Stay in the latest updates. Get the latest tips and advice delivered straight to your inbox. Email Guy Nirpaz | September 19, 2011 | Customer Lifetime Value and Customer Experience Lately, I’ve started building a SaaS Dashboard for my own usage (which I’ll be happy to share with others as well) and I have put together a short survey in order to learn what are the key metrics to measure SaaS business success. As I posted in our previous post, every metric matters when trying to see the whole picture, however, according to Chris Zane’s interview in Christoper Brown latest post, if he could only have one measure to manage his business, he would have chosen “lifetime value of customers”. This metric, in Zane’s opinion is not a static number but a dynamic one that can grow with the customer, so that customers will first purchase their bike when they’re 4 years old, then when they’re 6, again when they’re 12 and they might come by to buy their own kids their first bikes. That’s the power of a happy customer. This classic example could be taken to any sort of business, as in all businesses, it is critical to understand customers behaviour. What is ‘customer lifetime value’ translated to the terms of a SaaS company? It’s when your service is valuable and highly appreciated by your users who chose to repeatedly and constantly use your service. Most customers will encounter SaaS online services when signing-up to their free trial period / freemium. As the funnel goes on, the amount of users converting to paid customers naturally goes down, however, user’s usage pattern in crucial to understand what’s behind those numbers and also to reflect the users behaviour and needs. Therefore, even though measuring many other metrics should be taken under account, I agree that customer lifetime value should be standing in front of our eyes when thinking of our business plan. To run a successful SaaS business and increase the chances to gain lifetime users and revenue, a business must make the right conclusions and adjust its service according to customer / user experience. Tell us how you adjusted your service to fit your user’s needs! Popular Posts A day in the life of a Customer Success Manager: What do they do? 15,902 views The difference between Customer Success Managers and Account Managers 12,963 views Your 90 day plan as a new VP of Customer Success 5,518 views Guy Nirpaz Guy Nirpaz is a Silicon Valley-based Israeli entrepreneur and CEO of Totango, a Customer Success software platform. A pioneer in the Customer Success field, Guy established the Customer Success Summit and is a well-regarded industry speaker and community contributor. Guy loves people and technology and has dedicated his career to improving the way in which business is done through innovation. Fun Facts: Guy moonlights as the lead guitarist in a rock band based out of his garage in Palo Alto and used to command a tank battalion...as well as having grown oranges. Pingback: Customer Engagement is Key for SaaS() Pingback: Customer Success How to: Learning from Customers Who Churn() Pingback: How Zendesk and CloudBees Increase their User Engagement() Pingback: Totango Accelerates Revenues for Engine Yard Customers() Pingback: The Power of Measuring Customer Engagement() Pingback: Presenting – the SaaS Resource Center() Pingback: 6 Surefire Tips to Retain & Grow Customers() You might also like You might also likeGrowth Hacking with User BehaviorCustomer Success – The Farming Paradigm (With Gifs!)Top Executives Weigh In On Lessons Learned In Customer Success BACK TO BLOG | NEXT ARTICLE Let's stay in touch! We’re passionate about customer success. Sign up to get the latest in thought leadership and to follow our adventures.