Customer success metrics for SaaS startups & how to measure

By Heather Roukoski | July 10, 2023

In a down market, there is greater risk of customers not getting value from the product. So, how can finance teams help stay in front of customer churn?

Customer success metrics for SaaS startups objectively measure how your customers feel about your brand and how they relate to your company. These metrics offer an important gateway to improving your company’s performance and can help you drive growth.

How to drive growth with customer success metrics

Closely tracking your customer success metrics will enable you to drive growth and stop logo churn in its tracks. Here are two ways to drive growth with customer success metrics:

1. Capitalize on top-performing audience segments.

For all products and services, specific audience segments will inevitably account for the lion’s share of your audience. Measuring customer success metrics can help you identify and double down on your most profitable customer segments.

2. Improve your overall user experience.

Your customer success metrics can help you pinpoint exactly which of your customer experiences have been lackluster and why they were. This is essential for keeping your current buyers happy and attracting new ones.

Next, we’re going to cover some of the most critical types of customer success metrics and offer a few tips for how to track and calculate them efficiently.

What are the different types of SaaS customer success metrics?

Customer success metrics help SaaS leaders keep a real-time sense of how your customer base is expanding or shrinking. But what are customer success metrics and how can they help you drive growth?

Follow along as we take a deeper dive into the key metrics for customer success that SaaS startups should be tracking.

Acquired customers and canceled customers

Two of the most valuable measurements for you to keep track of include acquired customers and canceled customers. These two metrics are defined as follows:

Acquired customers

Corporate acquisitions can play an essential role in expanding your customer base. Keeping track of your acquired customers updates you about any acquisition strategy you might have in place and keeps you informed of how your broader customer base is developing.

Canceled customers

Canceled customers are users who have chosen to stop interacting with your services. After users cancel, you usually have a small window of time where you might be able to win them back through a discount, free service period, or some other special offer.

Once customers have canceled, there’s a possibility they’ll turn into churned customers. Let’s examine our next customer success metrics – the 2 types of customer (logo) churn.

Voluntary churn and involuntary churn

Customer churn is one of your most valuable customer success metrics to watch – specifically, with an eye to minimization. Canceled customers become churned customers if you cannot persuade them to return to your services. (RELATED: How SaaS Finance Teams Can Reduce Customer Churn)

While there’s no harm in sending an email or two with special offers to churned customers, be sure not to overdo it. Less is more because you could easily drive away customers who might have come back after some time apart.

What are the two types of customer churn? And what makes these KPIs such valuable customer success metrics? Known as voluntary churn and involuntary churn, these metrics are defined as follows:

Voluntary churn

Voluntary churn happens when customers choose to cancel their subscription and then maintain that cancellation status for good. A low churn rate is one of the best customer success metrics you could hope for and is something to be genuinely proud of.

Involuntary churn

Involuntary churn occurs when a customer’s credit card expires, and they are automatically unsubscribed from your services. SaaS companies frequently recover involuntarily churned customers by notifying them of their expired card via email and then rerunning the transaction after seven days.

The key things to takeaway are that voluntary churn and involuntary churn can get out of hand and create fractures in your monthly or annual recurring revenue if you’re not diligent. Instead of tracking one over the other, monitoring both of these customer success metrics should be a top priority as a SaaS CFO.

Recovered customers and renewed customers

Our next two customer success metrics are vital to keep track of and aim to improve over time. Called recovered customers and renewed customers, these are defined as follows:

Recovered customers

Recovered customers are users who have churned but have chosen to pick their subscription back up. A high customer recovery rate often indicates that you’re providing a valuable service your customers can’t find elsewhere.

Renewed customers

Your renewed customers are your users who have reached the end of their current billing period and chosen to keep their subscriptions active. Automated accounting software can help you seamlessly track your customer renewals and recoveries.

Remember, even if your customers churn, there’s always hope that they’ll come back. Keeping track of these customer success metrics will help you measure the timeframe in which your users return, which customer segments are most likely to be recovered, and other engagement data that can help you optimize your financial performance.

How to measure customer success metrics in real-time

Ready to drive growth with customer success metrics at your fingertips? Sage Intacct SaaS Metrics and Subscription Analytics software can help you measure, track, and calculate these and other metrics in real-time using a cloud-based financial dashboard.

Looking for a deeper dive? Have a look at our recent E-book on the most influential metrics you can use to help guide your team through the market downturn.