Short vs. Long-Term Changes
Most New Year’s resolutions last for about two or three months. In comparison, a lifestyle modification brings about an enduring change in the way you live on a day to day basis. Most companies start Customer Success as a reaction to renewals or churn, but it really isn’t absorbed into the organization’s DNA; it’s just a reaction. A new year’s resolution approach is like taking a short-term view, versus really embracing Customer Success as a way to run your company.
Why Do Some Senior Leaders Choose to Treat Customer Success Like a New Year’s Resolution, Rather than a Way of Life?
Customer Success starts with the leadership of a company. CEOs who lead their company differently are committed to Customer Success and long-term, sustainable growth. For most companies, Customer Success is about having a Customer Success leader, a Customer Success team, and maybe a software platform for CS automation.
Some CEOs view Customer Success as the silver bullet that will fix customer churn/retention issues. However, the root cause of the problem starts at the top, and installing CS as a reaction to bad processes is rarely a lasting solution. That’s when CEOs get a Customer Success team installed, thinking it will solve the problem – just like their New Year resolutions! In reality, the problems that exist are systemic to the company. Companies are usually focused on marketing the product and acquiring new logos, but either the product wasn’t delivering value, or the company was working in silos, and not meeting customer needs.
The process of Customer Success is a long haul. Installing a Customer Success team is not going to automatically get the churn rate down. The challenge is to build a Customer Success group, understand the mission of Customer Success, and align resources and priorities around that mission.
It’s important to understand the goals that you are trying to accomplish, which are:
- Protecting and securing renewals
- Responsible for cross-sell / upsell
- Being proactive, focused on adoption, and customers are successful using your product
- Being a trusted customer advocate
The question then becomes – how is the CS mission communicated to the rest of the company? Every organization in a company has a role to play and it’s not just the leaders, CSMs, and the CS automation software. It’s how you communicate, sell, and hand-off the product to the customer. It’s all about the long-term view, and not merely about a few months of effort. It has to be seen as a lifelong journey.
Why Is Churn the Wrong Metric to Drive Decisions?
Churn is a lagging metric. Churn is typically the symptom of an customer not getting value from your solution, which results in a termination of the relationship. A CEO’s reaction to a churn problem should be focused on the root problem, rather than the symptoms.
Here are some of the key questions that a CEO/Senior Management professional needs to ask. The answers to these can help fix the problem:
- What are the leading metrics that leadership uses to know how customers are consuming the solution you sold them?
- Are customer reaching their desired business outcomes in a reasonable amount of time? (Time to Value)
- What are the common attributes when customers are successful, versus the common indicators when the customers are having friction consuming your solution?
- Are you conducting an ongoing (quarterly) churn analysis to get to the systemic root cause of the core issues?
- What role does the product play in your current Customer Health metrics?
If the CS team, and supporting organizations within the company (Support, Product, etc.) are working to ensure what it takes to be successful, you should at least have the opportunity to mitigate churn through proactive activities. A health framework is one of the leading metrics to assess potential churn.
Assume that there’s a company that does a phenomenal job of selling, maybe even over-selling its products. It’s deployed to end users, who are the individual contributor, end users, but they don’t find value, and have no interest in the product. Since the product is not sticky, the churn rate is high. In this scenario, the challenges faced by the company are related to the product market fit, the product presentation, target market, and in understanding who is getting value out of the product.
If you don’t onboard a customer smoothly and if they don’t happen to get value quickly, then the chances are you’ll lose customer confidence in the first four-six months. It’s like planting the seeds of churn. In this scenario, it’s the CEO who has to think holistically about the reasons for churn, rather than going ahead and installing a Customer Success team to fix churn. If your product is hard to use or unable to deliver value, then such a problem can’t be fixed by a Customer Success team. It will inevitably be too expensive to install a Customer Success team to solve such problems and the CFO will never allow it.
Here, the CEO has to think about the systemic root cause of the product adoption issues:
- How they are taking it to the market?
- How customers are consuming it?
- Ultimately, are they getting value out of it?
To Be Concluded
I outlined above the need to build a pervasive culture of Customer Success that spans the entire organization, and the need to go beyond lagging indicators such as churn. This requires a maniacal focus on the value delivered to customers and how it is communicated to them. What is just as important – every team member needs to know exactly how they are contributing to Customer Success.
In the concluding section of this post, I will outline how the organization can take steps to make this a reality, and measure their progress towards this goal.
Mark Pecoraro is a senior business executive and trusted advisor to leadership teams with a demonstrated ability in consistently delivering high customer satisfaction, client retention and operational excellence in a recurring revenue business model for both start-up and established businesses. He was previously VP of Customer Success for Conviva and is a recognized thought-leader in Customer Success. He has held a variety of executive roles in enterprise SaaS organizations including Appcelerator, SOASTA, WhiteHat Security and Accept Software. He also serves on the Board of Advisors for Strikedeck and BlueNose Analytics, and is a member of the Standards committee for The Customer Success Association.Mark Pecoraro