In this business era, there’s a new type of feedback survey required. It’s different than traditional ways of collecting customer feedback.
All things “Customer”
The onboarding ghost ship (on customer entropy)
In Customer Success land, we’re starting to find religion around how critical customer onboarding and adoption can be. Continue reading
Customer journey vs. user journey
There’s a lot of talk these days about the “customer journey” and the need to define yours. Customer journeys can be a great way to lead your customers on a path to success. Continue reading
Driving Net Promoter® in your company: 3 must do’s
I recently read a great article from Bain about the motives and barriers to the Net Promoter System℠ adoption across the enterprise, regarding the so-called “inner loop” and “outer loop”.
As they described it, the “inner loop” relates to a person or team who initiates Net Promoter Score surveys for their own use. In other words, to gather customer feedback that they themselves have the ability to address and resolve.
The “outer loop” pertains to enterprise-wide adoption of NPS, including all of the departments that might be called upon to make improvements in response to Net Promoter Scores and customer feedback. I’d equate the “outer loop” to enterprise-wide adoption.
The challenge is that enterprise-wide adoption of the Net Promoter System is both the source of the biggest gains and the biggest challenges.
What does it take to reach enterprise-wide adoption? Consider three things.
Leadership commitment
Much has been written about this already, but it bears repeating: Leadership must embrace Net Promoter and mean it.
First, executive commitment to the Net Promoter System does not mean a commitment to sending customer feedback surveys. Rather, it means a commitment to respond to the feedback with operational improvements. No matter where or why they originate.
Second, it means a long-term commitment. Truly meaningful changes to drive improved Net Promoter Scores require many operational improvements delivered over a period of time. It’s a marathon not a sprint.
Third, it means avoiding Net Promoter Score infatuation – the mistake of executives using NPS as a single metric by which to run the business. Many other metrics are relevant, especially financial ones such as Lifetime Value, Customer Acquisition Cost, Retention Rate, Churn Rate, etc.
Departmental buy-in and alignment
The beauty of NPS is that it’s capable of surfacing opportunities to improve across many areas of your business; including sales, support, product and account management / customer success.
However, this is where most NPS programs get bogged down. One team is enthusiastic about measuring Net Promoter Scores, but another seems uninterested, uninvested or even uncooperative.
Why is this?
Anytime I encounter resistance from another team, I start by asking questions about their incentives. What are they being asked to do that takes higher priority? What are the measures of that team’s success? How are their goals set and accordingly compensated?
When there is misalignment with the NPS program, then the executive team needs to decide if they are going to change the goals and incentives of the team that’s not cooperating, or live with the mis-alignment. In some respects, ensuring goal alignment is a test of executive commitment to the Net Promoter initiate itself.
Customer follow through
Engagement with survey respondents is critical. It’s the start of a conversation, not the end.
For example, knowing that somebody is a proponent isn’t enough. A customer like this is a tremendous asset. You want to know why they are happy, and other ways they might help your business grow. For example, a proponent might:
- buy more from you
- serve as a customer reference
- join your advocacy program
- refer friends to you
- tell you why they’re a promoter in the first place
However, a promoter won’t do any of these things – until you ask. So, it’s your response that matters most.
Passives are another interesting audience. What would it take for them to become proponents? The answers to that question can surprise you, and sometimes it’s trivial things to do on your part. Again, the follow-up to the survey response is how you discover and address those needs.
Last, we tend to focus on detractors, and for obvious reasons. Getting to the root cause of what made somebody so unhappy is important. People have a greater propensity to complain than praise, so negative word-of-mouth is a real business risk.
One of the most interesting insights that comes from engaging detractors is spotting product mismatch. In other words, customers with needs that your product wasn’t designed to fulfill.
Net Promoter Score℠ and the subscription economy®
The term “Subscription Economy®” (as coined by Zuora) refers to a business model that is dependent on your customers making repeat purchases. Loyal, happy, high value customers.
In this business model, the cost of customer acquisition is offset by those repeat purchases until – ideally – the customer stays around long enough to become profitable.
Imagine your customer base as falling into three buckets:
- Customers who leave before they are profitable to you (net-loss customers)
- Customers who stay long enough to be profitable (break-even customers)
- Customers who stay AND who cause others to purchase your product too (hyper-profitable customers)
With so much revenue at stake, it’s vital to know which customer is which. And, it’s vital to know what drives customers into those buckets.
Net Promoter Score℠ to measure each customer’s mindset and engage them appropriately
Taking stock of each customer relationship and where they fall among the 3 buckets requires a combination of “what they say” and “what they do”.
I’ve written about measuring “what they do” – as in product usage. It’s also important to measure your customers’ mindsets, i.e. “what they say”. This is where Net Promoter Scores (NPS®) come in.
Consider the fact that customers’ mindsets are never fixed. There’s anecdotal evidence to suggest that overcoming an unhappy customer with an excellent recovery experience can often build loyalty. And at the same time, previously loyal customers that are neglected can become unhappy in time.
So, making continuous measurements of NPS scores is important. It allows for timely, targeted engagement on the basis of a customer’s current mindset.
Net Promoter Score to identify the drivers of outcomes like retention, churn and referrals.
Net Promoter isn’t just about scoring each customer’s health. The composition of proponents, passives and detractors and how they change over time will help you confirm key trends in customer base health. The qualitative comments they provide on their NPS survey responses can also reveal great clues into underlying drivers for churn risk and renewal likelihood.
Finally, NPS gets even more powerful when combined with other customer data to perform segmentation analysis. For example, ask yourself if your customers are equally happy across:
- Geographies
- Industries
- Tiers
- Sales channels
- Product lines
- Lifecycle stages
In all likelihood, there are “hot spot” segments living in these dimensions where NPS scores are especially high or low. This, coupled with analysis on qualitative response comments, can help pinpoint systemic issues that can be fixed.
“Subscription Economy”® is the registered trademark of Zuora, Inc.
Overcome the 3 data “gotchas” when building a Customer 360
So.… you’re thinking about a Customer Success or customer analytics solution for your team. And you know that the quality of the data you integrate into your Customer Success system will determine the benefits you get from it.
I’ve seen three common “gotchas” in customer data quality. Spend some time on these upfront and you will greatly accelerate your Customer Success system time to value.
Get your data from the “systems of truth”
So much of deploying a Customer Success system is accessing useful customer information as it lives in source systems.
Follow a simple premise:
- your best financial data is in your financial systems
- your best support ticket data is in your support CRM
- your best usage data is in your back-end and/or your clickstream tool
- and so on…
Beware of using copies of data or derivative data that you get from a system other than the source. I’m talking about you, Salesforce CRM. Too often, in order to put things into Salesforce, the data is somehow aggregated or manipulated to the point where it loses its detail and accuracy. Bypass Salesforce and go to the truth.
Pay attention to “data curation”
Data that is machine-generated is great, if only because it’s inherently accurate. Think usage data, for example.
However, a lot of your customer data is input by you, the vendor. This data is “curated” by your employees. Some curated data is very accurate, because there are strong incentives to make it so:
- support ticket data is generally good because status and backlog are closely inspected by the head of support
- revenue data from the finance team is good because it drives financial reporting. Nobody wants to report inaccurate data to the Board or the Auditors
- sales opportunity can be good if there’s strong VP Sales inspection and/or commissions are driven from opportunity records
Conversely, beware of data that must be maintained but for which there is no incentive to do so. The result is a lot of missing data or inaccurate data. Some examples:
- account fields in Salesforce like Tier, Stage, custom fields
- support ticket fields like “reason code”
- anything else where the data isn’t closely inspected by leaders all the time
If you really want a field of data to be accurate, work to create the incentives and inspection that would make it so. Or, forget it and focus on the art of the possible.
Keys must join your data
The elusive “Customer 360” enables a Customer Success Manager to know exactly how a customer is doing.
By definition, a Customer 360 is created by joining data from various sources like your Sales CRM, Support CRM, usage data, billing data, survey data, etc. This means you need a “key” to match up those records to a common customer record. A key is unique identifier, often a long string of letters and digits. For example, an Account I.D. in your Salesforce in instance looks like this: “999bb7c9999f27d11d09a5e”
Done well, you would know that a support ticket created by “MegaCorp” is the same company that has a sales opportunity under the Account name “Mega Corporation” in Salesforce CRM. Why? Because they share the Account I.D. in common.
Do you care about the people in your customer base? Then you’ll need to associate those people and their data to their respective companies. One approach is to embed account I.D.’s into your user / contact records. Or, use email addresses to match the URL domain at the company for whom they work.
Conclusion
Nobody’s data is perfect. And never will be. However, you will probably need to invest in data quality in order to maximize the benefits of your investment in the Customer Success team and the tool they use. Pay attention to the three gotchas and you will remove most of the impediments to success.
Customer success tools: the CEO’s daily friend?
FYI: this post was written when I was with my startup Bluenose Analytics, talking about a customer of mine.
I went to meet the CEO of one of my customers the other day.
We were talking about the status of the Bluenose implementation at his company. He shared how excited he was to complete the next phase, when usage data from their product flowed into Bluenose and he could access a Customer 360 profile.
This CEO made it a habit to call 2-3 customers a day and check in on them. He wanted all the pertinent details about that customer at his fingertips, so he could be informed during the conversation.
When he told me this, I logged into our internal instance of Bluenose – the version we use to manage our own customers. I showed him the profile of his company in my system.
I told my CEO friend, “you know, before I came over today I logged into Bluenose. It took me a couple minutes to review your account. I didn’t need to chase anybody for details. I didn’t need to log into several systems. It was all at my fingertips.”
We looked at usage, health scores, support tickets, emails sent to him and his team, end-users adoption, etc. This data came from many systems that we’ve wired into Bluenose: Salesforce.com, Marketo, Mixpanel, Zendesk.
I left the meeting and smirked in the parking lot; I think I made him jealous.
So, you’re a CEO who calls customers to check in on them. Do you have what I have before you call?
Your business model dictates your customer success model
TLDR: I come across a wide variety of SaaS vendors in the marketplace. I often see their customer success teams struggle to align themselves with the specific needs of the business they are in and understand what their Customer Success model should be.
The symptom can also be seen by one’s (in)ability to describe what our friend Nils Vinje calls the “Four P’s”:
- Purpose: why does the Customer Success team exist? To drive renewal revenue? Customer satisfaction?
- People: what type of person is best suited to the needs of the team?
- Process: what are the core processes the team must support?
- Platform: what automation will enable these people and processes?
First clue: start with your selling model
One way to answer these questions is to start with how your products are sold and deployed in the first place.
Are you selling online without sales assistance? This implies a relatively inexpensive product and a low-touch provisioning process. Your post-sale experience should (must?) be low-touch as well. What will the role of your Customer Success people play in this case? Perhaps to operate systems like online communities and marketing automation tools to enable “digital touches” only.
For the sake of contrast, imagine instead that you’re selling a complex product using outside sales resources. Your annual contract value is closer to $100,000 and your Professional Services team does the implementation. In this case, your Customer Success team is probably at the center of the post-sale experience. They’re delivering a high-touch, consultative experience to a low number of customers per CSM.
Many SaaS vendors sit between these polarities. In this case, your Customer Success team might need to support a multi-tier customer success model, delivering a different level of service for each tier. Or, you might employ approaches that blend your people resources with programmatic outreach through marketing campaigns and the like.
Which leads to another way to look at the problem.
Second clue: charting your growth journey
Another way to define the Customer Success team’s mission is to consider where you are in the growth journey of your company.
Most young SaaS vendors are operating a single, low- or no-touch selling motion. Your product is a basic version of what it will become, and your money constraints mean that expensive sales resources aren’t affordable yet. Your customer success model is probably low-touch or no-touch in turn.
As you reach later years of growth, your customer base has become heterogeneous. Small customers continue to come through the front door, because who would stop using an efficient, online sales model to acquire new customers?
However, your outside sales team is now landing larger customers too. And some customers grow year-over-year thanks to up-selling. The customer success model in this case is multi-tier. Digital touches are used for the lowest tier. People-driven touches are used in the highest tier. A combination of the two is used for customers in the middle.
Last, I see some larger SaaS vendors start to look homogenous again later. Their product has evolved into an Enterprise offering with high touch selling and high ACV’s. Small customers are no longer attractive to the acquisition sales team. And this determines the high touch Customer Success model that follows.
Summing it up
As your define your Customer Success team according to the “Four P’s” the first question to answer is whether you’re aligned to the selling model. If not, what are the gaps and how to close them?
Last, has Customer Success evolved along with the business to support a multi-tier model? Has your business become a single-tier model again, thanks to very large customers? Are there gaps to fill?
Customer Success models for SaaS businesses
I come across a wide variety of SaaS vendors in the marketplace and, in many cases, we see Customer Success leaders struggling to define what our friend Nils Vinje calls the “Four P’s”:
- Purpose: Does the Customer Success team exist to drive renewal revenue? Customer satisfaction?
- People: What type of person is best suited to the needs of the team?
- Process: What are the core processes the team must support?
- Platform: What automation will enable these people and processes?
Answering these questions is key for determining which Customer Success model is right for your SaaS business.
Start With your Selling Model
One way to approach these questions is to start with how your products are sold and deployed in the first place.
Are you selling online without sales assistance? This implies a relatively inexpensive product on a unit basis and a low-touch provisioning process. Your post-sale experience will probably be low-touch as well. What will the role of your Customer Success people play in this case? Perhaps they will operate systems like online communities and marketing automation tools to enable “digital touches” only.
For the sake of contrast, imagine instead that you’re selling a complex product using outside sales resources. Your annual contract value is closer to $100,000 and your Professional Services team does the implementation. In this case, your Customer Success team is probably at the center of the post-sale experience. They’re delivering a high-touch, consultative experience to a low number of customers per Customer Success Manager.
Of course, many SaaS vendors sit between these polarities. In this case, a mix of people-driven and digital touches might be right for you. Which leads to another way to look at the problem.
Charting the SaaS Vendor Growth Journey
Another way to define the Customer Success team’s mission is to consider where you are in the growth journey.
We’d argue that a young SaaS vendor is operating a single, low- or no-touch selling motion. Your product is a basic version of what it will become, and your capital constraints mean that expensive sales resources aren’t affordable yet. Your Customer Success model is probably low-touch or no-touch in turn.
As you reach later years of growth, your customer base has become heterogeneous. Small customers continue to come through the front door, because who would stop using an efficient, online sales model to acquire new customers? However, your outside sales team is now landing larger customers too. And some customers grow year-over-year thanks to upselling. The Customer Success model in this case is multi-tier. Digital touches are used for the lowest tier while people-driven touches are used in the highest tier. A combination of the two is used for customers in the middle.
Last, I see some larger SaaS vendors start to look homogenous again. Their product has evolved into an Enterprise offering with high-touch selling and high Annual Contract Values (ACV). Small customers are no longer attractive to the acquisition sales team, and this determines the high-touch Customer Success model that follows.
Summing it up
As your define your Customer Success team according to the “Four P’s”, the first question to answer is whether you’re aligned to the selling model. If not, what are the gaps and how does your organization close them?
Second, has Customer Success evolved along with the business to support a multi-tier model? Has your business become a single-tier model again, thanks to very large customers? Are there gaps to fill?
My take: The most prevalent gaps are when Customer Success teams are focused solely on the highest-value customer tier. This is a somewhat understandable approach but is also a recipe for churn. Successful organization find a scalable way to gain a deep understanding of every end user, as well as a programmatic way to reach out to multiple accounts.
Quantifying the benefits of your Customer Success team
TLDR: I’ve been reflecting on the business value that Customer Success leaders are trying to deliver to their companies, as well as how to explain what my startup Bluenose does to enable the same. While Customer Success started off as a way reactive way to battle churn, the discipline is quickly evolving, so it’s increasingly important to be able to quantify the benefits of Customer Success.
We came up with a simple framework to quantify the benefits of Customer Success by describing the sources of value: impact and reach. So, the mission of Customer Success is to maximize the value that comes from each. The diagram below outlines a few Customer Success activities that fall into certain segments as it relates to impact and reach. The upper right quadrant is the ideal state for a modern Customer Success organization.
Impact
Key question for quantifying Customer Success value: For the customers that you engage, what is the impact you’re making?
I’d argue that the impact ranges from low to high as you move from being reactive to proactive.
At the reactive end, Customer Success teams are typically “fighting fires” by triaging valuable customers who are threatening to churn. In fact, hiring firefighters is often the genesis of the Customer Success team.
The impact is low because once you’re in “save mode” you’ll save some customers but not all; some are so dissatisfied they can’t be recovered.
As your Customer Success team becomes more proactive, you can generate more value in three ways:
- Reduce churn by spotting and engaging at-risk customers sooner. There will always be customers at risk; the challenge is to engage them soon enough that you can fix what’s making them unhappy before it’s too late.
- Increase upsell and expansion revenue by ensuring widespread product adoption in accounts that you engage
- Create advocates in the customer base that accelerate your new customer acquisition.
What’s needed to become more proactive?
- An Early Warning System that uses data to spot at-risk customers and drives interventions to prevent churn.
- A customer journey. Each customer should be measured according to the stage of the journey they’re meant to be in. If they’re not in those stages, what customer touches are triggered to get them there?
Reach
Key question for quantifying Customer Success value: What percent of your customers are you impacting?
As SaaS vendors grow, their customer base often stratifies into tiers, such as Tier 1/2/3 where Tier 1 customers are the largest contracts. Customer Success teams are often created to protect revenue in these Tier 1 customers. This of course makes sense given the revenue at stake. However, servicing customers with your people is an expensive endeavor. Thus, the Customer Success team will often get stuck only serving Tier 1 customers because of the people cost.
Sometimes, we see Tier 2 customers served, but with a “coverage model” of one Success person to 50, 100 or even 300 customers. You could argue that with this ratio, the role is all about customer “saves” and not much else. Last, the lowest tier is often called “unmanaged” because Success teams have no involvement.
As your Customer Success team extends its reach, you can create value in several ways:
- Reduced churn in lower tiers.
- Nurture lower tier customers into higher tiers through upsell / cross-sell.
- Improve NPS® or CSAT survey results through proactive service.
What’s needed to increase reach? Customer Success must work programmatically and at scale. Many of the concepts of acquisition marketing apply here: campaigns that target people with a specific and relevant call to action. This programmatic approach happens as a complement to the people resources deployed in your Success team.
Some examples:
- If an end-user has a licensed seat but has never used a product, the call to action could be to watch a brief video on getting started with your product.
- If an end-user has adopted your product, then the call to action could be to explore new features or even enroll in an advocacy program.
- If an end-user has replied negatively to a survey, then the call to action might be to speak to a “special” support person to help overcome their issues.
A caveat: targeting users appropriately is essential. If the advanced user is sent an email about getting started, it’s spam because it’s not relevant.
Summing it up
For Customer Success leaders, it’s vital to maximize your impact and reach. I’ve found that you can vastly improve your reach by moving from firefighting to a proactive mode. To improve impact, work programmatically and at scale. How you achieve both of these are topics that I’ll dive into in further blogs.
Don MacLennan | High Tech Yankee 