5 customer success metrics to optimize your SaaS strategy

A well-executed customer success strategy in SaaS can significantly reduce churn, increase customer lifetime value, and create a predictable revenue stream. But to drive meaningful improvements, you need to measure the right metrics, analyze them effectively, and take decisive action based on insights.

This article will explore 5 essential customer success metrics that every SaaS business should track. We’ll also review real-world examples from leading SaaS companies and actionable strategies to help you optimize your business performance.

Customer churn rate

Understanding how many customers leave your service over time is crucial for identifying weaknesses in retention and improving long-term growth strategies.

Why it matters

Churn rate is one of the most critical indicators of a SaaS company’s health. It measures the percentage of customers who cancel their subscriptions within a given period. 

A high churn rate is a warning sign that something isn’t working - your product-market fit, customer engagement, or onboarding experience. Keeping churn low ensures more predictable revenue and higher customer lifetime value.

Losing customers also results in lost opportunities for growth. For example, if a SaaS company has a monthly churn rate of 5%, it could lose nearly half its customer base within a year. This high attrition rate neutralizes new customer acquisition efforts and makes it difficult to achieve revenue growth targets.

How to calculate it

To calculate churn, divide the number of customers lost in a given period by the total number of customers at the start of that period, then multiply by 100.

Benchmarks 

A healthy annual churn rate is under 5% for enterprise SaaS companies, while SMB SaaS businesses typically see churn between 10-20% annually. Consumer SaaS products often experience much higher churn, sometimes reaching 30-50%.

For example, as of Q3 FY2025, Zoom has maintained an impressively low online monthly churn rate of 2.7%. This success can be attributed to their relentless focus on user experience, continuous product innovation (adapting existing features and creating new ones, improving accessibility…), and strategic customer engagement efforts.

During the pandemic, Zoom rapidly scaled its customer success initiatives, providing free access to schools and optimizing onboarding for new users. These proactive strategies helped reduce churn and improve retention, ensuring sustained revenue growth.

How to improve it

To reduce churn, you can start by enhancing your onboarding experience. Customers need to see value quickly, so guide them through the product with interactive tutorials and personalized support. 

Another effective strategy is to establish a feedback loop - regularly gather input from customers and address their pain points proactively. 

Finally, consider offering flexible pricing models to retain customers who may otherwise leave due to budget constraints.

Learn more about churn rate and how to reduce it by reading our article here.

Net revenue retention (NRR)

This metric helps you determine whether your existing customers generate more revenue through upsells and expansions despite churn losses.

Why it matters

NRR goes beyond churn by measuring the revenue growth from existing customers, factoring in the expansion (upsells, cross-sells) and losses (churn, downgrades). 

Notably, this ratio disregards revenue stemming from new subscriptions but incorporates the effects of attrition and contraction on MRR.

A high NRR is a strong sign of product stickiness and long-term customer satisfaction.

How to calculate it

NRR is calculated using this formula:

Benchmarks 

A good NRR depends on the stage of the company. Here is an example of ranges based on our market observations:

How to improve it

To boost NRR, focus on upsell and cross-sell strategies by leveraging customer data to suggest relevant product add-ons. Implementing usage-based pricing models can also encourage customers to increase spending as they scale. 

Finally, prioritizing customer guidance and proactive support to help users get the most value from your product’s features can be a good start to improving your NRR. 

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Customer lifetime value (CLV)

Why it matters

CLV measures a business's total revenue from a single customer throughout their relationship. This metric is key for understanding long-term profitability and guiding investment decisions. 

A high CLV justifies higher customer acquisition costs and indicates strong retention and customer loyalty. Businesses with a high CLV can afford to invest more in personalized experiences, premium support, and long-term engagement strategies, ultimately driving sustainable growth. 

How to calculate it

CLV is calculated as follows:

For example, imagine TechFlow, an imaginary SaaS company offering a project management tool on a subscription basis. TechFlow has an ARPA of $100 per month, a gross margin of 80%, and a churn rate of 5% per month.

Using the CLV formula:

This means that, on average, each customer generates $1,600 in lifetime value for TechFlow. If the company’s CAC (Customer Acquisition Cost) is lower than this amount, its business model is sustainable and profitable.

Benchmarks

A healthy CLV-to-CAC ratio is at least 3:1, meaning you earn three times as much from a customer as you spent acquiring them. Here is a general rule of thumb:

• CLV lower than CAC (1:1.25 or worse) – Spending more to acquire customers than they generate in revenue is unsustainable and leads to cash burn. To fix this, either boost CLV or cut CAC.
• CLV higher than CAC (2:1 to 4:1) – A healthy ratio, meaning every dollar spent on acquisition returns $2–$4. A 3:1 ratio is ideal, balancing profitability and growth.
• CLV much higher than CAC (5:1 or more) – While highly efficient, this suggests underinvestment in acquisition. Scaling up marketing efforts could unlock more growth.

How to improve it

To maximize CLV, optimize your pricing models to encourage long-term commitments. Enhancing customer support and engagement strategies can also increase retention. Additionally, incentivizing annual subscriptions over monthly plans can help secure higher lifetime revenue per customer.

Another effective way to maximize CLV is by implementing loyalty programs incentivizing repeat purchases and long-term engagement. A great example of this is Blume, a body care retailer that successfully increased its CLV by introducing a point-based loyalty program called Blume Bucks (BBs) within their Blumetopia rewards system.

Blume customers earn BBs by completing actions such as:

• Making purchases
• Following the brand on social media
• Leaving product reviews
• Celebrating their birthdays

This strategy fosters ongoing engagement by rewarding both transactional and non-transactional interactions. Customers can redeem their BBs for free products, exclusive merchandise, and unique gifts, encouraging brand loyalty and increasing repeat purchases.

SaaS companies can apply the same principles by rewarding engagement, referrals, and feature adoption to encourage long-term retention and higher lifetime value.

Most importantly, you can integrate CLV feedback into product roadmaps. Fincome can help you track CLV trends, identify key insights, and measure the impact of your retention efforts: turn feedback into action now and book a demo!

Learn more and get deeper insights on CLV here.

Net promoter score (NPS)

Why it matters and how it is measured

NPS is a key indicator of customer loyalty and overall satisfaction. It measures how likely customers are to recommend a product or service by asking, "How likely are you to recommend our product to others?”

Customers respond on a scale from 0 to 10, where:

• ‍Promoters (9 - 10): Loyal customers who actively recommend the product, driving organic growth.
• Passives (7 - 8): Satisfied but not enthusiastic customers who may switch to competitors.
• Detractors (0 - 6): Unhappy customers who can harm the brand through negative feedback.

A high NPS signals strong customer advocacy and increased word-of-mouth referrals, reducing reliance on paid acquisition. Conversely, a low NPS highlights dissatisfaction and potential churn risks, making it an essential metric for identifying areas for improvement. 

Benchmarks 

A good NPS score for SaaS companies is 30+, while top performers aim for 50+, according to industry benchmarks.

Source: https://frill.co/blog/posts/guide-to-customer-satisfaction-nps-in-saas

How to improve it

To improve NPS, you can actively follow up with detractors to understand and address their concerns. At the same time, make sure you also reward loyal promoters with referral programs and exclusive perks. 

Customer engagement score (CES)

What is CES

Customer Engagement Score (CES) measures how actively users interact with your product. It considers key factors such as:

• Login frequency – How often users access the platform
• Feature adoption – Which features they use and how frequently
• Time spent on key functionalities – Engagement with core product elements
• Support ticket activity – Frequency and nature of user inquiries

Why is CES important

A high CES indicates:

• strong user engagement ;
• better retention rates ;
• higher customer lifetime value (CLV) ;
• increased upsell and cross-sell opportunities.

On the other hand, a declining CES can be a red flag for:

• potential churn ;
• decreasing product value perception ;
• lower long-term customer investment.

Businesses that leverage CES effectively can take proactive measures to improve customer experience. 

How CES drives Business Growth: the Snowflake example

Snowflake, a cloud-based data warehousing company, has demonstrated exceptional customer expansion, boasting a NRR rate of 168% as of FY2021. 

This means that even after factoring in customer churn, existing customers continued to spend significantly more on Snowflake’s services year over year. Their success can be attributed to usage-based pricing, seamless scalability, and an ecosystem encouraging excellent customer investment in their platform. This high NRR underscores Snowflake’s ability to drive ongoing value for its customers, making retention and expansion a core growth driver.

How to improve it

To boost CES, leverage product analytics tools to track user activity and detect early signs of disengagement. Identify patterns in customer behavior and segment users based on their engagement levels to implement tailored strategies.

Set up automated re-engagement campaigns for inactive or low-engagement users that provide educational resources, feature tutorials, or incentives to encourage more profound product use. Additionally, in-app guidance, such as tooltips and onboarding walkthroughs, will also help improve your CES as it allows users to discover valuable features they might have overlooked.

Ultimately, live chat support and proactive customer success outreach aren't emphasized enough to maintain engagement. 

Conclusion

Customer success isn’t just about tracking numbers; it’s about using data to improve relationships and drive long-term growth. By closely examining churn rate, NRR, CLV, NPS, and CES, SaaS founders can proactively enhance retention, increase expansion revenue, and build loyal customer bases.

Successful companies like Zoom, Blume, and Snowflake have shown that a data-driven approach to customer success has led to sustained profitability. Implement these metrics and strategies in your SaaS business today, and start optimizing for growth.‍

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