Top Three Metrics for Measuring Customer Success in SaaS
Customer success in SaaS isn’t just about providing support—it’s about creating loyal, engaged customers who drive long-term growth. To truly understand if your customer success efforts are paying off, you need metrics that show how well your strategies are working and how they impact customer retention, growth, and overall profitability.
Here are the three best metrics for measuring customer success in SaaS and how each one provides insight into your company’s performance.
1. Net Revenue Retention (NRR)
What It Measures: Net Revenue Retention (NRR) measures the revenue retained from your existing customer base over a specific period, accounting for upgrades, downgrades, and churn.
Why It Matters: NRR gives you a direct view of how well your customer success team is maintaining and growing revenue from current customers. A high NRR (above 100%) means you’re expanding revenue within your existing customer base—through upsells and renewals—faster than you’re losing it to downgrades or churn.
Goal for NRR: SaaS companies with strong customer success strategies typically aim for an NRR of at least 100%, as it indicates growth within the customer base even before new acquisitions.
2. Customer Lifetime Value (CLV)
What It Measures: Customer Lifetime Value (CLV) calculates the total revenue you can expect from a single customer over their entire relationship with your business.
Why It Matters: CLV helps SaaS companies understand the long-term revenue potential of each customer and measure the impact of customer success on extending customer relationships. Higher CLV suggests strong customer loyalty, good upsell and cross-sell performance, and effective customer retention strategies.
Goal for CLV: By aiming to increase CLV, you’re actively focusing on long-term growth and profitability. Customer success teams that focus on value realization, proactive support, and regular check-ins tend to see improvements in CLV over time.
3. Customer Health Score (CHS)
What It Measures: The Customer Health Score (CHS) is a composite metric that indicates a customer’s likelihood of retention or churn. It’s based on factors such as product usage, support engagement, and customer feedback.
Why It Matters: CHS is an essential metric for proactive customer success, as it allows teams to identify and address potential issues before they lead to churn. By monitoring CHS, customer success managers can prioritize high-risk accounts for extra support and engage loyal customers for upsell opportunities.
Goal for CHS: Aim to maintain a high average CHS, using it as a tool to guide your team’s priorities. A balanced score helps customer success teams stay proactive and improves overall retention.