CX Metrics That Matter to Me

The Gist

• Churn focus. Prioritize reducing churn by focusing on customer needs to improve overall happiness and retention.
• Growth goal. Aim for an NRR over 100% to demonstrate successful customer base expansion and sustained growth.
• Metrics mix. Balance multiple metrics, like NRR and GRR, to ensure an accurate and comprehensive view of customer success.
• Data storytelling. CX leaders should focus on telling a story with their data, using metrics like NPS and CSAT, to gain valuable insights and feedback from customers.
• Customer engagement. Personal outreach to customers, whether they are promoters or detractors, helps build relationships, encourages feedback and demonstrates the company’s commitment to customer satisfaction.
• Segment prioritization. Not all customers are the same, so CX leaders must recognize and prioritize the needs of their most valuable customer segments in order to provide tailored support and drive success.

The ancient Greek mathematician Archimedes famously tackled a pressing problem for his king: determining the purity of a crown. In a moment of inspiration while bathing, he applied the concept of measuring volume to assess the crown’s composition. Elated, he leapt from the tub, exclaiming “Eureka!” (I have found it!).

As with Archimedes’ insightful “Eureka!” moment, today’s customer experience (CX) leaders must carefully monitor key performance metrics to uncover valuable insights about their customers.

Melissa Henley, an experienced CX leader at Luxion, the company behind KeyShot 3D software, explores the vital aspects of both customer and employee experiences. In this latest podcast with CMSWire’s CX Decoded, Melissa, a CMSWire Contributor, identifies two core metrics that CX leaders should prioritize: churn and net revenue retention (NRR). Melissa elaborates on the significance of these metrics in evaluating customer satisfaction and cultivating a loyal customer base, emphasizing the importance of a keen focus on these numbers for a company’s success.

Additionally, Melissa addresses the crucial role of data in CX leadership. She asserts that proficiency in working with data is essential for success in the CX field. And just as Archimedes needed to perfect his measurement techniques to resolve the king’s quandary, in the world of customer experience, mastery of the right metrics can lead to those elusive, yet sought-after “Eureka!” moments.

You can read Melissa’s CMSWire columns here. 

We caught up with her on the topic of metrics and more recently. 

Editors note: This transcript has been edited for clarity.

Dom Nicastro: Hello, everybody and welcome to CX Decoded podcast. I am Dom Nicastro here with our latest guest, and I do these ones solo because these are the cool kids I call them they are the CMSWire contributors from the contributing community who write articles for us from the trenches, where they’re doing their jobs, learning the lessons, doing it, the work of CX. I love it. In this one is going to be Melissa Henley, vice president of customer experience at Luxion what’s going on, Melissa? 

Melissa Henley: Hey, Dom, how you doing?

Dom: Oh so good to have you. I’m so glad when I can just boot my team off these calls and just do these one-on-ones with contributors. It’s like this is my world, all I think about all day, the contributors making them happy and delivering great content, and you are one of the best. 

Melissa: Well, thank you. You could say that again.

Unraveling the Link Between Happy Employees and Satisfied Customers

Dom: So of course our listeners can follow you and CMSWire. Of course you are regularly writing content for us in the world of customer experience. And what I love about you, Melissa, is you actually cross over that path to employee experience a lot, too. I love that you’re talking about both EX and CX because how can you not?

Melissa: How can you have happy customers if you don’t have happy employees? The two are really tied together.

Dom: Right? So much so and how long has it been now since you’ve been writing for us in the contributor CMSWire world?

Melissa: Now probably I want to say like four or five years. It’s been a while.

Dom: That’s so good. Taking the time from the trenches right for us. We love it. The topic du jour today is going to be what KPIs you are following, the top metrics that you care about, the things you’re thinking of, the challenges around those, the successes, and also a little bit of we can open this up to some generative AI conversation, too — how can we not?

Melissa: How can you not truly?

Dom: But yeah, let’s get some knowing Melissa action going on here. So tell us about your role and kind of your path to get there where you are now.

Melissa: Yeah, absolutely. It was funny. When you were talking about metrics. I always say if I had known I would have spent so much time in Excel working with data, I would have majored in something besides women’s studies. So I actually came to software, sort of a really roundabout way. I was previously working in finance, had taken some time off, came back to work. And I was looking for a job at my previous company, their job description said, “we’re looking for a writer and we serve free lunch.” And I was like, well, I can write and I sure do like lunch. So that’s actually how I got into software. 

Dom: Wow. 

Melissa: Yep. And I ran marketing for a really long time. And then my previous company, they were looking to build out their customer success and customer experience practice. And so because I worked so closely with our customers, they had asked me to kind of step up and lead that. And so that’s how I ended up in the exciting world of customer experience.

Dom: Isn’t that crazy of customer experience professionals, the path is just not straight. It’s not clear. It’s like, where did you start, but you just wonder. And we had time Tom DeWitt on a podcast recently on CX Decoded, talking about his Michigan State University master’s in CX programs. So you actually are starting to see education meeting CX, right, which is so cool. When you’re hiring, in your experience, where are these young CX folks starting? Are they taking courses that relate to CX in any way or?

Melissa: It’s interesting, I see a lot of not just with myself see a lot of overlap between sales, marketing support, and those people tend to go into customer success and customer experience just because of the background is not as important as really being motivated by doing the best thing you can for customers. And I’ve had a tendency to sort of find those people throughout the organization and bring them over. But I definitely see as we’re hiring now, there’s definitely a deeper bench of CX professionals than there were when I started. And it’s exciting to see all the new programs, training and customer experience. I went through one myself a couple of years ago. It’s definitely changing.

Related Article: 20 Customer Experience Metrics Critical for Your Business

The Impact of Churn on Customer Experience and Strategies for Improvement

Dom: So I want to start the conversation by talking about the fun world of metrics.

Melissa: You must have just been at my desk when I was building a deck with all the metrics.

Dom: I like to call metrics, the “yeah, but … “ right there. Yeah…but it’s like, hey, our customers are happy. “Yeah, but what does it really say?: Everyone gets you on something. And in the journalism world, we’re always measured, you know, I mean, I think I shared something that was really exciting about a tweet or something I put out and it was getting a lot of love. And someone in the company said “yeah, but is it getting engagement on the website?” Don’t be a buzzkill. Come on, come enjoy this to vanity tweet, you know.

Melissa: You can’t enjoy it. You gotta look at the bigger picture with metrics, unfortunately,

Dom: I know and you being a leader in your organization and CX you are constantly being measured and asked by, you know, folks that care about the bottom line. So let’s get into three metrics, three high level metrics that you care a lot about. Let’s start with churn. OK, because how important is that one? 

Melissa: Obviously, you mean the number that gives me nightmares? Yes, absolutely churn. So here at Luxion, our product KeyShot is 3D visualization software. And so it is really one of those products that a lot of our customers will — they’ll learn it as a student when they’re in school for industrial design, and then become really faithful to it. And so we’ve been in the middle of transitioning from perpetual to subscription. So really, churn is sort of that number that I wouldn’t say it’s the one metric to rule at all for me, but it is one of the metrics that rule it all for me. And with churn in particular, it’s where you really see those hard truths about your customer happiness, because you can hide it all you want behind NPS scores, because that’s just a subset. But churn is really where the rubber meets the road.

Dom: In your past experiences, organizations, is churn like it’s just automatic. Does every CX leader have to be closely watched and churn? And if not, is there a good compelling reason that that’s not top of mind for them?

Melissa: You know, it’s interesting with churn, I think you can look at it a couple of different ways. Maybe you’re looking at your net revenue retention, you’re looking at your gross revenue retention. But in the end, I mean, you always sort of expect there’s going to be some level of churn. And I think as customer experience leaders, we’re always sort of striving towards that zero churn. But in reality, you’re never really going to hit zero, right? Because you’re always going to have companies that might be going out of business priorities change, so you’re never going to hit that 100% retention, although I think we all sort of always strive for that. But it really does keep the focus on the customer. I really think that’s why churn is one of those metrics that we watched so closely.

Dom: And obviously, this comes down to good tools, right? So you need to have that base — that foundation. So what are some of the platforms like those foundational have to have, if this system blew up, in my day, I will lose my mind kind of thing. Something that you’re just firing up every workday, and it’s telling you churn and sort of how does that process work?

Melissa: So for me, we really rely heavily on Salesforce. We’re in the middle of transitioning to a new payment platform. So we’re building our numbers together from a bunch of different locations right now. But for me, it’s really — we live and die in Salesforce, I have a pretty new customer success team. So we’re at the point now where we’re trying to decide if we need to invest in a customer success platform or continue to use our CRM. But for me, it’s our CRM, it’s our payments, its NPS, our customer, community, those are the things that I’m always sort of refreshing throughout the day.

Dom: Are the vendors lately doing a good job with letting Melissa Henley tell them her story, going into these demos, these selection processes, these bake-offs, as they call them, and they do a good job of letting you upfront — telling you your needs and kind of taking it from there.

Melissa: Some I wish they would do a better job of you know, I don’t necessarily want to become an expert on every single software platform in the world. And so when you find a vendor that really understands your needs, and tells you what you don’t know that you need, those are the ones that I really come back to over and over again, our customer advocacy platform. Influitive is one of those, I feel like they’re really on the cutting edge of customer advocacy and providing features I didn’t even know I needed before I asked for them. 

But on the flip side, they’re also really good about listening to feedback. So we are really heavy users of the discussions feature. And so when we have feedback based on what we’re hearing from customers, what we’re noticing, it’s they’re always really available to have someone from product management hop on the call set up calls with anyone in the organization. So I think especially those of us that work in customer experience, like we really notice when there’s a good customer experience. And on the flip side, we really notice when the customer experience is suboptimal.

Dom: Yeah, right. All right, so let’s give the one big takeaway for churn. If I were a customer experience leader, and I was tasked with improving that — it’s just been a bad quarter — things are not going well. Like where do I start trying to flip the script on a bad churn number.

Melissa: I’ll give a piece of advice, and I’ve written about this in my columns more than once over the years. It’s a piece of advice from the founder of the previous company I worked at — and she would always say focus on the customer, and the money will follow that if you’re making decisions based on money, customers can sense that and will like sort of recoil from it. But if you’re making decisions with your customer in mind that you’re really keeping their needs front and center, the money will naturally flow from that. So I would say if you’re really having issues with churn, take a step back and think about the customer — really think about — what are they facing? And what changes have you made? Are they addressing sort of driving revenue? Or are they addressing solving for the customers needs, and that should put you on a pretty good path forward.

Related Article: Top Customer Experience Metrics That Impact Internal Operations

Understanding and Leveraging Net Revenue Retention for Customer Success

Dom: Awesome. All right, and this next one, we’re going to talk about metric two of three that you’re super laser-focused on. And I’m going to take a deep breath on this, Melissa, because I’m from Boston. And when I say this acronym people probably won’t understand. So I’ll say it how I say it first. And then we’ll say it like how the rest of the world says it. So it’s NRR. That’s how I that’s how I say it. In the real world. It’s called N ar, ar, I had to take a deep breath to pronounce my R there. Can you define that? Tell us what it stands for, kind of give us the big picture of what it is. For those who might even be experiencing this for the first time. Possibly, you never know who’s listening in the podcast world, and then just lay the foundation of how you approach it.

Melissa: Sure, absolutely. So NRR, which always makes me feel like a pirate, when I say like NRR, to me, it’s really the one metric to rule it all. When you’re working with subscription customers, because it encompasses churn, you basically take your revenue, and then you subtract your downgrades your cancellations, and then divide it by your revenue, and then you get a percentage. And with net revenue retention, you really want to aim for over 100%, because that shows you’re expanding your existing customer base. 

Now, one thing with NRR, there’s also on the flip side, there’s gross revenue retention, which takes the expansion revenue out. And so you can have to look at both of them, you can’t just only focus on NRR, because you can sort of game the system, you can hide some of that churn behind expansion. So say you have 10% of your customers’ churn, but you expand one of your largest accounts, then it’s going to look like your NRR is great, when in reality, we have an issue going on. 

And so that’s why you can’t look at really one metric in isolation. That’s why probably today we’re talking about three metrics instead of just one. But with NRR, that’s really the thing you really want to be focused on is not just what are you selling, but what accounts are you upgrading and expanding? Obviously key for customer success?

Dom: Yeah, and in the nightmare department how close is NRR for you to churn? Is it giving you as many nightmares are not as much half as much?

Melissa: You know, yes and no, I think with NRR, it’s one that I really drive home with the customer success managers because it shows the other dimension of how well you’re doing your job, like churn shows how well you’re keeping customers, but are you keeping them by throwing crazy discounts their way? 

So NRR kind of shows that, and it also shows how well you’re getting to know your customers, how well you’re focused on the customers in terms of recommending features and products that would meet their needs. And, in particular, you know, having that data around adoption, and product usage is really one of those ways that you can push your NRR because you’ll basically know what you can recommend in a timely manner to your customers.

Mastering Data Skills and Understanding the Role of NPS and CSAT 

Dom: As you’re talking, I’m thinking, do CX leaders need to be basically data scientists? What’s that balance? Because, man, you know, things that make customers happy. But at the same time, you have to be able to use a tool that can extract these insights, you have to do it well. Are you like the owner of these tools basically, in your organization?

Melissa: Well, we have a business analyst I work with maybe 75% of my reporting needs I can handle on my own, which if you had told me that even 10 years ago, I’d been like, What are you even talking about? I don’t know how to run a pivot table. But then I work with him on sort of the 25% that’s a little more complex, where I need to tie multiple data sources together, where I’m trying to say like, well, if this then that, and so it’s helpful. Do you have to be a data scientist? No, but do you have to be comfortable with data? Yes.

Dom: Yeah, I’m actually typing away to ChatGPT right now to see what it thinks of NRR.

 Melissa: Oh, that’s good. You can have ChatGPT tell me if I’m wrong.

Dom: Exactly. Actually, I just put NRR in there and in ChatGPT says, I’m not sure what you’re talking about.

Melissa: Oh, so score one for the humans. That’s right.

Dom: You don’t know CX metric Nananananana. So all right, NRR obviously important to you. So give me that one big takeaway on this one the needs to be improved. I’m not quite sure that I’m getting it, I need to show my board something better with this, where do I start?