Running an ecommerce business involves a lot more than just stocking quality products; you also have to keep your customers happy.
If you have healthy customer success, it means your customers are happy and are getting value from your product or service. And why is that important?
Because happy customers are more likely to stick around, buy more, and tell their friends about your business. So, it’s crucial to track these metrics to see how you’re doing in terms of keeping your customers satisfied.
In this post, we’ll go over the 7 key customer success metrics every ecommerce business should be monitoring. You will learn about the factors that influence these data.
You’ll also learn how to measure customer success metrics. Let’s get started!
Table of Contents
1. Customer health score
A customer health score is a number that represents how well a customer is doing with your business. It uses various factors, such as the following:
- customer engagement
- purchase history
- customer support interactions
A higher score means the customer is more likely to stick around and continue doing business with you. However, a lower score could indicate potential churn (the customer leaving your business).
The health score is one of the most common metrics for customer success.
How to Measure:
To measure your customer health score, you can use a combination of data from various sources. They include the following:
- CRM
- Ecommerce platform
- Customer support software
- Post purchase feedback collection tool like Trackmage
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2. Customer lifetime value
The customer lifetime value (CLV) is the total amount of money a customer will spend on your products or services. It counts over the course of their lifetime as a customer.
CLV is an important metric to track because it helps you understand how much revenue each customer brings in. It also helps you make informed decisions about where to focus your efforts.
How to Calculate:
To calculate CLV, you’ll need to know the following:
- average purchase value
- average number of purchases per year
- average customer lifespan.
CLV = Average Purchase Value x Average Number of Purchases per Year x Average Customer Lifespan
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3. Customer acquisition cost
The customer acquisition cost (CAC) is the amount of money it takes to acquire a new customer. It is directly related to finance. Hence, it outperforms other customer onboarding success metrics.
You should track CAC because it tells you how well your marketing and sales efforts are working. If your CAC is too high, it could be a sign that you need to reevaluate your strategies.
How to Calculate:
To figure out CAC, divide the total amount you spent on sales and marketing by the number of new customers you gained during that time.
CAC = Total Cost of Sales and Marketing / Number of New Customers
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4. Customer retention rate
The customer retention rate is the percentage of customers who continue to do business with you over a certain period of time. This is perhaps the most wholesome of all customer success metrics.
It gives you an idea of how well you’re retaining customers and whether or not you need to make changes to improve retention.
How to Calculate:
Calculating the retention rate is easy. Divide the number of customers at the end of a period by the number of customers at the beginning of that period. Next, multiply by 100.
Retention Rate = (Ending Customers / Beginning Customers) x 100
If you’re not satisfied with your rate, there are ways to improve it. Check out our post on the top customer retention strategies to learn more.
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5. Customer retention cost
This metric is the amount of money it takes to keep an existing customer. It tells you how much it costs to keep a customer compared to acquiring a new one.
You can incur such costs from the following sources:
- Customer support services
- Loyalty programs
- Retention-focused marketing campaigns
- Incentives/discounts
- Account management
- Upselling efforts
According to Invesp, 70% of business people believe customer retention is cheaper than acquisition.
How to Calculate:
To calculate customer retention cost, divide the total cost of retention efforts by the number of retained customers.
Customer Retention Cost = Total Cost of Retention Efforts / Number of Retained Customers
6. Average revenue per user
The average revenue per user (ARPU) is the amount of money each customer brings in.
It serves as an indicator of the financial value of each customer and how to best allocate resources.
How to Calculate:
To calculate ARPU, divide the total revenue by the number of customers.
ARPU = Total Revenue / Number of Customers
7. Monthly recurring revenue
Monthly recurring revenue (MRR) is how much money a business can count on getting from its customers every month.
Being able to predict how much you can make in a month allows you to plan for future growth.
How to Calculate:
To calculate MRR, take the number of paying customers and multiply it by the average revenue per user for that time period.
MRR = Number of Paying Customers x Average Revenue per User
In the end, any ecommerce business needs to keep track of these seven customer success metrics. They’ll provide a better understanding of your customers, so you’ll know where to focus your efforts for growth.
We suggest that you use all of these metrics together, since they all tell you different things about your business and customers.
How often you check your customer success metrics will depend on the specific goals and needs of your business. Some businesses may benefit from daily or weekly check-ins, while others may only need to check in monthly or quarterly.
Also, certain metrics like website traffic and sales will need to be checked more frequently. Others, like customer lifetime value, can be checked less frequently.
It’s best to set up a regular time to check your metrics and make changes based on what your business needs.
