Beyond NPS: Eight Metrics for Support and Success

Beyond NPS: Eight Metrics for Support and Success

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Beyond NPS: Eight Metrics for Support and Success

High customer satisfaction and Net Promoter Scores as the desired outcome of Support and Customer Success interactions, while positive, is not enough because it does not connect service delivery excellence with tangible business outcomes.

Why NPS is Not Enough for Support and Success

Support and Success must be focused on the attainment of tangible business objectives. For the customer, this implies that Support or Success interactions must help the customer apply a product successfully. For the business, providing these services must contribute to retaining relationships with hopes of expanding their value. This is why organizations must look beyond NPS (Net Promoter Score) when measuring the impact of Support and Success on lifetime customer value.

Attainment of high Net Promoter Scores, while positive, is not enough to indicate that “promoters” will correlate to the positive outcomes the business expects. The measure of Support and Success must be tangible and focused on “end game” results such as:

  • Can the customer use the product?
  • Can customers achieve tangible business outcomes by using the product?
  • Did support or success services help the customer attain their goals?
  • How will the customers’ ability to achieve their desired outcomes influence their ongoing relationship?

Beyond NPS: The Right Metrics for Support and Success

What is the primary reason for offering Support and Success services?  In most cases these organizations are aligned to help customers adopt and apply products successfully. The rationale is if customer can use and apply products successfully, you will increase the likelihood that you can retain and expand these relationships.  A single, simple measure such as NPS cannot provide sufficient insight to indicate that Support and Success efforts are resulting in tangible business benefit.

Consider the following eight metrics for determining the impact of your post sales services.

Metric

Description

1. Onboard

The percent on that new customers have received formal onboarding guidance.

2. Adoption

The rate that customers have met adoption milestones.

3. Success

The percent of customer that have reached established performance goals or milestones on defined journey map.

4. Availability

The rate that customers business operations have not be interrupted due to downtime or outages.

5. Engagement Quality

The percent of all customer engagements that result in positive outcomes.

6. Retention

The percent of active customers that have committed to renew an existing relationship.

7. Health

The relative health of a customer relationship based on the composite rates of adoption, success, retention, and recurring revenue rates.

8. Net Recurring Revenue

The net growth or contraction of the total recurring revenue relationship value. See How to Measure Net Recurring Revenue

How to Measure Net Recurring Revenue

How to Measure Net Recurring Revenue

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How to Measure Net Recurring Revenue

Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding, and growing customer relationship value.  Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides necessary insights to identify the root causes of churn, attrition, and contraction.

Net Recurring Revenue Defined

Net Recurring Revenue measures the additions and losses to recurring revenue over a specified period. Net Recurring Revenue Rate indicates if the overall value of customer relationships is expanding or contracting. Knowing how to measure Net Recurring Revenue, you can obtain a clear indication of the performance and impact of service offers, products, programs, and customer-focused policies and practices.

How to Measure Net Recurring Revenue

To calculate the Net Recurring Revenue Rate, you need to know how much recurring revenue is added and lost within a period.  While you can calculate Net Recurring Revenue Rate by knowing the aggregate recurring revenue you add and lose within a period, it is ideal to have as much granularity as possible.

Recurring Revenue Measurement Period

Net Recurring Revenue is a time-based measurement.  Choose a period such as a month, quarter, or year.  The shorter the period the more likely you are to see variations from period to period due to time-based market factors and customer behaviors.  Measurement over longer periods will provide a more accurate reflection of the actual trajectory of recurring revenue performance.

Existing Recurring Revenue

Start with your Existing Recurring Revenue (Existing RR) at the start of a period.  This includes any sources of revenue that are renewable at the end of a term including product and service subscriptions.  This does not include one-time purchases and license fees.

Recurring Revenue Lost

Subtract Recurring Revenue Lost (RR Lost) during that period.  This includes subscriptions that are canceled or non-renewed (lost) and subscriptions that are reduced in total value (contraction).

Recurring Revenue Added

Add Recurring Revenue Added (RR Added).   This will include any new sources of recurring (additions) or expansion of the value of existing recurring revenue relationships.

See the formula below.

The Meaning of Net Recurring Revenue

Measuring Net Recurring Revenue provides a clear indication about the extent to which recurring revenue is growing or declining.  The more important insights from this metric come by examining the reasons for growth or contraction of Recurring Revenue.  Consider the following when examining Net Recurring Revenue:

  • What is the trend in Net Recurring Revenue – growth or contraction?
  • What is the rate of rate of change in growth / contraction?
  • What are the primary reasons for loss of recurring revenue – loss of customers or contraction or exiting of relationships?
  • What are the primary factors that contribute to revenue gains – new relationships or expansion of existing relationships?

The type and magnitude of changes to Net Recurring Revenue Rate can provide important insights into the reasons for changes to the value of customer relationships.  Use these insights to develop strategies to stem customer churn and reduction of contract value. Build upon practices and circumstances that lead to new customer engagement and growth of existing relationships.

Net Recurring Revenue

Recent Posts

Beyond NPS: Eight Metrics for Support and Success

High Net Promoter Scores as the desired outcome of Support and Customer Success interactions, while positive, is not enough because they it does not connect service delivery excellence with tangible business outcomes.

How to Measure Net Recurring Revenue

Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding and growing customer relationship value. Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides the necessary insights to identify the root causes of churn, attrition and contraction. In addition, examining the reasons for revenue growth presents opportunities to embrace and expand practices that encourage expansion of relationship value.

Success Marketing and Portfolio Management

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Scaling Support Delivery

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Essential Customer Success Activities

Customer Success is a series of interrelated activities performed throughout the customer relationship lifecycle. This article identifies and defines critical success activities.

The Tangible Impact of CX and Customer Success

The Tangible Impact of CX and Customer Success

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The Tangible Impact of CX and Customer Success

A well-defined CX strategy combined with an effective Customer Success (CS) operating model can yield significant and tangible benefits including retention and expansion of existing relationships and the strengthening of your product and service reputation.

The Tangible Impact of CX and CS

A CX strategy defines the approach a company will use to influence customers behaviors and perceptions by creating specific customer experiences. A Customer Success operating model promotes practices across the entire customer-lifecycle including landing new accounts; onboarding, success planning; product adoption; health monitoring; retention and expansion.

To learn more about CX and CS please read:

Customer Experience vs. Customer Success – Similarities and Differences

CX Opportunities

A well-defined CX strategy combined with an effective Customer Success (CS) operating model can yield significant and tangible benefits for retention, expansion and reputation.

CS-CX Impact

Recent Posts

Beyond NPS: Eight Metrics for Support and Success

High Net Promoter Scores as the desired outcome of Support and Customer Success interactions, while positive, is not enough because they it does not connect service delivery excellence with tangible business outcomes.

How to Measure Net Recurring Revenue

Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding and growing customer relationship value. Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides the necessary insights to identify the root causes of churn, attrition and contraction. In addition, examining the reasons for revenue growth presents opportunities to embrace and expand practices that encourage expansion of relationship value.

Success Marketing and Portfolio Management

Technology service programs are evolving to offer new value and benefits such as use and adoption assistance and resources to help attain successful outcomes. As technology service programs change service marketing must evolve beyond selling the initial service engagement and focus on sustaining and growing relationship value.

Scaling Support Delivery

Scaling Support Delivery requires the digital transformation of support and an increased use of digital technologies to improve and extend core support processes and enable new service capabilities. Digital transformation includes human-assisted, self-assisted and fully automated support transactions. This article defines and introduces key characteristics of the digital transformation to scale support delivery.

Essential Customer Success Activities

Customer Success is a series of interrelated activities performed throughout the customer relationship lifecycle. This article identifies and defines critical success activities.

5 Principles for Service Success in 2020 and Beyond

5 Principles for Service Success in 2020 and Beyond

There are many approaches to achieve service success and each company must chart its own unique course. Regardless of the path, there are five principles that all companies must embrace.

5 Principles for Service Success

There are five principles of service success. Every company must have an established CX plan, attainable goals, well-defined offerings, optimized service capabilities and the means to measure and improve performance.  These five principles establish the foundation from which to define, execute and achieve tangible, positive service outcomes.  Each principle is described below:

Established CX Strategy

A well-defined Customer Experience (CX) strategy must describe the experience you wish to create with your customers and the means by which you achieve stated outcomes.  A well-defined CX strategy should include the following elements:

  • Clearly stated objectives about the type of experiences you wish to create for customers.
  • The expected outcomes from delivering these experiences.
  • The potential negative implications from not providing the stated customer experiences.
  • The practices and methods to be used to deliver targeted customer experiences.

See All Articles Related to Customer Experience (CX) and Customer Success (CS)

Clearly Defined Organizational Goals and Outcomes

A CX strategy will be executed by individuals and teams and it is imperative to clearly define the roles and responsibilities for everyone involved.  It is imperative to clearly define the roles and responsibilities for everyone involved with the execution of the CX strategy.  Organizational goals and outcomes should include:

  • Clear identification of all teams and individuals responsible for execution of the CX strategy – note that responsibility may cross organizational boundaries and include Sales, Services, Product Teams, and other groups.
  • Defined goals and objectives for teams involved with CX.
  • Individual goals to clearly describe how everyone will contribute to the attainment of team, organizational, and corporate objectives.
  • Incentive structure to reward exceptional performance.
  • Sustained performance management process to monitor individual and team performance to targets.

See All Articles Related to CX and Service Strategies

Well Defined Offerings

Offerings define the rights and entitlements customers receive and the price they pay.  The blending of rights to use a product and service entitlements through subscription programs and the opportunities to extend service portfolios with success programs requires careful definition of well-defined service programs and offers. Consider the following:

  • Determine if service entitlements will be combined with the rights to use a product or offered for a separate fee.
  • Establish the service entitlements customers need and want to effectively adopt and apply your products.
  • Determine which entitlements will be included and which will incur an additional fee.
  • Establish a pricing and payment model to define how customers pay for add on services.

See All Articles Related to Service Offerings

Optimized Success Capabilities

The ability to attain strategic outcomes and execute the CX strategy will rely on your ability to deliver services efficiently and effectively.   Optimization of success-focused service capabilities must include a commitment to the following initiatives:

  • Focus product capabilities and services on defining and achieving customer success.
  • Reduce service events through improved product quality, monitoring and proactive corrective actions.
  • Create opportunities for customers to serve themselves through self-help, communities and service automation.
  • Develop tools and content to streamline new customer onboarding and drive ongoing adoption activities.
  • Transition staff from reactive issue resolution to high-touch account management activities.

See All Articles Related to Service Capabilities: Support and Customer Success

Means to Measure and Improve Performance

Service success must be defined and measured.  Few companies will maximize performance immediately and the attainment of desired outcomes will take time to achieve.  It is imperative to implement ongoing and meaningful monitoring of key performance indicators with the means to take corrective actions to improve performance.  Consider:

  • Establish the metrics that will indicate performance against targeted outcomes including churn rate, satisfaction, Net RR, service efficiency and effectiveness.
  • Review individual and team contributions to attainment of performance.
  • Identify inhibitors to performance and develop corrective action plans.
  • Conduct regular team meeting to review performance and introduce corrective actions.
  • Review goals, measures of success and performance targets and timelines with executive sponsors and gain buying to execute.

See All Articles Related to Metrics and Measures

Featured: NET RECURRING REVENUE - Using Recurring Revenue to Identify Customer Service Opportunities and Risks

This report provides detailed instructions for defining, measuring and applying NET RECURRING REVENUE to identify customer service opportunities and risks.

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Using Net Recurring Revenue to Identify Customer Service Opportunities and Risks

Using Net Recurring Revenue to Identify Customer Service Opportunities and Risks

Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding and growing customer relationship value.  Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides the necessary insights to identify the root causes of churn, attrition and contraction.  In addition, examining the reasons for revenue growth presents opportunities to embrace and expand practices that encourage expansion of relationship value.

Net Recurring Revenue

Recurring revenue is, or should be, predictable and expected income earned from ongoing relationships such as subscriptions and service contracts. Measuring Net Recurring Revenue provides an indication of the performance and impact of service offers, products, programs, and customer-focused policies and practices.

Net Recurring Revenue measures the impact of additions and losses to recurring revenue over a specified period and the Net Recurring Revenue Rate indicates if the overall value of customer relationships is expanding or contracting. 

Inputs

To calculate the Net Recurring Revenue Rate, you need to know how much recurring revenue is added and lost within a period.  While you can calculate Net Recurring Revenue Rate by knowing the aggregate recurring revenue you add and lose within a period, it is ideal to have as much granularity as possible. 

The type and magnitude of changes to Net Recurring Revenue Rate can provide important insights into the reasons for changes to the value of customer relationships.

Net Recurring Revenue is a time-based measurement.  Choose a period such as a month, quarter or year.  The shorter the period the more likely you are to find variations from period to period due to time-based market factors and customer behaviors.

The Formula

The formula for Net Recurring Revenue is straightforward. Start with your existing recurring at the start of a period, subtract recurring revenue lost during that period and add recurring revenue added.  See the formula below.

The Meaning of Net Recurring Revenue

Measuring Net Recurring Revenue yields obvious findings including a clear indication about the extent to which recurring revenue is growing or declining.  The more important insights from this metric come by examining the reasons for growth or contraction of Recurring Revenue.  Consider the following when examine Net Recurring Revenue:

  • What is the trend in Net Recurring Revenue – growth or contraction?
  • What is the rate of rate of change in growth / contraction?
  • What are the primary reasons for loss of recurring revenue?
  • What are the primary factors that contribute to revenue gains?

Net Recurring Revenue Trends

It is important to understand the trends in in recurring revenue growth or decline.  Of course, revenue growth is preferred, but decline may also occur.  Establish a reasonable representation of recurring revenue performance over a period that is long enough to accurately reflect typical customer buying behaviors and normal sales, adoption, and renewal cycles.

Measurement Period

The first consideration is the examined measurement period.  Short duration measurements (e.g. monthly) may reflect short-term factors that may overtime be normalized.  Measurement over longer periods can provide a more accurate reflection of the actual trajectory of recurring revenue performance.

The Sources of Growth

If Net Recurring Revenue is growing it is important to understand why so that growth can be sustained or accelerated.  Growth will come by establishing new customer relationships or from increased spending by existing customers.  Differentiation and understanding the sources of growth is important.

New Logos

Is growth coming from entirely new customer relationships?  If so, chances are that your product/services are in demand, customers are aware of your products, want access to your capabilities and that your reputation is positive.  This suggest that Sales and Marketing efforts are working.

Consider if growth can be accelerated.  Are your reaching your maximum addressable market or are there even more customers that you can win over.  Ask new customers why they choose your product over other possible alternatives.  Is it your reputation, your capabilities, price, other factors, or a combination of all the above?  You may be able to sharpen market messaging and enhance the overall value proposition to attract new customers.

Acquiring new customers is great, just make certain that you can nurture and sustain new relationships relationship.

Expanding Customer Relationship Value

How much revenue growth is coming from existing customers through increased spending? Perhaps one of the strongest indicators of customer satisfaction is their willingness to expand their relationship with you.  Expansion may be a result of the utility of your product and services and may indicate that your products are easy to use and/or that the success services you have in place effectively help customers successfully adopt and apply products.

Growth attributed to existing customers is something that every company must understand.  Engage your customers that increase their spending with you to understand why.  Determine how you can accelerate expansion of customer relationship value.

Low or No Expansion of Existing Customer Relationship Value

If you determine that very little growth is coming from existing customers, ask yourself why?  Are customers still trying to achieve value with what they already have.  If so, you may need to provide more assistance to help customers with onboarding, adoption training and success planning.  Its is also possible that growth may be inhibited by lack of value-added offers and extensions.  Examine your product and service portfolio.  Do you offer what your customers need?  Are there additional services that your customers are willing to buy from you?  If so, it is time to expand your portfolio of offerings.

Reasons for Loss

All the gains from new customer relationships and revenue expansion within your existing customer base can be quickly erased if you do not retain the customers you have.  Even if you have a positive Net Recurring Revenue Rate, losses are eroding your full revenue growth potential. 

Customer Loss versus Revenue Loss

Recurring revenue loss may occur because existing customers choose to spend less with you from period to period (e.g. downgrade their subscription level or number of licenses).  In these situations, you retain the customer relationship, yet you get less revenue from an existing customer.  Understanding why customers choose to reduce their spend level is important and should be examined so that underlying issues can be mitigated.

Most recurring revenue loses are likely the result of losing a customer relationship.  Customer attrition is inevitable.  Companies go out of business and sometimes legitimately no longer need to use your product.  Many of the reasons for customer churn can be mitigated when identified and understood.  If customers cannot derive value form your products understand why.  Perhaps it is simply a matter of not being able to achieve the outcomes they expect – if so, consider better onboarding, adoption and training programs.  Perhaps the products lack the features a customer needs or product capabilities are limited, or performance is unreliable.  These are issues that need to be raise to the attention of the product development teams. Customer attrition may also result from poor sales, service and renewal practices.

It is imperative to understand how much revenue you are losing and what percent of that can be retained if changes are made to products, programs and customer-facing practices and policies.

Retain, Expand and Grow

Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding and growing customer relationship value.  Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides the necessary insights to identify the root causes of churn, attrition and contraction.  In addition, examining the reasons for revenue growth presents opportunities to embrace and expand practices that encourage expansion of relationship value.

Retention and Recurring Revenue Model

This article is based on ServiceXRG’s Retention and Recurring Revenue Model which helps companies examine the financial health of customer relationships to identify the factors that affect recurring revenue retention and growth.  For more information contact Tom at tsweeny@servicexrg.com.

If you don’t have the time to review a lot of data, there is one metric that can provide a great deal of insight into the health or customer relationships and indicate the performance of Services and other customer facing departments. The one indicator that rules them all is Net Recurring Revenue.  When measured on a monthly, quarterly or annual basis you can learn a lot.

Featured: NET RECURRING REVENUE - Using Recurring Revenue to Identify Customer Service Opportunities and Risks

This report provides detailed instructions for defining, measuring and applying NET RECURRING REVENUE to identify customer service opportunities and risks.

This report is available for free – Register or login to get your copy.

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Related Articles

How to Measure Net Recurring Revenue

Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding and growing customer relationship value. Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides the necessary insights to identify the root causes of churn, attrition and contraction. In addition, examining the reasons for revenue growth presents opportunities to embrace and expand practices that encourage expansion of relationship value.

read more

The Tangible Impact of CX and Customer Success

A well-defined CX strategy combined with an effective Customer Success (CS) operating model can yield significant and tangible benefits including retention and expansion of existing relationships and the strengthening of your product and service reputation.

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Support and maintenance portfolios have been the foundation of many post-sales service offers, yet Support offers alone are no longer adequate to sustain and growth customer relationship value. Modernization of support portfolios and the evolution to customer success-focused programs and offers is the future of post-sales service portfolios. This article will help you to determine what type of post sales service portfolio you need.

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Support Imperative: Track and Report Defects

Support Imperative: Track and Report Defects

If a customer took the time to report an issue, Support has the obligation to document this event.

Defect or Design?

Many technology vendors define defects based on internal definitions and design specifications and not necessarily on customers’ perceptions of an issue that they perceive to be a limitation.

In some instances, a perceived defect is a legitimate product limitation and other cases is caused by user error, improper configuration, or a combination of non-defect related circumstances.

Whether or not the root-cause of an issue is truly a defect as classified by Engineering, what matters most is what the customer perceives.

If a customer perceives that a product is defective it will affect the tenor of the support transaction; will possibly influence a customer’s satisfaction with a support transaction; and may have broad implications for the relationship between the company and the customer.

See the article titled Customers think that your products are buggy – Now what?

Support Imperative: Track and Report Defects

If a customer took the time to report an issue, Support has the obligation to document this event.

Carefully and fully document defect related cases and the associated impact on customer satisfaction, future product purchases and subscription renewal rates to detect early indications that product defect rates are impacting the future of customer relationships.

Next Steps

ServiceXRG offers a wealth of expertise through coaching and research to help you define measures of success and to benchmark your performance.  Please review other reports and articles related to Metrics and contact us if we can help.

More Metrics Articles

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