This article was transcribed from Jason Noble’s presentation at June 2020’s Customer Success Festival.
I’m going to focus on a really crucial element for customer success: how do you prove the value of customer success to your organization and customers? Now, for those not in the know, customer success might sound like a frilly thing, and that’s why it’s absolutely essential that we prove its value to everyone.
Good customer success can be absolutely critical for conversion and retention, but unless you’re shouting it from the rooftops, you might as well not have it at all!
Here’s a breakdown of our agenda:
- About me and Vinli.
- What is value?
- Creating value.
- Why this is important today.
- What’s right for you.
- The customer today.
- Value realization.
But before we dive into the main topic here, a little bit of background on myself.
About me and Vinli
I'm currently the VP of Global Customer Success at Vinli, Inc. I’m leading our European business operations and our global CS function, covering customer success management, onboarding, and training.
Vinli is a US-headquartered technology startup whose primary focus is connected cars. We’re eight years old and we're all about driving insights, value, and outcomes for global mobility and automotive companies. We do this using mobility data and analytics.
I've spent the last 25 years helping organizations become more customer-centric by driving more value to their customers. I have built and led teams across all of the traditional customer-facing parts of the business. This includes service delivery, program management, customer support, account management, and customer success.
I've been very privileged to work on both the customer and partner sides of the equation. I've gained a really solid understanding of both sides, both with global enterprise brands and with more niche technology startups.
I’m all about bringing the voice of the customer to the leadership table. I’m advocating for a democratic approach where customers really become collaborators in what we do.
What is value?
It sounds like a really straightforward concept, but it has a different meaning depending on who you’re talking to. It can refer to:
- Price - What's the value of my house, or what’s the value of my property?
- Benefit - What is the positive outcome I get? How does my house make me feel?
- Worth - This refers to value for money. Does the benefit correlate with the price?
What is customer value?
When we start talking about the value of customers, it gets even more confusing. But it’s important to be very specific here because it’s essential that our partners and stakeholders know what to expect.
Customer value is the perception of what a product or service is worth to our customers versus the possible alternatives. The ultimate goal here is for the customers to feel that they've got the outcomes that they want out of our services in terms of benefits and services.
Why is value important?
Quite simply, if we're not delivering value to our customers, why are they our customers? Why have they come to us in the first place? Only by delivering value to our customers can we be successful. Ask yourself, what are our customers actually paying for our services? Now, of course, it includes a payment (of sorts), but there are also less tangible factors to consider.
There are no monetary issues that are equally important, such as time and effort. Customers have to feel that the benefit of your product outweighs the cost of time. Only when we deliver real value, are we really looking at customer success?
It's about delivering the value and the outcomes that our customers need and want. In a nutshell, we cannot deliver value without customer success.
Our aim is to have long-term partnerships with our customers. This is not something that you can take lightly, it can involve some pretty drastic management overhauls for your business. It can involve changing your fundamental work practices and even your whole work culture.
Both of these are a lot harder to measure but are absolutely critical and longer-lasting. Value is not always a static thing, it can evolve as the needs of our customers evolve over time. The use of the product should mature assuming that we're doing the right thing for our customers.
Ideally, we'd like the value to increase as they go on with us. And delivering value has some very welcome side effects. It should increase customer satisfaction, customer experience, and advocacy. The more value that our customers get from us, the more they're going to tell us about it.
How do we create value?
So, I know what you’re thinking: it’s all good and well talking about good customer success, but how do we actually go about creating it? And more importantly, how do we actually create value for our customers?
Well, It all goes back to understanding what our customers expected outcomes from us. It's super critical to get that initial sales engagement so we understand what the positive outcomes are going to be.
“Why should I spend time talking to you? Why am I buying from you?”
Customers are always going to have these two questions in their minds; they expect to see results sooner rather than later, so it’s essential to have these major points down very quickly.
Think about ongoing value
Throughout the journey, we need to ensure that we're communicating value with customers at all relevant points. A great way to track this is through customer executive business review meetings. These should act as a forum to specifically address the value of a product to our customers and the value that's being delivered to them.
And the key thing is, this value needs to be delivered over a prolonged period of time. It's not just about the initial value, but the ongoing value that we're delivering throughout the customer's relationship with us. Perceived value can, and does, change over time as our products and services mature and grow.
Why is this important today?
Over the last decade or so we’ve seen a real big shift back to the ‘age of the customer’. We’re really seeing the power go back into the hands of customers. Customers are no longer tied to us with long-term contracts or heavy upfront investments.
Instead, they're often on subscription-type models when they have the option to upgrade or simplify their package as they see fit. This risk of no engagement has moved from the customer to the supplier.
To minimize this risk, we've got to really focus on value and make sure that we're delivering what the customers want. More importantly, what do the customers need? I think across all industries, we’re seeing organizations have to embrace business models where customer retention suffers because it's easy for a customer to churn.
The need for new methods
In this kind of landscape, there's a need for constant customer engagement. We have to ensure we’re explicitly communicating our value proposition to our audience. And of course, we’re proving that these methods have a positive impact.
In this day and age, there’s a need for a very different type of customer-relationship management model compared to a few years back. But these things aren’t just gonna happen by accident. It needs investment.
In the wake of the global pandemic, keeping that focus on the customer whilst radically changing our way of working has proved very difficult. This change has meant that we've had to look at the value we're providing a lot closer and make sure that it still aligns with the requirements in a global pandemic.
Can we measure value?
It’s difficult to show value without numbers, right? This can be a particular problem seeing as senior stakeholders are often very fixated on value and hard data. But can we measure value? The short answer is ‘yes’ – you need to do it often and consistently. This messaging needs to be both outwardly and inwardly facing. In other words, we’re communicating our value to our customers, but we’re also communicating the value of customer success within your organization.
Now, the simple way to measure this is simply by looking at the financial benefits you’re receiving and measuring those against the cost of implementing these things in the first place. The challenge is, how do you put a monetary value on the benefit side and the cost side?
But I feel this model is a little too simplistic for me, and there are a number of other key metrics that can look at benefits in greater depth.
Net promoter score and customer satisfaction score
How well are we doing what we're doing from the customer's point of view? For me, net promoter score (NPS) is a relationship-driven metric, where you’re measuring set points in the year and you’re asking all of your customer contacts how likely they are to recommend you.
This isn’t necessarily to just friends and family, but to business partners and colleagues. With NPS, it's never just about the score, or even about the score compared to other companies, it’s about the trend in your score over time.
How are we improving how we're delivering value? But the supercritical piece here is the ‘why’ behind the numbers. We need to be looking deeper at each individual score. Why did someone leave that score? What's their real feedback?
Time to value
When did customers start receiving their expected value from us? What’s the ratio of delivered outcomes vs. expected outcomes delivered as a simple ratio? It's no longer just about going live on launch date, it’s about how long it takes to get to the value expected. If this takes too long, then you might as well be delivering nothing at all. The value itself is eroded.
To measure this, you need to establish what the value expected is, and you need to have triggers in place so that you know when it's delivered. I always like to measure both the time to launch and time to value alongside each other.
Ideally, I want to see the gap between them decreasing and the value delivery happening quicker and quicker. We can then use this as part of our sales pitch. A short time to value time is going to be a big incentive to customers.
Revenue retention rate
This measurement really shows how much of our current recurring revenue from our customers is being retained over time. The gross number excludes any growth from expansion in customers and is always between 0% and present.
The net number, on the other hand, takes into account total revenue minus the revenue lost from customer churn. It also takes into account the revenue gained from expansion from cross-sells and upsells. You should use both of these measures together in conjunction with each other and not use one at the expense of the other.
What’s right for you?
Customer success is about partnerships with our customers. It's not just about our customers' success, but about our success. We wouldn't be doing what we were doing if there wasn't value to us and to our businesses. The value for our customers goes without saying, but let's focus on the value for us.
This is most likely different from the value of our customers and will need to be measured differently. Here are some of the different metrics you can look at:
- Shareholder value
- Return on investment for a particular project
- Changes in market share and market growth
- Incremental profit loss and incremental revenue from different products and services
When we're delivering anything that provides value to our customers, there's a cost to us. And it's so important not to ignore this. It’s too easy to go overboard in attempting to meet customer needs, but there's a cost to doing this, and it’s ultimately unsustainable in the long term.
Beware of over-delivering
Now, sometimes there are key reasons to over-deliver at specific times, but just be very conscious about what it costs to deliver and that you’re not over-delivering without specific reasons
But why are we over-delivering? Are there issues with a product that we need to look at? Are there gaps in our processes, or are our communication channels not working correctly? Focus on fixing the reasons why we're over-delivering.
The customer today
As you will have noticed, events over the past couple of years have really necessitated technology coming in to overhaul the way we interact with customers. We have to up our game if we want to be successful.
It's not just about being there when a customer needs us, we need to shift to being far more proactive, and work with our customers to identify new opportunities for delivering value.
We need to work with them to try to understand when and how their priorities have changed and why we want our customers to grow. This can’t be static. We need to make sure that we’re always facilitating customer growth and identifying opportunities. Customer Success is the key area for ensuring this.
We’re in a state of constant change
Our customer's priorities are always changing, as well as their priorities. We need to keep on top of these changes and help understand what we need to continuously deliver value. We live in an era of constant change today. And it's only increasing.
There is no such thing as a ‘steady state’ anymore. And that pace of change is increasing. As customer success professionals, we need to be change agents, not necessarily change managers.
We need to understand why change occurs, and what a change management process is, but we can’t necessarily control change. Our role is to adapt to customers as their needs change.
We’ve talked a lot about how we measure value, but you have to realize value before you can actually measure it. Before we dig into this subject more, there’s one crucial aspect of value realization you have to understand. 👇
It’s a cycle
It’s not just something that’s set in stone, we have to define and redefine customer value continuously. Only when we've done that, can we have that real value realization moment when the product is delivering what's expected. Can customers have confidence that we’re going to evolve with their needs? We can prove this by being adaptable and agile.
This really encompasses optimizing your processes and your engagement approach. You have to do this so that additional value can be delivered on new services, new products, product expansion recommendations, or referrals.
Again, this goes back to how value realization is a continuous process. You need to be able to adapt to different definitions, delivery, and measurements. But that’s not enough, you have to be able to refine and iterate as you go along.
Key practical takeaways
It all really starts at those initial meetings and conversations with your customers. This can encompass both the marketing messages and the sales cycle sales pitches. All this then stretches through from the onboarding right to the continued delivery of services.
I want to wrap up this article with some practical tips that you can bring back to your customers and stakeholders today.
Capture what value looks like for your customers
This should happen as part of your sales process and should form a critical part of the handover from sales to customer success. You should have these documented for each customer, and you should continue to liaise with customers over their changing needs. The value expected can and will most likely change to the relationship with our customers.
Understand how your organization creates value
Does the value differ in customer segments? Work through some case studies and examples about how you've specifically delivered value to specific customers, and then highlight what works on these occasions.
This can really help bring to life the value that you're delivering, and can provide proof of what you should be working on to your senior stakeholders.
Constantly measure value
Even when the value changes, keep measuring it and note why it's changed. Make a note of whatever refinements you need to make to continuously deliver that value. Remember, it’s a marathon, not a sprint. There’s no end goal insight necessarily, customer success is always a work in progress.