Customer Success in a Nutshell
SaaS and other subscription-base business models have a dilemma, and it‘s not what you might think. It’s not data security, down time, or support. The dilemma is the gap between the customer and your solution’s value-providing potential. This dilemma exists because customers struggle to tap into your solution’s value. I like to call this dilemma The Value Gap.
The Value Gap
Let’s look at a fictitious story to illustrate the value gap dilemma:
Jan at AwesomeDesignsUnited manages a team of web creatives to produce exceptional web experiences. The growing inflow of new projects gets out of hand, and now Jan needs a solution to help her and her team easily manage projects and tasks. Jan finds CheckIt, a SaaS project/task management tool that will help her team eradicate the administrative chains of project management. Jan speaks with a courteous, helpful sales rep, John, who shows Jan a quick demo of the system. John mesmerizes Jan with the glorious simplicity of CheckIt. Jan gets approval from her CEO to purchase CheckIt.
Victory at last? Not yet . . .
Jan logs into the system ready to slaughter the endless busywork associated with managing her team. She clicks around the system, trying to remember what John showed her in the demo. CheckIt isn't as easy to use as she once thought. She creates users for all of her team members. Jan’s team thinks the software is too cumbersome. They think it looks pretty, but they don’t have the time to learn a new system, so Jan and her team resort to the old way of doing things.
Months go past and Jan hardly uses CheckIt- budget reviews come around and Jan decides to lighten the load and cut CheckIt loose.
Sam, the CEO of CheckIt, hears about AwesomeDesignsUnited- he calls Jan. She tells him that the software didn't solve their problems, it was difficult to use, it didn't do everything they wanted, and it cost way too much.
Sam does what any good CEO would do- he tries to fix his business.
Sam talks to his product manager about developing new features. He meets with his designers to talk about usability. He comes to the sales stand-up meeting to talk about overselling. He talks to his support team about being friendly and responsiveness. And he chats with his partners about changing their pricing structure.
Sam’s efforts are fruitless; customers keep leaving for the same reasons. CheckIt’s code base quietly hums on a server underutilized while the Jan’s of the world keep muscling through their administrative nightmares.
This. Happens. Every. Day.
The problem: Companies build solutions to perform specific jobs for customers, and customers experience value when they use solutions that relieve pains and/or create gains. But nobody is responsible for customers using the solution. Nobody is responsible for ensuring that customers experience and realize value. Nobody is responsible for whether customers stay or leave. This creates a value gap between solutions and customers.
Defining Customer Success
Customer Success (CS) teams help customers experience and realize value while increasing your solution’s value potential. Let’s break this down . . .
Help Customers Experience Value
CS teams walk customers through a process that enables customers to consume your solution and experience value. CS teams will spend a large chunk of time helping customers adopt, understand, and utilize your solution the way it was intended to deliver value.
Help Customers Realize Value
Customers not only need to use the solution, but they need to realize, or see, what the solution is doing for them. Is it saving time or money? Is it making money? Is it reducing defects or increasing production? If so, by how much? Customers need to see the pains your solution relieves and/or the gains your solution creates while they are still your customers, not after they've left.
Increasing Your Solution’s Value Potential
Beyond helping customers capture value from your current solution, CS teams gather a deep understanding of the customer’s explicit and implicit needs to aid product and development teams in creating new products and services that deliver increased value to customers.
Why Organizations Need Customer Success
Subscription-based companies make a relatively massive investment in developing, marketing, and selling a product to customers with the intention of realizing returns in the long run as customers pay monthly/annual fees. The break-even point on any given customer can range from 1 to 5 years. To be profitable, subscription-based business models need customers to stick.
So what entity in an organization owns retention? Marketing and Sales are responsible for bringing in new business, Product and Development are responsible for building new products, and Support is responsible for addressing issues with the solution. It’s difficult for any of these entities to juggle their own responsibilities along with retention.
This is where CS steps in to own the responsibility of whether customers stay or go. They focus on ensuring that customers experience value through using your solution, and they can do this better than any other entity within an organization because retention is the soul purpose of CS. Successful CS teams increase retention, keep revenue flowing in month-after-month, and help organizations capitalize on the advantages of a subscription-based business model.
Customer Success Metrics: Usage and Retention
CS teams can be measured by a gob full of statistics, but they all generally fall into two buckets: usage and retention.
Customers experience value when they use your solution to relieve pains and/or create gains, so a key metric is how much a customer uses your product. Measuring usage gives you an idea of the actual value a customer receives from your product. Customers who frequently use your solution receive more value than customers who rarely use your solution.
The final goal of delivering value to customers is to retain those customers. Retention (or churn if you are a glass-is-half-empty type) is to Customer Success as turkey is to Thanksgiving. At the end of the day, this is how a CS team adds value to an organization.
So you've decided to embark on customer success (or revamp your current customer success strategy)- what do you do now?
In my next post I’ll talk about how to quickly establishing a focus so that you don’t waste time spinning your wheels.