<aside> 💡 CSM, or Customer Success Management, is a strategy and process aimed at enhancing customer satisfaction and loyalty through the improvement of their interactions with a company's products or services. This approach entails ongoing engagement with the customer at all stages of their journey, starting from the initial product acquaintance to post-purchase support.

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Mathematically, CSM can be expressed as follows: CS = CE * CO

where: CS - Customer Success (The company's success from working with the customer) CE - Customer Experience (The user experience that the business and customer have gone through together) CO - Customer Outcomes (The results achieved by the customer, whether they are ready for "word-of-mouth" (the highest measure of customer trust))

This formula excellently encapsulates the concept, highlighting the importance of creating a positive experience for the customer and achieving the desired outcomes they seek.

<aside> 💡 Key CSM Metrics and Their Significance

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In any department, project, or product, it's crucial first to choose a primary metric.

North Star Metric (NSM) — is the key indicator that reflects the core value your product delivers to customers and is directly linked to the long-term success and growth of the business.

Mathematically, NSM = SUM of all KPIs

The North Star Metric (NSM) approach is suitable because it:

• Customer Value Focus: This metric prioritizes the creation and delivery of value for customers, which is fundamental for retaining and expanding the customer base.
• Measurability: The indicator can be easily measured using available data on revenue and customer activity.
• Impact on Strategic Decisions: The NSM can guide strategic planning, helping to identify which initiatives and product improvements can most effectively increase revenue from active customers.

In Customer Success Management (CSM), there are two main categories of metrics: qualitative and quantitative. These metrics provide valuable insights for assessing and improving the customer experience and the overall effectiveness of CSM strategies. Qualitative metrics reflect subjective evaluations and perceptions of customers, while quantitative metrics provide specific, measurable data about customers' interactions with the company and its products. Together, they offer a complete picture of how customers interact with the brand and which aspects need to be improved to enhance their satisfaction and loyalty.

Qualitative metrics are metrics based on surveys, focus groups, and one-on-one interviews.

Based on these qualitative metrics, let's develop the financial justification for our CSM department. We'll describe the financial indicators for CSM: conversion to the second purchase (C2-conversion), average revenue per paying user (ARPPU), average revenue per account (ARPA), churn rate expressed in monetary terms, net retention rate (NRR), annual retention rate expressed in monetary terms (ARR), and EGR (Earned Growth Rate) for linking qualitative and quantitative metrics (more on them below).

The result of these metrics for CSM serves as an explanation to the development department not in words, but in data: "Why it's worth investing in a particular feature or launching a new product?" and "What financial and qualitative consequences will follow?"

Let's delve deeper into these financial metrics..

Also, qualitative metrics indirectly impact the company's revenue through LTV (Lifetime Value), which is the profit a company derives from a customer throughout their entire relationship. LTV answers the question of how much money a customer brings to the company.

<aside> 💡 If the level of loyalty is higher, we can retain the customer in a crisis situation (they will understand that there is a problem and wait for its resolution), thus the Churn (the main quantitative metric) will not worsen.

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