I had the great opportunity to serve earlier this week as a panelist on UserIQ’s “Customer Success & Trends for 2017” webinar alongside Alex Obikhod of VMWare and Lawton Ursrey of Sage. We had a great turnout and discussed some of the most pressing trends in Customer Success (recording link to follow). The one trend that is foremost in my mind, and is applicable to every trend we discussed, is CS scalability.
timschukarScaling CS: Segmentation, Automation and Excogitation
Unabashed caveat: I will be facilitating a talk on the Business of Customer Success at the Customer Success Association Conference in Seattle on August 18, 2016. This post will help solidify the overall layout and will hopefully serve as reference material for those in attendance. Brace yourselves… it’s a long one.
Before we get lost in the details, it helps to take a step back and remember the basic steps to design, implement and monitor your Customer Success (“CS“) organization.
Define the value proposition for your CS team (cost reduction, revenue generation and risk reduction, etc.).
Baseline your current state of KPIs
Select set of desired business outcomes
Identify the drivers to meet your business outcomes and track them as you implement.
If/when you get lost, always come back to these steps for guidance.
I hear CS practitioners talk all the time about providing a frictionless experience with their clients to ensure quick onboarding, quick time-to-value, additional cross/upsell, etc. All of these are great and should be the focus of your CS efforts. However, in today’s low-barrier to entry world, you also need to make sure you are creating a max friction exit experience.
This quick follow up to yesterday’s post is driven by some questions I received on financial metrics to monitor for Customer Success teams. Payback period and CLV and great high-level metrics, but they really only take into account the classic costs of Sales and Marketing spend and hope your CLV/CAC ratio is high enough to get you profitable. For today’s Customer Success focused organizations, you really need to take into account Customer Retention Costs (“CRC”) as well.
timschukarCustomer Success Financial Metric Primer v2
You’ve got a killer idea, some initial financing and have seen great market acceptance. Now you need a financial plan to become a scalable and viable company before you can get additional funding. Before your eyes glaze over, rest assured I will keep this high level and just call out the initially important financial metrics to watch (and those your investors will be watching).
In the middle of an onsite Periodic Business Review (“PBR” – not to be confused with Pabst Blue Ribbon, hipsters), one of our more difficult executive clients suddenly blurted out,
“You guys just came out to review our data and show us where we can get better?”
Both my CSM-trainee and I were not sure how to take his comment. Was his incredulity good? I went on to explain that we partner with our clients to ensure they are not only attaining their expected value from sign-up, but that they continue to get incremental value throughout their life on the platform. After we reviewed his data, calculated his ROI and teased upcoming features, we engaged in a frank and meaningful conversation around his business needs and challenges. By then end of the meeting, we had changed a skeptical executive into an enthusiastic sponsor.
But don’t think a periodic onsite will solve all of your customer ills…
Almost all subscription companies track the health of their customer in some combination of excel sheets, CS software, customer surveys, QBRs, CSM surveys and NPS/CSat scores. It is no surprise that customer lifetime value is maximized through retention. However, these same companies are then often surprised when “green” clients churn.
When my good friend Alex asked me to run with the bulls at the San Fermin Festival for his bachelor party, I unequivocally said yes (much to the chagrin of my wife). I googled the route, read about being gored and/or trampled at La Curva de la Muerte, and increased my training regimen to include terror-based sprinting. Soon after I found myself jumping up and down next to Alex on a cold, narrow and crowded street in Pamplona.
Technology is an awesome and horrible thing. It can be positive and elevate your business or it can be negative and drag on your bottom line. I like to think of this as the Iron Man – Borg spectrum. On one side you have the newest and best technology integrated together to make a better man for the betterment of society. On the other side you have a writhing patchwork of wires and hoses that assimilates all it comes across – resistance is futile.
The obvious strategy is to stay on the Iron Man side of the spectrum, but that is certainly easier said than done. As companies grow, the natural tendency is to assimilate new technologies without (re)evaluating their value or to keep old technologies simply because of the technology debt. But resistance is not futile!
In 1984, Eliyahu Goldratt published the bestselling novel, The Goal, detailing common process struggles and the inherent theory of constraints. While this book focused on the manufacturing industry, the theory can just as easily be applied to any industry.
As a gross boil down (we are talking molasses here), the theory revolves around the redefining all aspects of your business in terms of throughput, inventory and operational expense. One then repeatedly measures and optimizes the entire process by maximizing productivity at identified constraints as opposed to maximizing productivity at each step in the process.