The trouble with Customer Value
Customer success folks have started talking a lot about customer value. That’s a good thing: anything that shifts the focus from internal activities and metrics to the customer is to be welcomed. But I think, along with its cousin “desired outcomes” the phrase has outlived its usefulness. I think we need a new language to help move us to the next level.
Before I get into my thoughts, I recognise that some will say that what I am suggesting is just semantics. They may well have a point! As a friend (Jonathan Corrie, CEO of Precursive) commented in a LinkedIn post where I first raised this issue, the words “value” and “outcomes” are part of the SaaS language. He is of course right. But language is important in shaping how we think about things and we need to change not just what we think, but more importantly, what we do.
Here’s my problem with ‘customer value’. It’s too vague; non-specific. This lack of precision has hindered the development of meaningful and reliable definitions of what customers need to achieve success. Therein lies another problem: the focus on the customer, the company, is wrong. Companies don’t buy anything; people do and, to borrow a phrase, value is in the eye of the beholder. We need language and accompanying tools and techniques that address the specific needs of specific people. The future lies not in the vague concept of customer value but in the measurable results of importance to key customer roles. Not quit as catchy but much more useful.
At this juncture I want to recognise the contribution of my friend Greg Daines to my thinking. It was in conversations with Greg that the phrase measurable results first entered my consciousness. His research into customer churn shows that when a supplier measures the results a customer gets, they stick around almost six times longer!
Impact of measuring customer results on life of a customer: Source ChurnRX
The key word here is measured. As Drucker’s well known saying tells us; “What gets measured gets moved”. To be measurable, it has to be specific. To be impactful, it has to be important to people who make and influence decisions, so we have to measure what matters to key customer roles. It is highly likely that one of the key roles, typically a senior executive, has a metric that is related to the overall performance of the business in this domain. This business impact metric is the one most suppliers focus on. It is important but not sufficient. Whilst decision makers have the final say they are often heavily influenced by others, so we cannot focus on just one role. It’s a brave executive that says no to renewing a product when colleagues can show an improvement in metrics that matter to them. To secure the massive benefits indicated by Greg’s research, we have to deliver measurable results to each key role.
At this point in the conversations I have with CEOs, product managers and CS leaders, many wilt under the thought of all the work involved to get to the detailed measures they need. Yes, it needs hard work and add to that add hard thinking but it’s actually easier than many imagine. Here’s how to get started:
List the key roles you sell to and serve. There are typically three to six;
Talk to them; follow them; attend the conferences and forums they attend;
List the metrics they focus on;
Identify the sources of those metrics - what systems and how often are they produced;
Figure out a way to get at those data [I’ll return to this in a future blog];
Rank results achieved to identify best practices.
BTW, the first three you should already have - they are a core part of any decent Ideal Customer Profile.
There are significant benefits from putting in the hard work. Understanding the metrics that matter to key roles guides content to help improve performance. The results data generated is used to correlate activities and performance. Using this, the quality of advice will go up several notches. Sharing the activities of the best performers in a role become the norm. And it’s all based on real data about what matters most to the people that matter.
It’s challenging work but you cannot claim to be customer focused or interested in customer success unless you can measure it. If you want advocates for your product, both within your customers and with their networks, you have to show how you are measurably improving their performance.
One of the challenges you will face on this journey will be data privacy. You must be able to assure the customer that:
Any performance data is totally secure;
No identifiable results are ever used without express permission.
Even then, some customers will be reluctant to share measurable performance data. Work initially with customers where you have built trust. Use their experience to persuade others.
My advice is stop asking how to add value to a customer. Start asking how to improve the performance in the specific and measurable results that are important to specific roles in the companies you sell to and serve.