By Lincoln Murphy, Customer Success Evangelist at Gainsight
Lincoln Murphy is a customer success expert and evangelist at Gainsight, a leading Customer Success solution for B2B SaaS companies. In this blog post, Lincoln explains what Customer Success is and why your business should care about it. Come listen to Lincoln and other top sales leaders at the Accelerate Sales Conference in Seattle, WA on August 18 – 19.
What if I told you there was a way to keep customers longer, get them to pay you more over time, get them to tell their peers about your product, and even a way for you to tell your customers they’re wrong and for them to love you for it?
You’d either call me crazy or accuse me of selling snake oil because that kind of magic just doesn’t exist.
Well I’m here to tell you that it does exist and it’s not magic at all. It’s called Customer Success and it is ensuring your customers achieve their Desired Outcome through their interactions with your company.
Desired Outcome is Critical to Customer Success
Customer Success is predicated on knowing what the Desired Outcome is for your customer and ensuring that they achieve it.
Desired Outcome has two parts: Required Outcome – the thing your customer must accomplish, and Appropriate Experience – the way your customer wants to accomplish their Required Outcome (for more details, read here).
The analogy that conveys the meaning of Desired Outcome the best is the commercial airline industry in the United States.
The required outcome for any passenger on a commercial airline in the US is to make it safely from point A to point B. Thankfully that’s pretty much guaranteed.
But how you get from A to B varies wildly from carrier to carrier. For instance, when I fly Southwest, I know they’ll meet my required outcome. However, when I get off a Southwest flight I complain about the boarding process, the absence of assigned seating, the cramped seats, no wi-fi, etc. In other words, they failed to meet the appropriate experience for me.
Even though Southwest met my required outcome, I don’t feel like the trip was successful because they failed to deliver an appropriate experience for me. Virgin America, on the other hand, delivers my Desired Outcome every time.
I believe that if you intend to do business with someone more than once, then ensuring your customers achieve their Desired Outcome (Customer Success) should be your primary goal.
Customer Success Isn’t Only for Technology Companies
This fairly simple concept of customer success started – and is absolutely blowing up – with technology companies that have a subscription model like PipelineDeals. While it started with these types of companies, the reality is that customer success can help any company, subscription or not.
Customer Success started with subscription businesses because it’s just easier to know if a customer has stopped being your customer since they have to actively cancel their account. In more transactional businesses, there’s a gap between purchases and you can’t really be sure if a customer is still a customer.
So customer success started in the subscription business model – primarily in the software as a service or SaaS market – because it was easier to see that customers were churning out.
And when it’s easy to see that the customer is not your customer anymore, it’s also easy to put a value on that. For a lot of companies that value turned out to be quite high, so something had to be done.
Executives and investors needed a way to keep their customers from churning out, and customer success became the solution. Help make your customer successful and they’ll stick around longer.
Customer Lifetime Value
The metric that SaaS companies watch most carefully is Customer Lifetime Value (LTV), but any company should be paying attention to this metric. Whether your company’s LTV is the aggregate value of subscription payments over 36 months in the case of SaaS, or the number of Triple Venti Soy Caramel Macchiatos I’ve bought at Starbucks (that’s a very large number), every customer for every business has an LTV. Customer success can help grow that number.
Customer success helps to drive LTV in a few ways.
- Acquire More of the Right Kind of Customers – Investors and executives realized customer success actually starts with acquiring the right customers in the first place. The right customers are those who could actually achieve their desired outcome through their interaction with your company.
- Get Customers To Stay With You & Buy More – When a customer achieves their desired outcome, then they’ll stick with you longer. Those same customers can lead to increasing revenue through customer success expanding their use and upselling in a way that was consistent with the desired outcome.
- Successful customers tell others – Successful customers who are using more and more of your product are also the ones most likely to tell others about your product. Customer success serves as a driver for advocacy and vitality in even the most boring B2B products and services.
Customer Success First Steps
Customer success is such a simple-yet-game-changingly-powerful concept. I know that it can apply to any business, regardless of business model, and I encourage you to take a few minutes and think about how you might apply this thinking to your business. Below are three steps you should follow to get started:
- Get clear on what the Desired Outcome of your Ideal Customers is.
- Identify what having customers continually achieve their desired outcome means to your company. This could mean LTV growth, second-order revenue from customers brought in through advocacy, etc.
- Determine what your Ideal Customers needs to do both inside of your product and in their everyday lives to achieve that desired outcome. (including bridging any Success Gaps that exist)
If you do just those three things, you’ll be on the path to making your customers successful, driving LTV through the roof, and crushing your competition.
But if you want to take your business to the next level, I recommend a…
Deep Dive on Customer Success
Now that I’ve whet your appetite on what Customer Success is and what it means to your business, join me at the Accelerate Sales conference August 19 & 20, 2015 in Seattle where we’ll deep dive on the topic of customer success and how to actually implement these ideas in your business in a way that will drive growth regardless of your business model.