The most important metric for Customer Success

Daily Active Users – DAU is the most important metric for Customer Success and user engagement. When Facebook present their quarterly business results, it is the first metric that is being reported on their quarterly call.
Facebook Earnings Call Slides

source – http://files.shareholder.com/downloads/AMDA-NJ5DZ/2138285812x0x888146/484823BA-5B5D-4BC4-B872-5F239E813384/FB_Q116_Earnings_Slides.pdf

You’ll see in their presentation that the second metric that is reported is of Monthly Active Users (MAU).

On a meeting with a very large enterprise software vendor, I was pleasantly surprised to see them starting to adopt MAU as the metric for business success.

Daily Active Users counts unique users active in a given day. Monthly Active Users counts unique users active in a given month.

Although not very sophisticated, DAU is a measure of customer (user) engagement. How many people take the time to use a product or service? If they use it often it means they see value in it, if they don’t, something is missing.

DAU is CSAT and NPS in one. It counts 100% of your customers, the ones that use your product and also the ones that don’t. And, it is objective!

By taking a deeper look into DAU and MAU you can come up with many important actionable conclusions.

Making the Metrics Actionable

DAU/MAU (ratio of DAU out of MAU) – this is usage frequency metric. DAU/MAU of a given group (could be users of in specific account) determines how often your product or service is being used. DAU/MAU that is closer to one (> 0.7) reflects daily use.

MAU/Licenses (ratio of MAU out of licenses sold) – is your license utilization. If licenses represents the number of seats purchased by an account, than MAU/Licenses represents the license utilization ratio. When license utilization > 1 – it’s time to grow the account, when license utilization is < 0.5 we have an adoption problem and potential churn risk.

Objection Handling

Many peeps in the customer success space are very uncomfortable with usage and utilization based measurements for customer success. Here are some common objections and my responses:

What if my product was not designed to be used daily?

If the product was not designed for daily use, change the frequency of measurement to the time window it was intended to – use MAU instead of DAU

What about non-interactive use? for example – website hosting service?

In some cases interactive use does not exist (really? not even admin and configuration?) – so measure utilization instead of interaction.

Isn’t business outcome the most important thing – more than usage?

Yes, value and outcome are very important, but DAU and MAU gives us great indications into that as well. There’s no single metric to measure, so if you can measure business outcome do that too.

If my customer is using my product – it does not mean they will not churn or cancel

That is true there are no guarantees, but if your customer does not use your product or service they WILL cancel eventually.

The most successful businesses in the world run on these metrics – you should do it too.

The Most Important Metric for Customer Success – Part 2

Customer Success – Finally Drinking like Sales People Do

Sharing Customer Success Customer Success is maturing! How do I know?

My first indication is the amount of drinks we’ve had together last night at Norwood. Reminds of some other crazy times ten years ago with a bunch of tech sales people in NYC.

For the first time, when asking a room full of people (over 100!), how many of them actually practice customer success daily – all hands went up.

We’ve spent some time talking about models. The business model of customer success and how the business metrics of maximizing customer lifetime value are should be the goal.

We’ve had a lively conversation about Farming vs. Hunting and the metaphor of running a Grove of customers, as the title of the book “Farm Don’t Hunt – The Definitive Guide to Customer Success” suggests.

And lastly, we’ve shared operational tips on portfolio management, prioritization and measurement at the customer success, director and VP level. This is exciting!

For your convenience, here’s the presentation I’ve used below. Looking forward to seeing you again – the good customer success people of New York!

Two Customer Success Presentations

Customer Success is really picking up momentum these days, and with momentum comes a lot of news that adds to a lot of confusion for people who are just starting to learn about what customer success is.

I’ve presented this presentation last week at the Silicon Valley Customer Success meetup, my goals was to make it dead-simple. I’m trying to answer: what are we really managing in customer success management, and what customer success teams really do. Take a look – let me know what you think.

The Customer Success Platform buyer’s guide (below) is designed to explain the considerations behind selecting a Customer Success Technology for your business.

Enjoy

Customer Success Explained

We’ve just finished up a kick ass Customer Success Summit 2015. Amazing vibe of over 1000 attendees. While organizing the videos on YouTube, I’ve created this play list of a series of videos Omer and I created few months back. It is a set of short videos (no more than 90 seconds each) that explains our point of view on Customer Success. I hope you’ll find it useful.

Customer Success Summit 15 is coming this march

The idea behind the first Customer Success Summit came as a result of many conversation with new customers who’ve asked us to connect with their peer group. As Customer Success is relatively new and there is not a lot of known best practices, customer success practitioners wanted to exchange notes with one another.

The first Customer Success Summit took place on March 2013 at the financial district in San Francisco. We didn’t know exactly what to expect and setup a place for 50-60 people. We ended up with 120 people. The room that we’ve booked was full all day and people had to stand in the aisles.

The 2nd Customer Success Summit which took place at the Tera Gallery in San Francisco last march was already a bigger more polished event that drew 400 professionals.

This year, the Customer Success Summit is going to be 10 times bigger than the first one! I keep feeling that it’s much easier to talk to Customer Success in 2015 than ever before. This year the agenda is also influenced significantly by the attendees. Thru the summit Facebook page, we’ve made sure to communicate daily with the audience who’s planning to attend. To take part of the conversation, simply like the page here and get involved.

I suspect that like the previous years, the summit will be sold out at least two weeks before the event. You should check it out today, and don’t forget to register if you’re interested in learning from your peers about Customer Success. The summit is a very good fit for customer success professionals, but also to any other SaaS/Software executive who’s building or is part of a Customer-Centric organization.

Last year we’ve introduced the Customer Success Manifesto, and this year we’re going to be introducing additional set of frameworks, including financials ones.

I’m looking forward to March – this is my favorite time of the year, much due to the annual Customer Success Summit. See you all there.

What’s the morale from “Hatching Twitter”?

I’m not sure if I like or hate the story of Twitter. For the past few days I’m reading “Hatching Twitter” by Nick Bilton. The story is amazing, it’s like a soap opera written by the best screen writer.

There are lessons to be learned by Entrepreneurs, by friends and by business people. It’s enjoyable to read although in many cases it makes my stomach ache…

The main theme that comes across – you can’t do successful (and failing in case of Odeo) startup with friends, you’ll end up with no friends.

Read it, let me know what you think?