Success should be measured on how you are achieving the clients' objectives, not your internal metrics.
When people talk about Customer Success, a lot of the focus tends to be on areas such as reducing churn, or increasing product usage, and whilst we can acknowledge these are part of the process, they are only symptoms of the ultimate goal: hitting the client’s objectives.
A big part of my working experience has been in adtech, and in this sector, it’s very common to have performance metrics in the platform which makes for an obvious barometer of how the software is helping the client. You might think that hitting a revenue and ROI target that is entered into the system by the client themselves is meeting the clients’ business outcomes and leave it at that, but often, that’s not the full picture. Pretty much all businesses have other goals apart from revenue. As an example, I had a business conversation with a hotel client I used to manage, and this revealed that ‘room-nights’ was actually the measure of their performance. It was this number that they reported on internally and also to shareholders and the market. Once you understand hotels’ business model, you can see why. On the whole, hotels have two main streams of revenue from a customer; one is the cost of the room, and the other is the revenue generated from on-site purchases, such as Food and Beverage. The more nights a customer stays in a hotel, the more they spend in the bar, restaurant, room service etc. Armed with this knowledge, we were able to adjust our tracking setup in the platform to bring in the room-nights metric which meant it could be reported on in the UI, but also optimised against in the campaigns. Moving forward, this allowed us to have a true benchmark of whether the software was helping the client hit their target. Conversations with the Product team then became focused on how the development of the platform would make hitting the targets more efficient for their team, both ROI and time spent in the system.
For Adtech, it’s easy to have hard proof points that your software is delivering value. In fact, many clients will calculate the vendor's fees into their own ROI calculations to ensure they’re hitting the campaign targets, and covering the operational costs as well. Move outside of Adtech, and it becomes more challenging.
Let’s take an HR SaaS as an example. Many of these platforms offer features that manage both the recruitment process and also ongoing HR operations such as paid leave and performance reviews. How do you measure the ROI of managing annual appraisals? You will need to focus on Business Outcomes when a hard ROI doesn’t exist. It might take a few conversations with senior stakeholders to understand what benefit they are paying you to deliver and will measure you against. Once identified, get it signed off, in your Mutual Customer Success Plan if you have one. Also, talk to your sales team as they might (read: ‘should’) have identified these goals when going through the sales process. If you don’t have a ‘Sales to CS handover’ process in place, it’s time to start one.
In many respects, it doesn’t matter what the measure is, as long as it is meaningful to the client, and is something that can be measured against and is consistent.
Once you have the metric, you also need to add it to your CS Dashboards. Even better, report these back up to management as well. Alongside your churn rate, net revenue retention, MRR etc, place the outcomes the client is holding you to. This helps develop a company wide culture of measuring business outcomes, and not just focusing on the standard metrics which, to be honest, are all internal.
Then starts the virtuous loop. Your product will evolve to be more aligned to business outcomes, giving Marketing more case studies, giving Sales more material to win new business, giving Customer Success more clients to deliver outcomes with, and so on, and so on.
And what about churn and product usage? If you’re hitting the client's true business outcomes then these will look after themselves.
Simon has over 10 years helping clients achieve their goals through the use of software. Having previously lead Customer Success teams in London, Europe and New York City, Simon now owns Kupr Consulting working with B2B SaaS companies to improve their Customer Success teams and processes.
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