Deliver a Comprehensive Customer Health Analysis in Your Board Meeting Image

Deliver a Comprehensive Customer Health Analysis in Your Board Meeting

Preparing for a board meeting can be a hassle.  But it’s a necessary and beneficial hassle.  As recurring revenue companies grow and the renewal and upsell part of the business becomes a larger part of the overall company bookings, the Customer Success update is becoming even more important to the board.  So let’s do it right!

As I wrote in a recent blog post,  it’s important to be consistent with regard to what you report to the board.  You want to get them used to your reports and your style of update, and the way to do that is by providing new information in the same format meeting after meeting.

I like to start my board update at the highest level with the most important piece of information – retention/churn rate.  You may choose to show any, or all, of these, or even parse them further.

Customer retention rate – simply the percentage of customers who 1) were up for renewal and 2) renewed their contract during any given time period. Depending on the frequency of your board meetings, I would show this, and all numbers below, for the most recent month/quarter and also YTD.

  1. Customer churn rate – the inverse of retention rate.
  2. Lift rate – measures whether renewing customers pay more or less at renewal time for the products they already own.  This is largely about the stickiness of your product and the quality of your post-Sales organizations because it tells you whether you can decrease a customer’s discount more often than you have to give additional discount points at renewal time.  For many companies this number will never be larger than 100% because they do not raise prices, or reduce discounts, for existing customers.
  3. $$ retention rate (with upsell/downsell) – this measurement includes everything –  1) the addition of products that were not on the original contract, whether added at the time of renewal or during the subscription period, 2) churned products or licenses, and 3) churned contracts.  This percentage quantifies the success of your Customer Success team.  Industry-leading companies are typically in the 120% range.
  4. Spread – you should measure both the difference between 1 and 3, and also the difference between 1 and 4.  In the healthiest recurring revenue businesses, both of those spreads are growing over time as your largest contracts renew at a higher rate than your average, and the average upsell across your install base also increases.


Effectively measuring Customer Success really requires all four of these numbers.  Satisfied and successful customers (the goal of Customer Success) do three things regularly:

  1. Renew their contracts
  2. Increase their spend for the same products (allow discount reduction)
  3. Buy more product


So, that’s a starting point for your board update.  At this point, I would typically provide an overall subjective assessment of the health of the install base.  The numbers are great to show but they also want to know what YOU think.  That’s why they are paying you the big bucks.  This might often be a statement like the following:

Our overall retention rate continues to grow nicely, now up to 93% YTD.  This is due to the success of our land-and-expand efforts, which are continuing to increase the number of licenses we are adding to existing contracts.  However, our most recent product is not being upsold at the rate we expected and adoption of it is also slower than original expectations, which is the reason we are at 93% as opposed to our goal of 95%.  The retention rate of our Strategic customers is exceeding expectations at 103% but that is being offset by a higher customer churn rate in our SMB segment where we are at 85% against our goal of 88%.  It’s clear that our current onboarding process is not working as well for the SMB segment and we are reassessing and refining that process.

Note that your overall customer health assessment is still sprinkled with lots of facts but adds your insights and opinions about why the numbers are what they are.  Listen to the way your VP of Sales does his update and you’ll get a good idea of how you should do yours in this area.

Now your update can branch in a couple of different directions often depending on the size of your company.  At a larger company, with more than 200 customers, you will probably want to show some of the above numbers by segment.  Notice in my example above that I referred to Strategic customers and SMB customers.  Those are obviously different segments and you will probably want to show the same numbers as in your overview, for each of those segments.  In some cases, you may want to do the same by Industry or Geography.

If you are a smaller company, you may actually give an update that includes several, if not all, of your customers.  Your board will know many of them by name and will likely want updates on the most strategic, highest value, or most recently signed.  This may be more of a discussion than an update but it is up to you to guide it.  Your guide here may well be the dashboard I suggest below.

In any size company, you’ll want to show some kind of dashboard that provides an overall health assessment of your install base.  Retention rates, as discussed above, are part of that story but I suggest that you go one level deeper and, in true Customer Success tradition, show a Red/Yellow/Green dashboard of some kind.  I personally prefer a pie chart for this type of report.

As I also wrote in a recent blog post, make sure you don’t surprise your CEO with anything during a board update.  I say that now because it applies to my last suggestion here.  Depending on a number of factors, I would most likely show some of the largest renewals that will be happening between this board meeting and the next, and assess the risk of each of them.

I think it’s really important that you, the VP of Customer Success, are intimate with specific customer situations.  I think your board will expect the same.  Again, use your Sales VP as an example.  If he shows the five biggest deals expected in the next quarter, you can bet your boots that he knows who the decision-maker is, what the remainder of the Sales process looks like, what the risks are, and how your product solves a business problem for each of those companies. You need to know the same things about your critical deals – what’s the risk level, expected upsell or downsell, if there’s risk, what is it and how are you mitigating it, etc.

Perhaps most importantly, have an answer ready for the question “How can we help?”  And, if they don’t ask, you can still request their help.  They are your partners, don’t forget it.  They have every right to expect some things from you and you have every right to return the favor.