This article was originally published in CXBuzz.
Customer Experience (CE) is an essential component for any modern organization focused on accelerating growth and delivering amazing outcomes for its customers. For today’s CEO, that means you better be up to speed on the CE lingo and terminology that’s now de facto from the field to the boardroom. And it’s not just learning the terms; it’s learning why and how they’re so critical to your growth.
Here’s a good list to get you started (with all those buzzy acronyms included):
Annual Churn Rate (ACR)
As businesses start to mature and grow, many evolve from measuring logo retention to gross retention (GRR) to their ultimate north star, net retention (NRR). But when you give up looking at what percentage of your customers are churning (your Annual Churn Rate), you’re not seeing the full picture of your business.
That’s because there’s a big difference between churning customers and churning dollars. Say you have an annual customer churn rate (logo churn) of 10%, but your dollar churn rate is 25%. You’ve got an issue that needs attention ASAP. On the other hand, if your dollar churn rate is really low but your logo churn is high, it might be telling you that you’re pricing strategy is off, or you’re selling to customers who are simply too small to be a good fit for your product.
Out of the gate, the Annual Churn Rate is a great metric to start tracking as you start to gain product-market fit and understand the needs of your customers and the value they expect you to provide. But once you’ve built your foundation and start to hit scale, net retention is undeniably your north star. You’ll learn more about this in a minute.
Customer 360
A Customer 360 gives companies a complete view of each and every customer’s past, present, and future behavior (so, 360 as in 360°). As you might imagine, with multiple trackable touchpoints and buckets of data, spreadsheets or homegrown solutions just can’t handle this kind of thing.
It typically takes some level of sophisticated tools to get a consistent, accurate, single-source of truth of all your customers—and to make sense of all the relevant data. These include:
- How long they’ve been a customer
- Overall health score
- Product adoption
- How long until their next renewal
- Current contract value
- Transaction history
- Invoice history
- Survey history
- Product usage history
And it’s not just about gathering data. It’s about having an intelligent tool that turns that data into insights that you can take action on in order to proactively drive outcomes.
Customer Journey Map
While every customer is different, businesses want each person to walk away with the same type of experience after they engage with your team: a great one. One of the best ways to understand who your customers are, what drives their decisions, and how they view their world—and your business—is a customer journey map.
A journey map is a visual representation of a customer’s interactions with your company, including what they need, how you help, and the processes you have in place to engage and interact with them. Do you send them an email every day during onboarding? Do they get a monthly newsletter from your CEO? Do you host quarterly business reviews (QBRs) with them?
Mapping the customer journey is both an art and a science, and as a CEO, it’s critical that you’re able to read the map and identify the key moments impacting your customer’s overall experience with your company and brand. Then you can work with your team to find ways to enhance the journey, revise touchpoints, update your product roadmap, or integrate new features that align with a customer’s experience. It will be an iterative process, but with this map in hand, you won’t lose your way.
Net Promoter Score (NPS)
The days of the one-and-done sale are long gone; today, you must sell continuously to retain customers and minimize churn. One important customer satisfaction metric is the Net Promoter Score (NPS). NPS measures your customers’ overall satisfaction with your company’s product or service and even their potential to advocate for it on your behalf.
A lot of CEOs hear the term “net promoter score” and wonder if it’s really as important as their VP of Customer Success is telling them it is. I’m here to confirm: it is. And I’ll go so far as to say if you don’t have it, you’re missing something big.
First developed by the consulting firm Bain & Company, NPS attempts to distill the evaluation of a company’s overall customer experience program into one metric, helping to focus budget, resources, and time on those that can help drive lasting loyalty.
A simple metric that gives you loads of insight into how you could improve your business? It doesn’t get much better than the NPS.
Net Retention Rate (NRR)
As we mentioned earlier, Annual Churn Rate is a key foundational metric for measuring customer success. That being said, the issue with customer churn is that it fails to capture the impact of existing customers who choose to upgrade and expand (or downgrade and retract) their use of your company’s product over time.
Enter the north star metric for any company wanting to expand their growth through existing customers: Net Retention Rate (NRR). In any business, and even more so with recurring revenue models, it’s not just about retaining customers; it’s about growing them. Especially for CEOs who are looking to drive the enterprise valuation for their company. Because a one-point difference in NRR can be the difference between making the Fortune list—or not.
After all, if your customers are happy, they’re not just staying with you, they’re growing with you. And whether or not a company is growing with you is the number one sign of whether they’re going to stay for the long term. The best companies—public or private—achieve annual NRR of greater than 100%.
One more thing here: NRR is even important if you’re an early-stage company, and especially if you’re looking to raise funds to help manage cash flow. Every dollar counts. Every customer counts. And NRR could impact everything from pre- and post-money valuations to fundraising multiples and more. Net retention rules!
User Analytics
If you’re noticing a trend here, that’s by design: understanding your customer is the best thing you can do to grow your company. And there’s no such thing as customer success without user success.
What I mean by “user success” is pretty literal: how a customer uses your product and service, and for some companies, that can be hundreds or thousands of users. Here’s why: if a user isn’t successful in your platform, it’s the first sign that the customer will churn. So if you don’t have analytics that show you how customers are adopting your tool, engaging with key features and services, and then integrating that data back into your other customer success tools to proactively drive them to your stickiest and most valuable features, then you’re not going to get the growth you’re after.
Conclusion
As you guide your company into a more successful future, knowing the most important Customer Experience terms can help you communicate with your teams more effectively and make sound investments that will reap huge rewards.
