Customer Success terms.

The extent to which the customer actually uses the product in a way that achieves the purpose of the purchase. Adoption is about the right use, not just a lot of use.

What it costs, on average, to acquire a new customer.

FormulaCAC = sales and marketing costs in the period ÷ number of new customers in the same period

How many months it takes before the gross profit from a customer has covered the cost of acquiring that customer.

FormulaPayback period = CAC ÷ (monthly revenue per customer × gross margin)

Customers or revenue lost during a period. The term is used both for the number of customers (customer churn) and for revenue (revenue churn), and it matters which one you mean.

A group of customers who started in the same period, for example the same month or quarter. Cohort analysis follows each group separately over time, so new sales do not distort the numbers.

A randomly selected group of customers who do not receive an initiative for a period, so their results can be compared with those who do. The most reliable way to estimate the effect of an initiative.

What would have happened if an initiative had not been carried out. It can never be observed for the same customer, only estimated by comparing with customers who did not receive the initiative. This is why the effect of preventive work is always an estimate.

The role or function responsible for the tools, data and processes the Customer Success team uses: health scores, reporting, segmentation, automation and systems. Normally has no customer portfolio of its own.

The share of customers who left during a period. Each customer counts the same, regardless of how much they pay.

FormulaCustomer churn = customers who left in the period ÷ customers at the start of the period

Systematic work to ensure that customers get value from what they have bought, so that they remain customers and often buy more. There is no official standard definition.

The most common role in the field: an account owner who follows up a portfolio of customers, with an emphasis on adoption, customer health and renewal. The content of the role varies a great deal between companies.

The function that helps customers who have a question, a problem or an error. The starting point is an enquiry, and the work is done when the enquiry is resolved. Customer Success works to a greater extent from the customer's goals.

Existing customers buying more: more users, more products, higher volume or a more expensive plan. Expansion is what allows NRR to be higher than GRR.

The share of revenue from existing customers retained over a period, excluding expansion. GRR can never exceed 100%.

FormulaGRR = (revenue at start − revenue lost to churn and downgrades) ÷ revenue at start

A combined measure of several signals about a customer relationship, such as usage, change in usage, enquiries, payment history and feedback. The purpose is to sort customers by their need for follow-up.

An estimate of how much a customer is worth over the whole relationship. Because it relies on assumptions about future churn, it is an estimate, not an accounting figure.

FormulaLTV ≈ average monthly revenue per customer × gross margin ÷ monthly customer churn

The ratio between what a customer is worth over time and what it cost to acquire them. Shows how many times the customer pays back the acquisition cost.

FormulaLTV:CAC = LTV ÷ CAC

The share of revenue from existing customers retained over a period, including expansion. NRR above 100% means the customer base grows in value even without new customers.

FormulaNRR = (revenue at start − lost revenue + expansion) ÷ revenue at start

The phase in which the customer gets started with the product and achieves first value. Considered one of the most important places to invest in Customer Success, because in many companies churn is highest early in the relationship.

The customer extending the agreement when it expires. In companies with annual or multi-year agreements, renewal is a clear point in time where the customer takes a position on the value. Where the customer pays for usage or has no minimum term, there is no such point in time: in practice the customer renews every time they use the service.

The ability to keep customers and revenue over time. The opposite of churn. Usually measured with GRR, NRR or the share of customers retained.

The share of revenue lost during a period. Shows the financial effect of churn directly, and is often a more important management figure than customer churn when customers differ in size.

FormulaRevenue churn = lost monthly revenue from customers at start ÷ monthly revenue from the same customers at start

An account owner responsible for many customers – often hundreds or thousands – who works through digital customer journeys, automation and shared initiatives instead of personal follow-up of each customer.

Dividing customers into groups that receive different follow-up, for example by value, complexity and potential. Determines which customers get personal follow-up and which are followed up digitally.

Churn without cancellation: the customer stops using the service, or uses it less and less, without saying so. Most common where the customer pays for usage or has no minimum term. Because no event is recorded, the company has to define for itself when a customer counts as lost.

The time from when the customer starts until they achieve the first concrete value. What «value» means must be defined for each product.