cs metrics redux 📊

Pete Harris, Chief Operating Officer at Pipedrive, joined me on the latest Land and Expand. Check out here (Apple), here (Spotify), here (web) or wherever you get your podcasts. We discussed the interplay between physical health, go-to-market in product-led growth (PLG) companies, and career progression among other things.

Pete’s a great guy and a lot of fun to talk with. I think you’ll enjoy the discussion.

Now, let’s dig into something I get asked about all the time: What are the right customer success metrics…?

I get asked a lot… “What are the customer success metrics we should be tracking?”

It’s a tough question to answer because most teams are swimming in metrics — but not all metrics are created equal.

To answer it, I like to break metrics into three categories: business metrics, outcome metrics, and activity metrics.

Let’s go through each.

1. Business Metrics

These are the metrics we know best:

• Gross Revenue Retention (GRR)

• Net Revenue Retention (NRR)

• Gross Margin

• Bookings

These are internal-facing indicators of your company’s health and success. They drive your company’s value, but here’s the catch: they don’t tell you anything about your customers’ success.

By nature, business metrics are lagging indicators. They’ll tell you what’s already happened, but they won’t help you course-correct in real time.

2. Outcome Metrics

This is where the magic happens.

Outcome metrics measure your customer’s progress, not yours. Ideally, they are tied to your product or service but represent the real-world impact on your customer’s business.

For example: If you sell recruitment software, an important metric might be “time to fill” — the average number of days it takes to fill an open job position.

Outcome metrics like this give you a direct line of sight into whether your customers are achieving their goals.

And, ideally, these metrics ladder up into business outcomes like:

• Revenue growth

• Profit growth (cost reduction)

• Revenue retention

• Future cost avoidance (risk reduction)

These metrics are powerful because they map directly to measurable impact. But here’s the challenge: outcome metrics are the hardest to measure.

They require deep customer knowledge and data you might not have access to. So often, you’ll need to use proxies — like product usage data or activity metrics — as a stand-in when direct data isn’t available.

These success metrics are the hardest to measure but the most impactful because they align your entire company around customer outcomes.

3. Activity Metrics

Activity metrics measure interactions with your customers and their engagement with your product. Examples include:

• Number of meetings, QBRs, consultations, and other valuable touchpoints

• Logins or usage statistics around key product features

Activity metrics are leading indicators of outcomes, but they’re not the outcomes themselves. Just because a customer logs into your platform every day doesn’t mean they’re getting value from it.

The key is ensuring activity drives outcomes, which in turn drives business results. Each is a leading indicator for the next.

Activity and business metrics are easy to track — so most companies stop there.

Your finance team already tracks business metrics like revenue, NRR, GRR, and Gross Margin. And there are plenty of tools on the market that allow you to track and measure activity.

But these are surface-level indicators. To really understand customer success, you need to go deeper.

Melissa Perri says it perfectly in her book Escaping the Build Trap:

Most companies are in love with their solutions and their own business metrics. But to drive real success for both your customers and your business, you need to fall in love with your customer’s problems, the outcomes they’re working toward, and obsess over ways to measure those outcomes.

To help visualize this concept, here’s a fantastic graphic from my friend, Jeff Navach:

The reality is, in any business, you have to focus on multiple things at once and keep them in balance. As leaders, it's our job to align activity (what our teams do) toward business results for our customers while ensuring we drive our own business success.

The best leaders walk that tightrope every day.

What customer outcome metrics do you measure? Have you found they are a leading indicator to your company's financial success?

Hit “Reply” to share your thoughts.

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