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Learning 5 MIN READ

Customer Education for SaaS: 5 Top KPIs to Measure Success & Empower Your Customers

All products that require some level of tech-savviness involve a learning curve. Unless you help your customers learn your product and incorporate it into their lives, you’re in dangerous waters.

Your lifeline? A customer education program.

Research -where most of the respondents came from the software industry- shows that companies are steadily increasing their investment in customer education.

At the same time, they report multiple business benefits with product adoption rates (48%) being “where respondents saw the greatest measurable impact, followed by renewal rates (37%) and customer satisfaction scores (31%).”

state of customer education 2021 research findings - Thought Industries

How do you know if your customer training program has brought value to your business? We have singled out the top 5 Key Performance Indicators (KPIs) that hold the answer to this question.

Let’s see which these KPIs are, why they are important for business growth, and how customer education plays a role in shaping them.

5 SaaS KPIs That Measure Customer Education Effectiveness

Want to know that your training efforts don’t go to waste? Then keep a close eye on the following 5 KPIs:

1Customer Acquisition Cost (CAC)

CAC = (Cost of Sales + Cost of Marketing) / New Customers Acquired

Customer Acquisition Cost (CAC) is the amount of money a company spends to gain a new customer. To calculate CAC, you add expenses (sales and marketing) and divide their total by the number of new customers you gained during a specific period of time. Expenses include the salaries of your employees.

SaaS companies have one of the highest average Customer Acquisition Costs, estimated at roughly $400. By lowering CAC, you will improve your bottom line and budget. For example, you can use the money that you’d normally spend on advertising to invest in new equipment, product updates, and new releases.

How customer education reduces Customer Acquisition Cost: Customer onboarding helps build brand awareness. It helps create buzz about new products, so more people will hear about you on social media and through word of mouth.

Think of customer education as a marketing hack that, moving past the initial investment, strengthens your brand and decreases the money you spend on marketing – which is undeniably the most costly factor in the customer acquisition equation.

2Customer Churn

Customer Churn Rate = (Customers beginning of the month — Customers end of the month) / Customers beginning of the month

Customer churn is one of the most “burning” KPIs for a company. The simplest way to calculate customer churn rate is to divide the number of clients you lost during a certain time period by the number of customers you had at the beginning of that period. Multiply by 100 to get the percentage.

You need to decrease churn and increase customer retention for two reasons:

How customer education prevents customer churn: Customer education is an effective way to prevent churn and increase customer retention because it ticks several boxes in one go.

For starters, it helps the customer discover all the functionalities of your product and better adapt it to their needs. This equals higher product adoption and, consequently, customer satisfaction (their money is well spent on a product that has brought value to their lives).

Customers will also be able to “play around” with the product more confidently and resolve technical issues on their own by turning to the resources you’ve already provided them. If they have a product that meets their needs without causing them technical headaches, customers will continue to use your product or renew their subscription to your service.

3Customer Engagement

There’s not a specific formula to measure customer engagement because it’s a combination of different metrics that measure the number of meaningful interactions a customer has with a company, how much they spend on your product or service, whether they’re brand ambassadors, etc.

When clients fully enjoy your product, they like you more, so they engage with you more! They will follow you on social media and leave positive reviews. And the more they interact with you, the more you stay top of mind and become the first choice for their next purchase.

How customer education increases customer engagement: A customer education program takes customer loyalty to a higher level. It helps customers feel more connected and develop a deeper relationship with your brand. A survey by wyzowl backs this up, with 86% of respondents saying they’d be more likely to be loyal to a company that has offered them customer onboarding.

4Customer Satisfaction (CSAT) and Net Promoter Score (NPS)

CSAT = Happy customers/Number of customers asked

Customer Satisfaction Score (CSAT) is another critical metric. It’s usually measured by asking customers to rate their satisfaction with your product using a linear scale.

Net Promoter Score = Number of promoters/Number of detractors

Similarly, the Net Promoter Score (NPS) is measured by asking “How likely you are to recommend our product to a friend or colleague?” Ideally, you want to get “extremely likely” responses.

Customer satisfaction and Net Promoter Score are indicators of future growth. More interestingly, they coexist with positive online reviews. Social proof inspires trust and boosts sales, so you really want to have happy customers who give your product the “thumb up.” Don’t forget that SaaS products have the potential to transform the way a person works or even lives – it’s not an investment someone will make lightly and without thorough research.

How customer education improves Customer Satisfaction and NPS: Customer education increases customer satisfaction and, consequently, your NPS by teaching customers how to best use your product, therefore enabling them to enjoy it more and get the full benefit from it.

5Customer Lifetime Value (CLV)

Customer Lifetime Value = (Customer Value * Average Customer Lifespan)

(Customer Value = Average Purchase Value * Average Number of Purchases)

Customer Lifetime Value is the average revenue generated from a customer for as long as they remain your customer. Businesses often compare Customer Lifetime Value against Customer Acquisition Cost to predict profitability and make the necessary adjustments to increase CLV, especially via marketing and product development.

Naturally, you want this number to be as high as possible, as it’s directly related to your bottom line and, in the long run, your business’s survival.

How customer education increases Customer Lifetime Value: As we mentioned before, a customer onboarding program facilitates product adoption, builds loyalty, and creates recurring business for your company.

The best part? Upselling and renewals happen easier when customers have fully enjoyed your product. They’re willing to sign up for advanced features and more expensive plans, try new products, and renew their subscriptions to keep enjoying the benefits.

Ready To Maximize Your Business Performance?

Would you like to improve any of the above KPIs in your business? If so, which one? Please go ahead and share this article on social, add your answer to the above question, and tag LearnWorlds.

Our team will review your comment and respond with ways to improve the metric you selected, using customer education.

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Androniki Koumadoraki
Androniki Koumadoraki

Androniki is a Content Writer at LearnWorlds sharing Instructional Design and marketing tips. With solid experience in B2B writing and technical translation, she is passionate about learning and spreading knowledge. She is also an aspiring yogi, a book nerd, and a talented transponster.