How To Calculate Customer Success Margin in Drift | Arithmix

Calculating customer success margin is an important aspect of any business that wants to measure its success in retaining customers. It is a metric that helps businesses to understand how much revenue they are generating from their existing customers. In this article, we will discuss what customer success margin is, when it is valuable to calculate it, and how to calculate it.

What Is Customer Success Margin?

Customer success margin is a metric that measures the profitability of a business's existing customers. It is calculated by subtracting the cost of servicing the customer from the revenue generated by that customer. The cost of servicing the customer includes all the expenses associated with providing customer support, such as salaries, software, and infrastructure costs. The revenue generated by the customer includes all the revenue generated from the customer, such as subscription fees, product sales, and upsells.

Customer success margin is an important metric because it helps businesses to understand the profitability of their existing customers. It also helps businesses to identify which customers are the most profitable and which customers are not generating enough revenue to justify the cost of servicing them.

When Is It Valuable To Calculate Customer Success Margin?

Calculating customer success margin is valuable for businesses that want to measure their success in retaining customers. It is especially valuable for businesses that operate on a subscription-based model, where the revenue generated from existing customers is critical to the success of the business.

Calculating customer success margin is also valuable for businesses that want to identify which customers are the most profitable. By identifying the most profitable customers, businesses can focus their resources on retaining those customers and providing them with the best possible customer experience.

How To Calculate Customer Success Margin

To calculate customer success margin, you need to follow these steps:

1. Identify the revenue generated by the customer over a specific period of time.
2. Identify the cost of servicing the customer over the same period of time.
3. Subtract the cost of servicing the customer from the revenue generated by the customer.
4. Divide the result by the revenue generated by the customer.
5. Multiply the result by 100 to get the customer success margin as a percentage.

For example, if a customer generates $10,000 in revenue over a year and it costs $2,000 to service that customer over the same period, the customer success margin would be calculated as follows:

1. Revenue generated by the customer = $10,000
2. Cost of servicing the customer = $2,000
3. Revenue generated by the customer - Cost of servicing the customer = $8,000
4. $8,000 / $10,000 = 0.8
5. 0.8 x 100 = 80%

Therefore, the customer success margin for this customer is 80%.

Calculating customer success margin is an important metric for any business that wants to measure its success in retaining customers. By understanding the profitability of their existing customers, businesses can focus their resources on retaining the most profitable customers and providing them with the best possible customer experience.

How Do You Calculate Customer Success Margin in Drift

Drift itself isn’t naturally geared towards letting you calculate complex metrics like Customer Success Margin. As an alternative, teams typically use products like Arithmix to import data from Drift and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Drift, combine it with data from other systems, and create calculations like Customer Success Margin.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Customer Success Margin in Arithmix

Calculating metrics like Customer Success Margin is simple in Arithmix. Once you've created your free account, you’ll be able to import your Drift data, and use it to create natural language formulas for metrics like Customer Success Margin.

Arithmix is designed to give you the power to build any calculations you want on top of your Drift data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.