\/ul>\n<\/li>\n<li>Mange\n<ul>\n<li>Ensure the Outcome is\n<ul>\n<li>Clearly articulated and understood<\/li>\n<li>Being achieved<\/li>\n<\/ul>\n<\/li>\n<li>Sustain healthy relationships<\/li>\n<li>Routinely consider Adoption Expansion<\/li>\n<\/ul>\n<\/li>\n<li>Understand Revenue\n<ul>\n<li>ARR and MRR<\/li>\n<li>Annual Contract Value ACV<\/li>\n<li>Total Contract Value TCV<\/li>\n<\/ul>\n<\/li>\n<li>Under Retention and Churn (by implication)<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>&lt; 6 Customer Success Framework | Home | 8 Bringing It All Together &gt; 78% Complete! 42. Essential Metrics Introduction https:\/\/www.udemy.com\/course\/essential-customer-success\/learn\/lecture\/20998228#overview Focusing on the leading indicators will help me plan and execute the right activities. Will see positive results in the metric (lagging) that we&#8217;re measured on. If the customer is successful, and the value ..<\/p>\n<div class=\"clear-fix\"><\/div>\n<p><a href=\"https:\/\/wiki.thomasandsofia.com\/?p=3196\" title=\"read more...\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[57],"tags":[],"class_list":["post-3196","post","type-post","status-publish","format-standard","hentry","category-customer-success"],"_links":{"self":[{"href":"https:\/\/wiki.thomasandsofia.com\/index.php?rest_route=\/wp\/v2\/posts\/3196","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/wiki.thomasandsofia.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wiki.thomasandsofia.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wiki.thomasandsofia.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/wiki.thomasandsofia.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3196"}],"version-history":[{"count":8,"href":"https:\/\/wiki.thomasandsofia.com\/index.php?rest_route=\/wp\/v2\/posts\/3196\/revisions"}],"predecessor-version":[{"id":3218,"href":"https:\/\/wiki.thomasandsofia.com\/index.php?rest_route=\/wp\/v2\/posts\/3196\/revisions\/3218"}],"wp:attachment":[{"href":"https:\/\/wiki.thomasandsofia.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3196"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wiki.thomasandsofia.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3196"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wiki.thomasandsofia.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3196"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}